Portland has been one of the hottest rental markets over the last two years, followed closely by Seattle. The population of each metro is heavily weighted toward the Gen Y demographic, and the entire region has posted some very strong fundamentals, with vacancy rates of less than 4 percent in Seattle, and around 2 percent in Portland.
So, it's no surprise that developers like Phoenix-based Alliance Residential have been expanding their profile in the area. Recently, Alliance announced Suzi Morris as the new development director for the Pacific Northwest, responsible for all day-to-day aspects of the firm's development throughout the region, which includes Northern California, Washington and Oregon.
Morris recently sat down with MFE to discuss demographic trends, micro-units and why overdevelopment might not be as big of a story for Seattle as some market watchers believe.
MFE: What are the main demographic trends you're seeing in the Pacific Northwest markets?
Morris: The Gen Y demographic comprises our primary renter audience in the Pacific Northwest and we definitely expect this trend to continue. We are increasingly looking to incorporate Gen Y-friendly elements within our developments and managed communities. In the Pacific Northwest, this includes a variety of tech-savvy features and amenities such as built-in iPod/cell phone charging stations in each apartment home; connectivity stations in the lobby for residents to access account information, pay rent and log-in to a local community trading site; and iCafés with complimentary Wi-Fi designed to keep this demographic “plugged in” at all times.
MFE: Is Alliance jumping on the smaller/micro-unit trend? Is that going to be as big of a deal on the West Coast as it is on the East?
Morris: In Seattle, the average size of units being developed is in the low- to mid-700 sq. foot range, which tends to be smaller than many other markets. The socially active Gen Y renters on the West Coast are comfortable with smaller unit sizes, providing there are heavily-amenitized common spaces to gather and entertain within the community. Lavish clubhouse areas and conference rooms are a must for new communities and many of our properties feature amenities such as green rooftop decks, multiple barbecue sites, luxurious common courtyards with fire pits, community kitchen facilities and big-screen media stations.
MFE: Is there a risk of over-development in Seattle and Portland?
Morris: Portland has not seen significant supply additions yet, but Seattle has one of the strongest tech markets in the country, demonstrated by many high-tech employers including Google, F5 Networks, Amazon and the Gates Foundation. The area also has a well-diversified economic base and pent-up demand, which makes it a strong market for development.