Investors Clamor for King Co. Workforce Housing
Investors have shown strong interest in Federal Way and the surrounding South King County locations, not only driven by the growth of the Seattle core but also Kent Valley, the Port of Seattle and Tacoma.
FEDERAL WAY, WA—Market fundamentals here support workforce housing, which is evident in the recent $71.5 million sale of the MIRO at Dash Point Apartments. Both parties were California based as the seller of the 386-unit multifamily garden-style property was San Francisco-based FPA MultiFamily. The buyer was San Diego-based RedHill Realty Investors.
Berkadia senior managing director Kenny Dudunakis along with senior directors David Sorensen and Ben Johnson, all of the firm’s Seattle office completed the sale on behalf of the seller.
“Investors have shown strong interest in Federal Way and the surrounding South King County locations,” Ben Johnson, Berkadia senior director, tells GlobeSt.com. “The attraction is not only driven by the growth of the Seattle core but also Kent Valley and both the Port of Seattle and Tacoma. Our market displays some of the strongest fundamentals in the country that support workforce housing.”
Located at 31004 19th Pl. SW, the property features one-, two- and three-bedroom floorplans with hardwood floors, personal balconies or patios, and in-unit washers and dryers. Community amenities include a fitness center, a basketball court, a dog park, a playground and a pool with a lounge. The property is located just minutes from downtown Tacoma and the Puget Sound, and has access to Dash Point State Park and Interstate 5.
Multifamily developers will show continued faith in the Seattle-Tacoma apartment market as deliveries rise this year, according to a 2019 forecast report by Berkadia. Construction is scheduled to complete on approximately 14,000 units by year-end, up more than a third from 2018 additions.
While development will remain concentrated around the downtown area, nearly 2,000 units are scheduled in the Redmond submarket. Helping drive housing demand is Microsoft’s expanding campus there. The project is expected to be completed in 2022 and will accommodate 8,000 additional employees.
In the near term, growth by Amazon.com Inc. will move worker headcounts to more than 75,000 in the Puget Sound area this year. Overall, employment is forecast to expand 1.6% by year end. While growth will be down from 2018, the local expansion will exceed the 1.3% national increase at the same time.
These rising payrolls will contribute to an increase in rental activity. However, annual leasing activity is expected to trail the influx of new inventory. Average occupancy is forecast to slip 10 basis points year- over-year to 95% in the fourth quarter. Apartment operators will respond in kind by tapering effective rent growth. Monthly effective rent is forecast to advance 1.6% to $1,679 by year end, according to the report.