SEATTLE, WA-Earlier this year, the Belltown apartment market was the place to put your investment dollars. Spurred by high rents and high demand, new projects were underway in every nook and cranny of the downtown neighborhood.

The newest kid to arrive on the block is the art-inspired Klee Lofts of developer Val Thomas Inc. Though an attractive property with attractive amenities, Morris Groberman of Colliers International says Klee’s opening comes at a tough time for the urban apartment market–but that could change by next Spring.

Helen Wattley-Ames, director of property management for Market Management Inc., is in charge of leasing up the 140 lofts and penthouses, as well as 31,500 sf of retail space of Klee Lofts–a mixed-use complex located at 2717 Western Ave. She tells GlobeSt that as of today the residential units are 12% leased, and the first tenants moved in just last week.

Asking rent for the lofts, which average 789 sf, is $1.94/sf—with 1,360/sf-average two-story penthouses going for $2.80/sf. This translates to monthly rents between $1,300 and $4,000. Wattley-Ames says the only concession being offered by the developer is the one originally planned when pre-leasing began mid-August—one month’s free rent with a 14-month lease.

The retail section of the artsy building has yet to ink a lease—though Wattley-Ames says there is a high degree of interest and she is optimistic tenants will be moving to the signing table soon. Asking retail rents here, says Wattley-Ames, “…depend on whether the tenant is looking for a full-service or triple-net lease, with triple-nets running in the low $20′s.”

Morris H. Groberman, a senior VP and apartment specialist with the Seattle office of Colliers International, says the urban market here is “very competitive and tough now.” He tells GlobeSt., “We’ve noticed fewer tenants moving to this area (Seattle) like they once were. There are also (since September 11) fewer people moving just for the sake of moving.”

Groberman attributes some of the tenant shortage to the large amount of apartment product that has come on line here the past year or two. And, he says much of the slowdown can be explained by the time of year—with November through January being notoriously short on new tenants.

The good news says Groberman, there appears to be a great deal of pent-up demand—demand which could very well start moving in February, March and April, typically highly-active leasing months.

Current market influences, of course, include the recessionary economy and September 11. But, comparing recessions of the 1980′s and 1990′s, Groberman is more optimistic about the present. “The underlying economics behind this recession are better,” he states, continuing, “Interest rates are at their lowest in about 35 years, and there are defense-related companies that are still creating jobs.”

If conditions remain on their current track, Groberman says he thinks the apartment market will hit bottom between now and January and then will begin to rebound in the spring. “Of course,” he cautions, “If there is another major terrorist attack, all bets are off.”

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