SEATTLE-In its most recent market report, Paragon Real Estate Advisors says the apartment market in downtown Seattle is “experiencing a significant mismatch between supply and demand…especially in the new property luxury market.”
Relying upon a report out of O'Connor Consulting Group LLC, Paragon says the area's vacancy last measured at 13%–excluding new properties in lease up. And, Richard Belden, a principal with Paragon, tells GlobeSt.com that in response, landlords have been knocking off between 10% and 20% from their rents since Sept. 11.
Adding to the numbers of vacant units are six new properties. Altogether 1,156 apartments are packaged into the Shelby, Clearwater, Metropolitan Tower, Uwajamaya Village, Wall Street Tower and Avalon Belltown. According to Paragon's report, 46% of these new units were vacant at the close of 2001. To that, the Olympus will come on line sometime between now and late summer, tossing another 327 units into the mix.
Belden splits vacancies in the established properties into three basic categories. “About one-third of the people bought a condo or house. About a third responded to concerns for their own economic circumstances. And, the rest is just a migration,” he explains.
“In other cities that have experienced similar declines,” Belden notes, “tenants have taken advantage by moving to better locations and better buildings. And landlords here are making full-throttle efforts to entice new tenants to downtown–those who, perhaps, previously shied from the area's lofts rents.
In its report, Paragon tells of a 10-year-old (unnamed) property that cut rents to $1.45/sf from $1.85/sf. The result was stabilization at 95% occupancy. Another 4-year-old property it says is at an effective $1.50/sf with no concessions.
Belden says landlords making reductions in the 20% range are bringing in tenants, while others continue to struggle. Paragon takes note of a “significantly remodeled” property that has budged downward to $1.91/sf from $2.13/sf–but remains at 35% vacancy.
Though the current numbers surrounding downtown are less than stellar, Paragon makes the observation that developers continue to look toward the future. “Interestingly,” the report says, “developers are already looking at sites that could be developed and come on-stream in 2004 and beyond.”
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