According to the RealFacts report, Seattle rents declined by 0.7% in the last quarter of the year. This means that rents are now at their lowest level since first quarter 2001, and the total annual change for 2002 was a decline of 0.2%. Seattle rents have remained basically unchanged for nearly two years. O ver the past four years, average rents increased by 13.7%.
The report states that the softness in the market is underscored by the relatively weak occupancy rate. After hitting a peak in 1999 and 2000 of about 96%, occupancy has been sliding slowly downward and is currently at 92%. This figure has not changed significantly in the past year.
A major concern in the Puget Sound area is the loss of jobs. Employment growth ceased in 2000; modest job loss in 2001 was followed by greater job losses in 2002. This factor has reduced demand for apartments and put downward pressure on rents. Most analysts agree it will take at least two years for economic recovery in Seattle.
However, many investors are looking past the current situation to the long-term fundamentals. Developers are still interested in Seattle; new construction permits for the first nine months of 2002 were only slightly lower than in 2001.
And although the total number of sales of apartment buildings has decreased, the average price per unit is increasing. According to a study by Hendricks & Partners, the average price per unit increased from about $70,000 in 2001 to $80,000 in 2002.
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