It comes as no surprise that the Puget Sound area is one of the strongest multifamily markets in the country right now - it has been this way for a number of years. The question is can it continue? The editors at Multi-Family Housing News recently posed that question to Billy Pettit, President of Pillar Properties. We wanted to share Billy's thoughts on the challenges that come with operating 1,600 apartment units in such a hot market.
Here are excerpts from the article that appeared in Multi-Family Housing News:
What can you tell us about the evolution of the Seattle multifamily market?
Pettit: There is no doubt that the Seattle market has been on an unprecedented run over the last few years and all the underlying fundamentals have been working in our favor, leading to record rent growth, low vacancies and demand far outpacing the substantial amount of new supply entering the market. All that said, the new supply has absolutely introduced new challenges to the market here. We have seen downward pressure on rent growth and, for the first time in a while, we have seen the use of concessions appearing more and more in the market.
Is there any more room for multifamily expansion downtown?
Pettit: The short answer is yes, there is definitely more room for multifamily expansion in the downtown core. It really comes down to timing for us. Do I want to deliver another 2,000 units in the next two years? No. Do I want to deliver another 2,000 units over the next five years? More likely. Do I want to deliver another 2,000 units over the next 10 years? Absolutely.
Rents in Seattle have been above the national average for the past five years. What sustains this growth?
Pettit: What sustains the growth is that Seattle is a very attractive place, and it’s a hot city right now. People want to live here, and unlike in the past, more people are driven towards living in the downtown core. We are also lucky to be bolstered by strong job growth with higher than average wages which drives the demand.
Most of the units under construction are high end. How do you expect this to influence Seattle’s rental market?
Pettit: It’s not about targeting high-income residents, it’s about supply matching up with demand. Market fundamentals are market fundamentals and we have the luxury of extremely strong fundamentals that are driving rents. Demand has largely outpaced supply over the last three to five years. Going forward, I do expect to see some softening in the market as more supply will be delivered this year and the next one.
Tell us more about your plans at Pillar Properties going forward. Is the company considering entering other markets, outside the Puget Sound area?
Pettit: Our core strategy remains the same as we continue to look for attractive opportunities throughout the Puget Sound region. Over time we may consider exploring new markets in other areas, but at this point we remain committed to our strategy.
You can read the entire article HERE.