SEATTLE – For years, the Seattle rental market was so heated that renters would constantly monitor online listings and quickly show up to available apartments with checkbooks and references in hand. For many apartments, they’d have to fill out applications on the spot and cross their fingers.
Those days are over. A glut of new apartments washing over the city has quickly turned the tables as vacancy rates hit their highest levels since the recession, led by downtown Seattle, where one-fourth of all apartments are now sitting empty.
Landlords who are increasingly hard-pressed to fill their vacant apartments are offering deals like a free month’s rent, gift cards and even free electronics.
A recent review of online apartment ads found 157 different apartment buildings in the city of Seattle offering significant deals for anyone willing to sign a long-term lease – and that was just for public ads posted in one 24-hour span. There were dozens more specials on offer in the suburbs.
Most of the freebies were in newer buildings that must fill up dozens or even hundreds of new apartments at the same time – including some buildings that haven’t even opened yet – but there were plenty of handouts at older buildings, as well.
The most common “concession,” as such incentives are known in the industry, was free rent – offered at 112 different buildings in Seattle. The average was a free month, but the offers ranged from two weeks to two months.
A free month works out to an 8.3 percent discount over the course of a year. Of course, the landlords are hoping to get you in the door and then re-sign you for future years without any specials (they might even drive up the rent a bit after your lease expires to make up for that initial move-in deal, knowing it’s costly and time-consuming for people to move.)
Another common item was free parking for several months, or in some cases the full term of the lease. Others offered gift cards that went as high as $2,500. Some promised free Amazon Echos. There were memberships to outside gyms given away, and free Uber credits.
Out of about a dozen renters interviewed for this story who have gone apartment hunting in the city recently, all but two said they’ve noticed much less competition from fellow renters and more aggressive tactics from landlords. Several said landlords were open about some units being vacant for months, and leasing agents were sometimes willing to negotiate lease terms.
Jed Dolbeer moved last month and looked at five new apartment buildings in the Ballard-Fremont area.
“They all said, ‘If you move in today, your first month will be free, or your deposit will be free.’ They all brought that up without me even asking,” said Dolbeer, who wound up taking a spot in a place that gave him a free month.
Phil Patton said he had at least a couple of days to make a decision on any apartment he looked at during his recent search – unlike a year ago, when he felt like he had to make the call on the spot during the showing. He noticed this time that some of the newer buildings seemed to have a standing list of openings for months, which he could use as a fallback option if he couldn’t get his desired place in an older complex.
Or, as Gabriel Mathews put it: It was the “easiest (apartment) hunt I’ve ever had in Seattle by 10 miles.” He and his girlfriend found a place in the Central District after only a few days.
In the first quarter of the year, the average concession from landlords across the metro area was worth $360 over a full year, according to Apartment Insights/RealData. Just a year ago, apartments were offering a paltry $24 in concessions over a yearlong lease.
This is all happening because of the region’s record apartment-construction boom. Overall, the city is getting more new units this half-decade than in the previous 50 years combined, and the peak of the openings is happening right now.
Even in 2016, the Seattle area was already building the most new apartments per capita of any big metropolitan area in the country, according to a study by ApartmentList – and construction has sped up since then.
The apartment openings have finally begun to outpace Seattle’s nation-leading population growth. Rental vacancy rates have grown, particularly in areas where lots of new apartments are going – namely, in and around downtown.
At newly opened properties, 40 percent of all brand-new units across the region are sitting empty – that works out to about 5,000 units that have never been lived in, according to Apartment Insights/RealData. About 10,000 additional units across King and Snohomish counties are sitting empty at buildings that aren’t brand new, largely because of regular turnover.
When including apartments of all ages, about 7.5 percent are empty across the greater Seattle area – the most since 2010. A year ago, 6 percent were empty.
But the regional averages mask the extremes in neighborhoods getting the most apartments: 26 percent of all apartments in the core of downtown Seattle right now are empty, up from just 5 percent a year earlier (the number is skewed by new buildings that take a while to lease up, though vacancy rates at older buildings downtown are also rising).
In South Lake Union – where Amazon’s growth spurt has led to a doubling of the neighborhood’s apartment stock in just four years – 14 percent of all units are vacant. In the southern part of the city, 11 percent are empty. About 9 percent are vacant in Queen Anne/Magnolia, First Hill and Fremont/Wallingford.
Apartment construction is set to continue at a similar pace through at least 2019, so the trend will likely continue.
This is all translating to somewhat better news for tenants on the rents they pay.
Seattle was among the top six metro areas in the country for rent growth every year from 2015 to 2017, according to ApartmentList.
But this year? It’s 22nd of out 25, and rents here have actually dropped slightly compared with the record highs reached last summer.
Of course, this doesn’t mean Seattle is suddenly cheap – the typical two-bedroom apartment is still above $2,000 a month. And the slowdown in the rental market follows seven years of rent increases that totaled nearly 60 percent, among the biggest increases in the country. It’s just that things are no longer getting any worse, which, at this point, is what constitutes a victory for renters.
And in most cases, it’s still cheaper to get an older building offering no incentives than to rent a more expensive, newer place offering freebies.
“Even after taking things such as free rent and other offerings into account, often times it’s still not worth it,” said Keith Porter-Davis, who went apartment hunting in the city recently but wasn’t swayed by the freebies – even one that offered a free month’s rent plus a $2,500 gift card. He “did a little math and found that at most of the places where those types of promotions are, it’s still not worth it because the rent is bumped up to cover it.”
All of these trends for renters – the drop in competition, the extra time to decide on a place, the flatlining prices – serve as a stark contrast to the for-sale market, where buyers are being forced to bid on homes faster than ever as home prices continue to soar. The number of single-family homes getting built across the metro area is up about 9 percent over the year prior, but is still well below the historical average (a national trend), while condo construction here also remains weak.
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