Queen Anne Apartment Market Good to Paragon

SEATTLE, WA-While much of the news concerning Seattle’s real estate market has been gloomy, the last two quarters of the year have been good, at least, for Paragon Real Estate Advisors. Michael McQuaid has been a partner and broker with Paragon since its formation in 1995.

He tells GlobeSt.com this small, local firm sold four apartment properties on the lower slope of Queen Ann during that period. The aggregate total sales price for the properties, sold in separate transactions, was $8.66 million.

McQuaid tells GlobeSt.com rents have not been increasing the way Seattle’s urban landlords were expecting at the beginning of 2001. The higher vacancies in the Denny Regrade area, he says, are a reflection of a temporary oversupply caused by all the new product that has come on the market there the last few years. Conversely, from McQuaid’s vantage point, the apartment markets in lower Queen Anne, Ballard, Green Lake and West Seattle are doing well.

All four Queen Anne properties just sold by Paragon received multiple offers and were under contract within a week of listing. “There haven’t been any new (apartment) buildings come on the market on the lower slope of Queen Anne in the last two or three months,” says McQuaid, adding, “But, if I had a classic brick to sell there right now, I believe it would sell as quickly and bring the same value as it would have at the start of the year.”

The apartment properties were sold by Paragon in separate transactions. The first, the 26-unit Iris at 415 W. Roy brought $2.65 million, which translates to a capitalization rate of 5.76%, a gross rent multiplier of 10.74, and $197.53 per sf. The El Freida, located at 1932 Queen Anne Ave. N, has 11 units and sold for $1.1 million (cap rate of 6.97%, $176.57 per sf). The 15-unit Queen Anne is located at 1635 Queen Anne Ave. That property fetched $1.3 million (cap rate of 6.07%, GRM 11.26, $194.03 per sf). And the 30-unit Hillcrest Manor at 21 West Lee sold for $3.61 million (cap rate of 5.75%, GRM of 11.80, $191.86 per sf).