Report: Systemic Changes to Seattle Multifamily Market Post-Pandemic Will be Few

 

February 19, 2021 (Seattle, WA)

2020 saw Seattle investors and commercial real estate experts put the brakes on activity, as predicting how the market would evolve seemed like an insurmountable task. Movement in the market remained limited while speculation around emerging trends such as the impact of work from home and the popularity of suburban assets continued to swirl. However, a recent report released by local firm Lee & Associates predicts that multifamily fundamentals in particularly have remained relatively stable. Looking ahead, Lee & Associates believes that the impacts of 2020 are unlikely to morph into the long-term trends that many thought would flip the commercial real estate industry on its head.

Sales volume for multifamily properties in 2020 came in at just 31 percent of the volume of 2019. Just about $2.6 billion in deals closed last year, while $8.4 billion in multifamily transactions were solidified in 2019.

“I think that buyers waited all year for there to be this big price reduction and blood in the streets, and that was not what we saw,” explained Lee & Associates Principal Candice Chevaillier. “What we saw was a big pause and a bid-ask gap…So from that standpoint, I think that the seller community kind of froze and really focused on their operations…And on the buyers’ side, there was an expectation that prices would immediately come down because the sky was falling.”

However, fundamentals held largely steady. Market vacancy ticked up slightly from four percent to 4.4 percent across the Tri County area, while rates dipped 4.8 percent. In Snohomish and Pierce Counties, rents even increased, rising by one percent and 2.4 percent, respectively. As 2020 and the pandemic wore on, the hope for a vaccine and a return to normalcy expectations about what would happen within the market moderated.

“I think especially with the advent of the vaccine and news of the vaccine, the perception of values coming down in any kind of significant manner really evaporated,” added Chevaillier.