Pierce-Kitsap-Thurston Shows Continuing Strength

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Pierce-Kitsap-Thurston Shows Continuing Strength

Pierce-Kitsap-Thurston Shows Continuing Strength

Seattle - Apartment Insights 4th quarter results show the continuing strength of the rental market.  The vacancy rate is 3.64%. Rents climbed 1.5% to $1,111 per month. Not considering rent levels, the market here outperformed metro Seattle for the third straight quarter according to Tom Cain, the firm's principal. 

The data are from his Seattle firm’s statistics and trends on 50+ unit properties in Pierce, Kitsap and Thurston counties. 

Vacancy:  3.64%   

The market vacancy for our nonrandom survey of conventional, stabilized 50+ unit properties in all three counties is 3.64%, up from 3.32% last quarter. The vacancy rate was 4.02% a year ago. The rate for all properties including those in lease-up is 3.92%.

Pierce:  3.55%  

The vacancy rate in Pierce County bumped up from 3.25% to 3.55% this quarter. It was 4.22% a year ago.  

Gig Harbor's rate dropped to just over 2%. The rest of the submarkets are in the 3% range with the exception of Tacoma South, which is 4.3% vacant.

Kitsap:  4.6% 

Kitsap County's vacancy rate climbed to 4.6% from 4.36% last quarter. It was 3.44% a year ago.

The vacancy rate shot up nearly a full percentage point to 5.21% in Bremerton. Port Orchard is the strongest submarket with a vacancy rate of 3.47%.

Thurston:  3.31%  

Thurston County continues to have the lowest vacancy rate, 3.31%. Still, it is up half a point from third quarter. A year ago it was 3.64%. Olympia at 2.92% vacancy is the strongest submarket in Thurston.

Rental Incentives

Pierce:  $5 per Month (0.5%)   

Kitsap:  $4 per Month (0.3%)  

Thurston:  $1 per Month (0.1%)      

The average overall rental incentive for the three counties crept up from $2 to $5 per month.  Five percent of the properties are offering rental incentives, the same as last quarter. 

Rents:  $1,111 per Unit   

$1.29 per Square Foot 

Average rents climbed $16 to $1,111 per month and $1.29 per foot, an increase of 1.5% over last quarter. They increased 11.7% over the past year. Over the past five years the average annual increase is $6.1%

Pierce:  $1,101 per Month 

$1.28 per Square Foot 

Kitsap:  $1,197 per Month 

$1.41 per Square Foot 

Thurston:  $1,058 per Month 

$1.24 per Square Foot 

Rents increased $20 in Pierce, $11 in Kitsap and $7 in Thurston. Submarkets topping the list for largest rent increases over the past quarter are both in Kitsap. They are Port Orchard and Bremerton. The lowest average rent can be found in Lakewood. At $956 per month it is the only submarket with average rent under $1,000.

New Construction  

There are 2,045 units under construction, which is 600 more than last quarter. The majority of these are in Pierce County. There are another 2,212 units that have successfully completed the design review and permitting process. Additionally, 3,276 units are in the earlier stages of the construction pipeline.

Featured in the photo, Arbors at Edgewood opened in Pierce County.  The 130-unit phase II is scheduled for completion in mid-2017. It is managed by Greystar.

Observations  

This is the third straight quarter that Pierce-Kitsap-Thurston has outperformed the metro Seattle market, not counting overall rent levels. The three-county market had a 1.5% rent increase this quarter, whereas rents went down in metro Seattle. The 3.64% vacancy rate here is a full percentage point lower than metro Seattle's. 

Mortgage lender Freddie Mac recently predicted that Tacoma is a top ten market nationwide for apartment rent growth. It is rated number three. They expect rents to increase 5.8% in 2017.

As long as the economies in these three counties remain strong, we expect the markets to continue to perform very well. Factors such as a relatively low level of apartment construction together with the limited inventories and rising prices in the residential market will help ensure it.

For decades Tom Cain has supported a variety of industry organizations and events with his data and expertise as a foremost expert in the apartment industry. His company surveys the five counties in Central and South Puget Sound.
This article highlights survey results that subscribers can access from an online database of all 50u+ properties. Apartment Insights also provides customized rent reports and market reports. www.apartmentinsightswa.com  206-632-2220
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