Nonetheless, says Gregory Wendelken, the firm's Seattle regional manager, the Puget Sound's modest growth relative to the Bay Area means apartment rents never became outrageously over-inflated and will therefore experience only a mild correction. "While the Puget Sound apartment market will continue to feel the pinch of a contracting employment base and slowing local and national economies over the next year, the market's long-term outlook remains strong," says Wendelken.

Approximately 4,000 units are forecast to come online in 2002, compared to 5,300 in 2001 and 6,000 in 2000. The forecast expresses some doubt that all of the units slated for completion will be delivered on schedule. Given the waning employment growth, the forecast also doubts there will be enough demand to absorb the units, as it predicts that the vacancy rate at the end of 2002 will be 6.3% up from the current rate of 5.5% and well ahead of the 3.9% rate at the end of 2000.

Despite the rise in vacancy, average rents are expected to hold steady in 2002 after rising 5.6% in 2001, though high-end unit rates could fall off by as much as 3% and concessions will continue to become increasingly prevalent, affecting net operating incomes.