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Seattle Multifamily Market Report – September 2023

Chris Nebenzahl

Chris Nebenzahl

Seattle, WA - Multifamily Market Report
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Tags: Multifamily Data

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While Seattle is not commonly referred to as a Gateway market, its fundamentals often follow many of the tech-heavy Gateway’s on the west coast and in the northeast. As the multifamily industry cools amid significant new supply pressure, Seattle is once again trending like its peers. Traffic, overall occupancy, and occupancy growth are tracking in line with Los Angeles and Boston, while significant rent declines are tracking with San Francisco.

Seattle Performance Cools as New Supply Leads to Urban-Suburban Split

While Seattle is not commonly referred to as a Gateway market, its fundamentals often follow many of the tech-heavy Gateways on the west coast and in the northeast. As the multifamily industry cools amid significant new supply pressure, Seattle is once again trending like its peers. Traffic, overall occupancy, and occupancy growth are tracking in line with Los Angeles and Boston, while significant rent declines are tracking with San Francisco. From a development perspective, Seattle has more projects under construction than San Francisco, Chicago, and Boston, and roughly the same number as Washington, D.C. Most of the new supply is concentrated in the urban core, as well as Kirkland, Bellevue, and Tacoma. While market fundamentals are declining in most submarkets, the suburbs continue to outperform the urban core.

MSA Market Snapshot Seattle

Rent and Operating Trends

Like most markets, many of Seattle’s key multifamily indicators have fallen over the past year. Occupancy, net effective rent, and concessions have all trended in the wrong direction compared to a year ago. However, there are some reasons for optimism, as leading indicators including traffic, leasing and ATR are all better than they were a year ago, albeit by slim margins.

Seattle WA


Traffic and Leasing

  • Seattle lags the national average in both traffic and leases per week, however the market’s conversion ratio of 30% is only a few points below the national average.
  • The average property sees 6.3 tours per week and signs 1.8 new leases per week in the metro. These metrics are like many peer markets but are well behind the national leaders in the southeast and southwest.
  • Traffic is strongest in the Downtown/Capitol Hill/Queen Anne submarket, where properties average 8.3 tours per week. Despite some social challenges, the urban core continues to attract traffic. However, with only 1.7 new leases signed per property, the conversion ratio of 20% in the submarket ranks last among all submarkets in Seattle.
  • Leasing activity in the suburban submarket of Everett/Mukilteo/Mill Creek is the highest in the metro, as properties average 2.3 new leases signed per week. The northern submarket is outperforming the MSA average on almost all metrics, and new supply is limited in the area.
  • The Beacon Hill/Rainier Valley/Skyway submarket is struggling from a leasing perspective as properties are averaging just over one new lease per week. Leasing has fallen on both a monthly and annual basis, and as a result, the submarket’s occupancy is the lowest in the metro.
Seattle WA Traffic and Leases
Source: Radix

 Occupancy and ATR

  • Seattle is holding its own from an occupancy perspective. Despite the 43-basis point decline in the past 12 months, the market’s occupancy rate of 94.7% ranks within the top ten in the country.
  • The Tukwila/Sea-Tac submarket between Seattle and Tacoma, has both the highest occupancy and highest leased percentage in the metro. Despite low traffic, the submarket is still attracting new tenants and the closing ratio is the highest among all submarkets in Seattle.
  • Properties across the metro have an average of 11 units available to rent over the next 60 days, well below the national average. ATR has improved by roughly 10% over the past year.
  • Several suburban submarkets including Des Moines/West Kent, East, and Tukwila/Sea-Tac have very tight ATR. The average property in these submarkets has fewer than five units available.
Occupancy Rate Seattle WA
Source: Radix

Net Effective Rent and Concessions

  • While occupancy, traffic and leasing have performed moderately, net effective rents have fallen meaningfully.
  • On a year-over-year basis, rents are down 3.2% across the metro, compared to a 1.5% decline nationwide. Nine submarkets have seen rents fall by 4% or more in the past year, while only two submarkets, West Seattle/Burien and Bothell/Woodinville have seen rents grow.
  • Over the past month, rents have increased in four submarkets, but as we approach the fourth quarter, we will likely see rents fall across the metro.
  • In the popular suburb of Redmond, net effective rents have fallen 6.6% in the past year. While demand is strong and both traffic and new leases signed outpace the market average, new supply is weighing down performance in the submarket.
Same Store NER and YOR NER Seattle WA
Source: Radix

Employment Trends 

  • Seattle’s job market is dominated by a few large companies in the tech, aerospace, and consumer staples industries. While the city does not have as large a tech presence as San Francisco, the headquarters of Amazon and Microsoft make Seattle one of the leading tech hubs in the world. Boeing, Starbucks, Costco, and Nordstrom are also headquartered in the MSA.
  • Despite the presence of several large companies, the job market has weakened in recent months. Seattle lost 2,900 jobs in July and 1,700 jobs in April as large tech layoffs drove the declines.
  • The metro unemployment rate of 3.4% is still below the national average, but it has risen from its recent low of 3% in April.
  • Amazon made headlines by requiring employees to return to the office, and while the experiment is yet to play out in totality, many workers who have grown accustomed to remote and hybrid work will push back and seek other opportunities. This trend is not reserved only for Amazon, but for many companies mandating in person work.
New Job Formations Seattle WA
Source: Bureau of Labor Statistics
Unemployment Rate Seattle WA
Source: Bureau of Labor Statistics

New Supply Pipeline

  • Seattle has one of the most active new supply pipelines in the nation, which is the main driving force behind the underperformance in multifamily.
  • More than 30,000 units are currently under construction across the metro, according to BuildCentral data. Those 30,000 units are spread across more than 200 properties, with the heaviest concentration in the urban core as well as the suburbs on the east side of Lake Washington. Tacoma also has an active pipeline with several projects concentrated in downtown Tacoma.
  • When considering the projects in planning stages, the pipeline grows to more than 700 projects. Many of these deals may not pencil as construction and borrowing costs have risen and operating fundamentals have fallen, but even if a percentage of deals move from planning to construction, the negative impact on apartment performance could be lengthened.
  • The economy remains strong, but the continued delivery of new supply will create significant short-term pain in the Seattle multifamily market.
Construction Pipeline Seattle WA
Source: BuildCentral

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About the author

Chris Nebenzahl
Chris Nebenzahl
Chris Nebenzahl is the Director of Economic Research at Radix, where he oversees all macroeconomic and multifamily market analysis. Chris has 15 years of multifamily experience in data analytics, research, asset management and acquisitions. Prior to his time in the multifamily industry Chris was a portfolio manager at Bank of New York, focusing in the government and commercial fixed income sectors.
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