The distinction between Tacoma and Seattle is no more clear than in the respective profiles of their apartment markets. While Seattle’s explodes with new development, Tacoma’s 36,000-unit apartment market continues to tread a cautious path, adding few projects selectively. Accordingly, two of the five current and market-rate apartment projects recently completed or under construction are located at Point Ruston, the metro area’s major redevelopment zone (see Special
Real Estate Factors). The Commencement, a 62-unit redevelopment of an unfinished luxury condo project run aground by the recession, completed construction here in September; and 217 units (173 market-rate apartments and 44 condos) are under way in the Copperline Apartments, its completion date unspecified. The 178-unit Dupont Station-TRAX Dupont TOD is under way in Dupont for completion this November. Rush Commercial’s two-tower, 177-unit Tacoma Mall Apartments broke ground in May near Tacoma Mall. The News Tribune (Tacoma) has described the development as “the first major apartment project built in the Tacoma area since the recession began.” Reis cites a November 2013 completion date. In downtown Tacoma, meanwhile, the Jackson Building has been “reborn” as the Vue 25 apartment tower. Also stalled earlier by the downturn, the project was completed in May.
Conditions seem clearly supportive of the measured new activity. The 163 market-rate units that completed construction during the first half of the year were met by 310 units of positive net absorption and a decline in the vacancy rate to just 4.6%, a year-over-year decline on the order of 80 basis points and the lowest rate recorded here since 2001. The performance of rents, always a key element in development feasibility, has been substantially positive since 2010. At $785 and $765 per month, the second quarter asking and effective averages were up 0.7% and 0.9% for the quarter and were up 1.4% and 2.0% year-to-date. According to the firm’s First Glance report of its third quarter data, vacancy increased to 4.7% during the period amid modest negative net absorption. The average asking rent, however, added $6 during the quarter.
Reis expects total 2012 net absorption to run at nearly twice the year’s volume of new supply. Vacancy is forecast to end the year at 4.3%. And gains of 3.7% and 4.4% are projected for the mean asking and effective rents for the year. A relative balance of supply and demand in the period following should hold the vacancy rate to just above 4.0%. Rent growth should remain strong.