Published September 2002

Apartment vacancy rate
hits 10-year high

By Bryan Corliss
Herald Business Writer

The number of empty apartments has doubled in Snohomish County over the past year, and now is at a 10-year high, industry watchers say.

Rents have stopped climbing and construction of new apartments and condominiums has come to a screeching halt, the observers said.

The outlook is for “zero-percent growth” for the next year or so, and it’s likely that rents will fall 4 or 5 percent during that period, said Mike Dupre, a principal in Dupre+Scott.

Tom Hoban at Coast Management agreed.

“We’re telling our clients to expect the rest of this calendar year to be flat on rents and about where we’re at now with occupancy rates,” he said. There’s been little cause for optimism in 2002.

Apartment vacancy rates countywide jumped from 4.7 percent in July 2001 to 9.2 percent in June, according to a recent report from Property Dynamics, a Woodinville firm that tracks the rental market.

In the south Everett/Paine Field/Mukilteo area, which is home to almost a third of all apartments countywide, vacancy rates hit 10.8 percent in June, the report said. That’s up from 5.7 percent last summer, and 7.2 percent in December.

In Mountlake Terrace, vacancy rates more than doubled over the past year, jumping from 4.4 to 9.5 percent. Edmonds landlords also saw their vacancies more than double, with rates going from 3.7 to 8.1 percent, according to the report.

Dupre’s most recent survey was in April. At that point, the county’s vacancy rate was 8.6 percent. But even that was the “highest rate we’ve seen in a long time, certainly in the past decade,” he said.

Rents dipped slightly over the winter, Dupre said, falling from an average of $799 in October to $793 — the first decline in years.

The causes of the market slump are no mystery. “It’s the tech wreck and the recent Boeing layoffs and the general softening of the economy,” Hoban said.

There are some veins of silver lining the storm clouds, according to Hoban.

One is the nature of the people who are loosing jobs. Tech and aerospace workers aren’t as transient as, say, construction workers, who will pack up their pink slips and move more readily, Hoban said. Instead, those laid off so far this year are staying in their apartments and looking for other jobs.

And the other piece of good news is that, this time, there isn’t a glut of new apartments on the market.

Credit all the growth management restrictions that slowed the construction of new apartments during the recent boom years, he said.

Only one new apartment project has received building permits in Snohomish County so far this year, a 284-unit complex planned for Mill Creek. By comparison, almost 1,600 new multi-family units got permits last year.

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