What’s up with Tacoma apartment building? Rents on rise as city mulls new housing options
The apartment-building boom might be slightly cooling in Tacoma as other areas take off and the city pushes forward with plans to make more types of housing possible.
Three multifamily property tax exemption proposals have come before the City Council so far this year with four more “waiting to go,” according to city media representative Maria Lee, for a total of 364 units to be proposed so far this year.
If/when those waiting in the wings come to council, that would be roughly on pace with projects approved by midyear last year totaling just over 300 units.
Meanwhile, Lee noted that Tacoma expects more than 1,000 MFTE units from previous approvals to be completed this year.
Beyond Tacoma’s city limits, University Place/Fircrest have seen construction of hundreds of new apartments, while the city of Lakewood recently announced a developer’s plan for hundreds of new apartments coming to Lakewood Towne Center area.
With incredible progress also has come spectacular flops.
Funding problems last year stalled Tacoma Trax and continued to stall Tacoma Town Center, while Point Ruston is in the middle of foreclosure proceedings on parcels that include yet-to-be developed multifamily-unit buildings.
Tacoma-based builder Harbor Custom Development, which in recent years pivoted to multifamily apartment development in the area, declared bankruptcy in December 2023.
Add to all that, construction start forecasts as a whole for the Puget Sound region haven’t been universally upbeat.
In a report accompanying the recent Horizons Economic Forecast for Pierce County at the Greater Tacoma Convention Center, Neal Johnson, principal of Sound Resource Economics, wrote, “The higher cost for borrowing has also put new building permits for residential construction on a downward trend. This will negatively impact building materials sales and the construction labor market for the next one to two years.”
He noted at the breakfast on Jan. 31, “Going forward, construction is going to take a hit,” in terms of permitting and employment.
Apartment List, in its March report, noted that in Tacoma “the overall median rent in the city stands at $1,600, after rising 0.6% last month. Prices remain down 0.5% year-over-year.”
It added, “This is a faster rate of growth compared to what the city was experiencing at this point last year: from January to February 2023 rents had decreased 0.1%.”
It also noted, “The median rent in Tacoma is 16.2% higher than the national, and is similar to the prices you would find in Anchorage, ($1,615) and Tampa, Florida ($1,587).”
Rent rates seem on track to continue to rise as demand goes up for what’s available.
In their first-quarter report for 2024 for Kidder Mathews, Dylan Simon and JD Fuller wrote, “The recent rise in vacancy should come down throughout the next year as continued population growth fails to be met with additional supply.”
Tacoma, meanwhile, continues its multi-year overhaul of development regulations to encourage more types of construction to meet a broader range of income levels. It is currently introducing residents to proposals in Phase 2 of its Home in Tacoma, a part of the city’s broader Affordable Action Strategy, with a public hearing set for March 6.
Phase 2 focuses on the city’s overhaul of zoning so that more than just single-family residential or multi-story studio apartment buildings dominate the development landscape.
“New Urban Residential (UR) zones will support ‘middle housing,’ establishing two low-scale zones (UR-1 & UR-2) and one mid-scale zone (UR-3). Scale and density increase nearer to walkable features,” according to the city’s proposed plans, now in a public comment period.
New types proposed include rowhouses; small multiplexes, larger than a duplex; backyard buildings which could include garage, courtyard housing, defined as a “group of detached or attached units arranged around a shared courtyard which is a shared social space taking the place of private back yards.”
“We’re not trying to invent something new — we’re really just trying to allow what are traditional housing types,” senior planner Elliott Barnett said at an informational session Feb. 20.
The plans also come with reduced parking requirements to make way for more housing. The city hopes to take final action in July with council approving the plan.
More information can be found on the city’s Home in Tacoma information website.
Home in Tacoma public hearing
March 6, 5:30 p.m. in person at City Council Chambers, 747 Market St., Tacoma.
On Zoom at www.zoom.us/j/84416624153
Dial In: +1 253 215 8782; Webinar ID: 844 1662 4153
This story was originally published March 6, 2024 at 5:45 AM.
