The multifamily industry has experienced a lot of changes on a national scale over the past year. Catapulted by growth in the tech industry, jobs markets have been popping up across the country in places like Atlanta, Dallas, Phoenix, and Seattle. While the country as a whole has seen a number of influencing factors in multifamily, the West Coast landscape has especially been affected by population shifts and economic changes.
Here are some of the top trends that are influencing the multifamily market in the major West Coast cities:
1. Continued demand for housing in the Bay Area
Vacancies are continuing to drop in cities across the San Francisco Bay Area as the demand for housing exceeds the number of units available. Rental growth has risen to nearly 11.5 percent over the past year, with the counties of Alameda and San Mateo leading the growth. Along with the high rental rates in San Francisco, cities in the South Bay are also becoming increasingly more expensive which has created a higher demand for housing in Oakland metro where rent is cheaper and residents can still commute to their jobs.
2. San Diego’s multitenant market is booming
The multifamily market in San Diego is proving to be a lucrative investment as military jobs and growth in biotech and manufacturing is attracting residents from across the country. The city is experiencing a surge in multifamily property as the construction of nearly 12,000 multifamily units broke ground in the first quarter of 2017. Furthermore, all of the city’s multifamily development is expected to push city’s vacancy rate up to around 4 percent, with the downtown area being affected the most by vacancies. Even though these units are expected to be filled, the increase of vacancies may keep rental rates stable for the time being.
3. Seattle’s market is paving the way
Seattle was one of the cities that felt the brunt of the 2008 recession, and by the end of 2009, the city’s vacancies were more than seven percent. Fortunately, Seattle managed to turn their multifamily market around and now boasts some of the best vacancy rates in the region, with less than 3.5 percent of the multifamily properties being without a tenant. Some of this success is due to economic growth brought on by Amazon and a surge in the tech industry, but analysts also attribute the city’s thriving multi-tenant market to a shift in lifestyle choices. More people in Seattle are moving around with their jobs and don’t want to be locked into living in one place.
4. Portland’s economy is picking back up
With unemployment rates on the decline and wage growth looking positive, the multifamily market in Portland is expected to complete 2017 on an upward trajectory. Development in the multifamily market has been active in the first quarter with ground breaking for nearly 9,000 units. Vacancy rates are expected to reach a ten-year high in the end of 2017, pushing beyond 7 percent as construction for more than 20,000 units goes underway.