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August 25, 2022
The pandemic has created a great deal of uncertainty for both consumers and businesses. Real estate developers are certainly not immune to the ebbs and flows of economic trends, no matter the size of the market. Despite recent fluctuations, one thing is for sure: Demand for well-designed, centrally located apartment units is still remarkably strong, especially here in the Puget Sound region.
A recent report issued by industry data collector Apartment List shows that average multifamily rents in Seattle have risen sharply, some 1% over the past month alone. What’s more, rents have increased by nearly 19% in the area year over year, with median rents in Seattle sitting comfortably at $1,681 for one-bedroom apartments and at about $2,100 a month for two-bedroom units. These growth trends are outpacing both statewide and national numbers.
Yet it’s not just the region’s most-urban areas experiencing this massive push for additional apartment homes. Rents in smaller markets like Issaquah are growing, too, up 14.2% year over year, according to the Apartment List study. Other submarkets with rising year-over-year demand include Bothell (16.6%), Kirkland (12%), and Redmond, which reports a whopping 17.1% increase.
As everyone knows, economic growth is good, as it can generate family-wage jobs, valuable tax revenue and, of course, other financial and lifestyle opportunities for most every individual and business. The more important question, however, is whether our recent apartment growth can be sustained? In other words, are developers, investors and municipal decision-makers committed to doing what’s possible to meet that demand with market-rate units?
The answer is more complicated than a simple yes or no. Our successful delivery of apartment supply will require developers to stay current with work and lifestyle trends among consumers, while cities throughout the Puget Sound region will need to ensure they’re doing everything possible, in terms of zoning and codes, to support the industry’s push for new multifamily development.
This will be especially important for the area’s suburban markets, which are experiencing record demand for market-rate housing near transit, restaurants, retail and other goods and services. Apartment demand in local submarkets has been on the rise for years, a trend that was exacerbated over the past 24 months as companies relaxed their work-from-home policies and apartment dwellers took advantage of lower costs and greater space afforded by suburban multifamily communities.
These smaller markets could take a lesson from Seattle and Bellevue planning departments, which recently relaxed their codes to accommodate taller buildings, greater densities, and lower parking requirements in certain downtown neighborhoods together spurring new investment and development activity. A few ideas that might help to guide these cities’ efforts to amend their sometimes-outdated code include:
Sidewalk width and usage: Cities such as Kent, Auburn, and Burien, to name just a few, are seeing massive growth in the apartment-development sector, with more demand on the way, especially as mass transit continues to expand to these communities. Currently, there’s some confusion among real estate owners on what they can and cannot do there in terms of ground-plane development. For instance, it would greatly benefit both developers and residents to update codes with less ambiguous requirements for wider sidewalks, strategic locations for curb cuts, and conditional use for restaurants and retailers.
Accommodation for transportation and technology: No one expects lower-density markets like White Center and SeaTac to have the same level of demand for pedestrian mobility and bike lanes as Seattle and Bellevue. Recently, Redmond, which is far more populated than most other suburban municipalities, increased its code accommodations for commuter and recreational bicyclists. Smaller cities could better support multifamily growth by updating their codes to incentivize bike-friendly communities, as well as employing mandates for EV-charging equipment, not to mention technology focused on automated pick-ups and deliveries for its residents.
Reasonable parking requirements: Years ago, Seattle and Bellevue revised their codes to include zero-parking requirements in their highest-density neighborhoods. That’s not reasonable for smaller municipalities, of course, even as residents’ reliance on automobiles diminishes in secondary communities throughout the Sound. Some cities, however, still have outdated codes requiring far too much on-site parking than necessary, or less bike-storage minimums than what should reasonably be required of developers who want to meet the needs of environmentally focused apartment residents.
The burden of meeting the region’s growing market-rate housing demand is hardly on just the suburban planning departments alone investors and developers are equally responsible. Real estate companies need to think more creatively about what urban residents want, and how to deliver projects in a non-traditional way. For instance, for the GIS Plaza project that will deliver later this summer, the GIS International Group team worked collaboratively with Bellevue on approving the city’s first automated auto-parking system, enabling the high-rise development to accommodate 20 cars in a space designed for just six, thanks to a German-designed auto-stacking solution geared specifically for small-site buildings like this.
Developers must continue to deliver more user-friendly apartment layouts so many residents are now using their homes as offices, too, a trend that won’t end any time soon thoughtful amenities programs, and unique on-site storage options for bikes, scooters, and other urban-mobility preferences. These consumer needs can’t be satisfied through only space planning and design. Apartment developers that expect their projects to experience long-term success also need to think about managing their properties with a blend of human- and technology-based resources, all with the goal of keeping residents healthy, safe, and satisfied.
The Seattle area has experienced record growth in urban and small-market apartment development, and that trend will continue for the foreseeable future. It’s up to real estate owners and city planners to work collaboratively and creatively on delivering buildings that will meet that demand and in so doing, support our local economies for decades to come.
Ryan Grams is principal at GIS International Group, a real estate development and construction company serving the greater Puget Sound area.