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The latest report from Kidder Mathews reveals that rents in the Puget Sound area have slightly increased compared to last year, indicating a stabilization of the apartment market in Seattle. The vacancy rates remain steady at around 7%, and cap rates are settling in the low-to-mid 5% range for most submarkets.
In Q3, there was a cautious return of investors to the market with sales reaching $983 million across 60 transactions, marking an increase of 83% and 46% respectively from last year. The average cap rate remained unchanged at 5.1%, but showed a decrease of 30 basis points from the previous quarter.
Due to higher interest rates and construction costs slowing down new developments, it is expected that vacancy will decline as current supply is absorbed. Most submarkets in Puget Sound experienced modest rental rate growth averaging around just one percent year-over-year with gradual increases projected for future periods.
According to Dylan Simon, “As we head into Q4, it’s evident that over summer there has been significant progress made by both rental rates holding steady and investor activity picking up.”
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