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Wed April 20, 2011
Race to build apartments could be good for renters and construction workers
Some industries are slowly creating jobs again, but construction isn’t really one of them. The state lost about 2,400 construction jobs just last month, according to state employment economists. But in Seattle, hope could be on the horizon.
The clanking and pounding sounds of construction are starting to return to the city. Some builders who work on high-rise projects have been able to dust off their nail guns, thanks to a growing demand for apartments.
Since last year, the rental market has shifted from landlords offering gift cards and TVs to snag tenants, to one with few vacancies and increasing rents.
Matthew Gardner, a land use and real estate economist at Gardner Economics, says everyone from young professionals to baby boomers have shied away from homeownership.
“People believe that if home prices are not going to go up in the manner they had been doing, then perhaps I don’t actually need to own a house," he says. "And housing in the city of Seattle is still expensive to buy, and not so much as to being able to rent.”
He says people are also more interested in apartments now because they're designed with higher quality finishes and located close to work. Foreclosures have also sent more people into the rental market.
Tenants aren't the only ones interested in apartments right now. Developers have noticed the rising demand and are rushing to build enough units to satisfy it.
“It’s one of the few land uses now that makes sense if you’re a developer," Gardner says. "We’re actually seeing a lot of commercial developers who traditionally build offices, now are looking to build apartments. Are they going to a build spec office right now? No, they’re not. Are you going to build a condo? No, you’re not.
He says nearly 13,000 new units could hit the Seattle market in the next four years. He expects most of them to go up in neighborhoods already full of apartments, such as Belltown, South Lake Union and the downtown retail district.
The local trade association says that could help put about about 20-percent of residential builders back to work. It could also be good for renters. If supply outstrips demand, they'll have more room to bargain and possibly score some free goodies again.
Real Estate Commentary