EVERETT, WA-Over the course of the next 18 months or so, Saint Newton advises that airlines will head toward “the bottom of the bottom” of their industry. All the while, stair-stepped Boeing layoffs will drive up apartment vacancies here. The good news, says the broker and principal with Seattle-based Paragon Real Estate Advisors, is that after mid-2003 airlines should begin replacing their aging fleets, Boeing (Everett’s largest employer) will begin re-hires, and the apartment market will mount firmly back into the saddle.

“Boeing has a legit backorder of planes that need to be replaced because they’re getting old. It’s unavoidable,” Newton tells GlobeSt.com, explaining, “The reason they’re not selling today is because airlines don’t have the cash.”

Just how much might rates drop over the next 18 months? “By two or three points, if I had to guess,” says Newton, remarking that occupancies have been quite high by industry standards. In a Paragon report released yesterday, citing research by Dupre+Scott, vacancies in Central Everett averaged 3.5% over the last 5 years, with South Everett penciling out at 5.05% during the same period. The most recent study gauges Fall 2001 vacancies in these markets at 5.5% and 6.45% respectively.

One question that remains is whether absorption will be strong enough through the next six quarters to handle inventory increases brought of new construction. Underlying that is the uncertainty of and what portion of developments currently proposed for Everett will be moved forward, delayed or dropped entirely.

Paragon’s fourth-quarter report says Everett (with 16,842 units as of September) was delivered 289 new units in 2001, a 1.75%% increase—much lower than the 4.91% increase from 812 coming on line the year before. An additional 723 units are now under construction, with 2002 delivery targets. Another 401 units are on the boards.

Commenting on the strengths of the apartment market here, Newton says, ” Rents are a bunch lower than further south [in Seattle], and people creep north looking for more affordable apartments.”

Daily, commuter-rail service from Everett to downtown Seattle is already available, and a new transportation hub is under construction. The availability of solid public transportation will assist in sustaining the long-term health of this market—the prospects for which Newton says are bright.

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