Markets Summary
Julie Cumings December 9th, 2009
Residential Market – Overall, the residential market is still struggling, although there were several positive numbers in sales prices. However, home prices are still declining, but the percentage of decline is getting smaller. Foreclosures are still rising. With over 40,000 properties available for sale in Western Washington, during 3rd Quarter 2009, only about 12.8 percent of these properties were sold. The greatest number of sales occurred in the $250,000 to $350,000 range.
Apartment Market – Only 25 sales have occurred during the first three quarters of 2009 for apartments larger than 20 units. In fact, there were no sales occurring in the third quarter. Rental increases have slowed, but capitalization rates are rising and gross rent multipliers are going down. All of the sales that occurred are for apartments more than 15 years old. However, Snohomish County 2-4 showed a positive increase in price per unit. Both King and Pierce Counties had increases during third quarter, while Snohomish had no sales.
Retail Market – The retail market is showing signs of stress. Almost every subsection of the retail market in every area has negative absorption. Capitalization rates are increasing. Lease rates are continuing to decline.
Industrial Market – The flex market has remained a problem throughout the last few years with high vacancy rates and low lease rates. Vacancy rates have increased in all areas and lease rates have fallen. Of concern is the very large negative absorption rate for the Southend and Tacoma.
Office Market – This market is showing marked increases in vacancy rates due to the amount of new inventory coming into the market, particularly in the downtown Seattle area. Much of the space is not preleased. Consequently, lease rates are decreasing in most areas for all office classes. Capitalization rates are also increasing.
Recommendations – It is advised that any property type be approached with caution. Apartment market is guarded. As foreclosures increase, we would expect that people will need to turn to rentals. Thus, demand should increase. The retail market is showing signs of strain, with declines in lease rates. Office and industrial is not a good time to invest in unless it’s for owner user purposes. Then deals can be found for purchasers to avoid paying monthly rent.
