Strong economic growth is driving multifamily builders, who are expected to bring about 3,500 apartments to the Seattle region this year, up from 2,500 units in 2007, according to Marcus & Millichap Real Estate Investment Services. In addition, asking rents are expected to rise 6.2 percent to $1,072 per month, while effective rents advance 6 percent to $1,009 per month, said the firm. One of the notable new apartment communities to open in the region is Avalon Meydenbauer in Bellevue. The 368-unit development includes 19,000 square feet of ground floor retail space and is the first project with housing over a grocery store in the area. It’s AvalonBay Communities, Inc.’s 13th community in the Seattle area, with more on the way. Avalon Towers Bellevue, a high-rise, mixed-use project in downtown Bellevue, is scheduled to begin construction this summer, and the final phase of Avalon Juanita Village in Kirkland begins construction this spring. In addition, the company plans to start two projects in Seattle in 2009.
Eyes are on Gresham, Ore., where the City Council recently voted to establish a mandatory rental housing inspection program. Deteriorating properties have been a problem in the community. Landlords have urged the city to move slowly and carefully in implementing the program. In nearby Portland, apartment owners will see rents advance 4 percent to 6 percent this year, estimated Greg Frick, a partner at Hagerman Frick O’Brien, LLC, a Portland-based real estate investment firm. The improving multifamily market will also see vacancy rates drop to about 3.5 percent from the sub-5 percent range, he said. Frick attributes the performance to good fundamentals and a modest amount of new construction.
The big Grand Avenue development in downtown Los Angeles is moving forward and has a new investor. Istithmar, a fund controlled by the royal family of Dubai, is on tap to invest in the massive development designed by architect Frank Gehry since the California Public Employees’ Retirement System has pulled out. The $1 billion first phase includes 390 marketrate condos, 98 affordable rental units, a 295-room Mandarin Oriental hotel, and retail space. Related Cos. is the developer.
INLAND EMPIRE, CALIF.
This area has been hard hit by foreclosures. The Riverside/San Bernardino metro had the fourth-highest foreclosure rate in the nation in 2007, according to RealtyTrac, an online marketplace for foreclosure properties. The mortgage problems are leading to a number of homeowners returning to the rental market. However, there is a potential shadow market from an overbuilt single-family sector. Still, some industry experts remain optimistic. New apartment supply in this highflying market is expected to be well below its average this year. The market has been producing 4,000 to 5,000 units in recent years, but scheduled completions will drop to about 1,170 units in 2008, estimated Greg Willett, vice president of research and analysis at M/PF YieldStar. His firm expects occupancy rates to be slightly better, increasing to 96 percent or higher by the end of the year.