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Seattle-Tacoma metro area building new apartments at a higher rate than NYC

Although apartment construction has slowed nationally two years in a row, one interesting data point emerged recently.

More apartments are either under construction or in the pipeline from Tacoma to Seattle than in all of New York’s metro area.

That’s according to data-and-analytics firm Yardi Matrix, via a recent RentCafe analysis of new multifamily unit construction nationwide.

Despite all the building, the number of affordable units being created remains an issue.

The Seattle-Tacoma-Bellevue metro expects 13,682 units to be added this year, compared with the New York metro area, at 13,418, according to the RentCafe analysis.

That’s a 17 percent increase for the Seattle metro over last year.

Aside from Seattle-Tacoma metro, another area is developing more multifamily than New York and Seattle, according to the data, and that’s Dallas-Fort Worth, which expects 22,196 new units this year.

In the Seattle-Tacoma metro area, Seattle is far and away the leading supplier of new apartments, at a rate of nearly 6,900 new units for 2019. Bellevue had the second leading total at 1,766.

Tacoma was listed in the report at 549 units projected for completion this year.

An advisory released by RCLCO Real Estate Advisors, based in Washington, D.C., noted that millenials remain the largest segment of renters nationwide and that they “continue to have a lower homeownership rate at this point in their lives than earlier generations.”

“While surveys show that 75 percent would like to become homeowners at some point, overall the growth in the homeownership rate is stagnant, and it is unlikely to return soon to the levels seen during the last housing boom,” the report noted.

Figures from the city of Tacoma show that since 2016, 4,512 total multifamily units have been planned, are in permitting or are now under construction to date.

Of projects that have come through the city’s Multifamily Property Tax exemption program, not including nonprofit developers or development outside of mixed-use centers, 1,293 new units have been completed since 2016, including 54 affordable units.

Figures provided from Pierce County show that from 2016 to 2018, 1,667 multifamily units have been built outside Tacoma, with 488 built or projected for 2019.

As for affordable units, 652 have been built from 2016 to today via the county’s affordable housing incentives.

Tacoma Housing Authority estimates that beyond the already existing housing, 22,297 additional affordable units are needed to serve the city now, and an additional 21,745 by 2040.

New apartment construction had been on the rise nationwide since 2011, peaking in 2017, with 331,765 units. That number has been in steady decline since then.

RCLCO doesn’t see conditions changing much for millenials anytime soon:

It is likely that more of the millennial generation will remain renters longer than earlier generations, and some may not move over the for-sale side of the market for a long time. If and when the next recession comes, it is likely to result in higher levels of unemployment and lower wage growth, which will impact the youngest and least experienced workers the greatest, potentially further slowing their transition to the for-sale market.”

In the report cited by RentCafe, Seattle’s concentration of new apartment growth was closely matched by Miami, which ranked fourth on the list in number of new units. Austin, Atlanta, Los Angeles, Phoenix, Washington, D.C. and Houston rounded out the top 10 nationwide.

Portland, Oregon, ranked at the bottom of the list of RentCafe’s 20 cities, with a mere 4,448 new units to be added to the city’s supply for 2019. Lack of available land and regulation restrictions are listed as reasons for its lower number.

Portland may soon not be alone in keeping those numbers low.

According to RCLCO’s report: “Perhaps as a result of recession concerns, given the uncertainties resulting from the U.S. trade war with China, apartment owners and operators may be more focused on driving occupancies than rents, to better position themselves for the eventual downturn.”

The RentCafe report is at www.rentcafe.com/blog/rental-market/apartment-construction-2019/

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