REGIONAL MARKETS: WEST
APARTMENT FINANCE TODAY • APRIL 2008
West At-A-Glance
SEATTLE
Strong economic growth is driving
multifamily builders, who are expected
to bring about 3,500 apartments
to the Seattle region this year, up from
2,500 units in 2007, according to
Marcus & Millichap Real Estate
Investment Services. In addition, asking
rents are expected to rise 6.2 percent
to $1,072 per month, while effective
rents advance 6 percent to $1,009
per month, said the firm. One of the
notable new apartment communities
to open in the region is Avalon
Meydenbauer in Bellevue. The
368-unit development includes 19,000
square feet of ground floor retail space
and is the first project with housing
over a grocery store in the area. It’s
AvalonBay Communities, Inc.’s 13th
community in the Seattle area, with
more on the way. Avalon Towers
Bellevue, a high-rise, mixed-use project
in downtown Bellevue, is scheduled to
begin construction this summer, and
the final phase of Avalon Juanita
Village in Kirkland begins construction
this spring. In addition, the company
plans to start two projects in Seattle in
2009.
PORTLAND, ORE..
Eyes are on Gresham, Ore., where the
City Council recently voted to establish a
mandatory rental housing inspection
program. Deteriorating properties have
been a problem in the community.
Landlords have urged the city to move
slowly and carefully in implementing the
program. In nearby Portland, apartment
owners will see rents advance 4 percent
to 6 percent this year, estimated Greg
Frick, a partner at Hagerman Frick
O’Brien, LLC, a Portland-based real
estate investment firm. The improving
multifamily market will also see vacancy
rates drop to about 3.5 percent from the
sub-5 percent range, he said. Frick attributes
the performance to good fundamentals
and a modest amount of new
construction.
LOS ANGELES
The big Grand Avenue
development in downtown
Los Angeles is moving
forward and has a new
investor. Istithmar, a fund
controlled by the royal family
of Dubai, is on tap to invest
in the massive development
designed by architect Frank
Gehry since the California
Public Employees’
Retirement System has
pulled out. The $1 billion first
phase includes 390 marketrate
condos, 98 affordable
rental units, a 295-room
Mandarin Oriental hotel, and
retail space. Related Cos. is
the developer.
INLAND EMPIRE, CALIF.
This area has been hard hit by foreclosures.
The Riverside/San Bernardino
metro had the fourth-highest foreclosure
rate in the nation in 2007, according to
RealtyTrac, an online marketplace for foreclosure
properties. The mortgage problems
are leading to a number of homeowners
returning to the rental market.
However, there is a potential shadow market
from an overbuilt single-family sector.
Still, some industry experts remain optimistic.
New apartment supply in this highflying
market is expected to be well below
its average this year. The market has been
producing 4,000 to 5,000 units in recent
years, but scheduled completions will drop
to about 1,170 units in 2008, estimated
Greg Willett, vice president of research
and analysis at M/PF YieldStar. His firm
expects occupancy rates to be slightly
better, increasing to 96 percent or higher
by the end of the year.
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