Smart Money Sticks to Fundamentals
The Bellwether sale provides a further testament to the strength of the Seattle apartment market, with its nation-leading job growth attracting young professionals, and many multifamily investment opportunities.
SEATTLE—With a segment of investors running to the hills, the 10-year Treasury rate still requiring well over 125 basis points of expansion to hit its mean, an upward rising cost of capital and little abatement of capitalization rates, now may be the time to identify investments in Seattle, says a report by Colliers International. The brokerage firm indicates that the smart money is sticking to the fundamentals of underwriting, spotting opportunities and continuing to invest in the very strong local market.
With that investor trend in mind, the John Winthrop Apartments in the First Hill neighborhood recently sold. The sales price of the apartment building was $18.22 million, equating to $230,633 per unit and approximately $425 per net rentable square foot.
Built in 1925, the property is steeped in history, and offers red brick and terra-cotta details that emanate quintessential-Seattle architectural character. The 79-unit property is located at the nexus of Seattle’s high-demand neighborhoods and key job centers: Downtown, First Hill, South Lake Union and Capitol Hill.
The John Winthrop Apartments was previously owned and operated by Bellwether Housing, Seattle’s largest nonprofit affordable housing provider. Bellwether will utilize sale proceeds to support a campaign to create 1,000 affordable apartments in the next five years.
Dylan Simon, executive vice president, and Jerrid Anderson, vice president, of Colliers International’s Seattle multifamily team closed the sale on behalf of Bellwether Housing. The buyer was not represented by a broker.
“This sale has been an invaluable opportunity for our team to support the work of Bellwether Housing,” noted Simon. Colliers was the keynote sponsor of Bellwether’s annual Closer to Home benefit breakfast,
an event that raised $350,000 for Bellwether Housing.
“The success of this sale for Bellwether provides a further testament to the state of the Seattle apartment market,” Simon continued. “Seattle’s nation-leading job growth and high desirability among young professionals continue to offer numerous apartment investment opportunities for savvy investors.”
Nearly 6.5 million square feet of class-A office space demand currently circles the Seattle market, according to the Colliers report. This represents demand for more than 30,000 information-worker/STEM/FIRE jobs and another 120,000 workers supporting those jobs.
“Seattle continues to outshine nearly all cohort markets in every category indicative of a growing commercial real estate sector: office absorption, high-wage job growth and income growth,” Simon tells GlobeSt.com. “Two general concerns permeate several major metros in the nation including Seattle: the fact that we are late in the real estate cycle and the quantum of new apartment deliveries relative to inventory. Yet, savvy investors are looking past any noise of concern and focusing on economic fundamentals. In Seattle specifically, an outsized economic engine and resultant nearly unending demand for high-wage workers is paving the way for demand that matches supply.”
Colliers predicts that national and local real estate markets will remain dynamic into 2019. Remaining an outlier in the national market, Seattle is an investment grade market with continued opportunities for smart money, Simon observes.