Research & Forecast Report

RESEARCH & FORECAST REPORT PUGET SOUND REGION Q2 2020 | MULTIFAMILY

YOY YOY YOY YOY Occupancy Rate Number of Sales New Supply (Units) Rental Rate (PSF) 94.1% FORECAST 3 FORECAST 1,410 FORECAST $2.09 FORECAST

Overview Key Takeaways

Looking solely at occupancy and rental rates, the Puget Sound multifamily · Rents grew 60 basis points year over year in the Puget Sound, largely market appears to be weathering the current pandemic relatively well. fueled by substantial growth (3.5%) in Pierce County. Rents have grown in every county and asset class, with the lone exception · Though occupancy dropped 20 basis points YoY in the Puget Sound, King of 1-bedroom units in King County, which stayed flat. As a whole, the County (accounting for 70% of tracked inventory) grew 10 basis points. Puget Sound saw a 20-basis point reduction in occupancy, though · Total investment volume by dollar amount has dropped 188% year over occupancy year over year in King County (where 70% of inventory exists) year in the Puget Sound. still grew by 10 basis points. Investment sales declined significantly quarter over quarter and year over year (down 33% and 367%, · The average cap rate for the Puget Sound dropped slightly, from 4.6 to respectively), given the new excise tax and flood of listings pulled off the 4.4% quarter over quarter. market. However, the Kiara trading hands for $320M ($700K/unit)—which · Deliveries dropped 34% quarter over quarter, though the under- was the quarter’s 5th largest multifamily sale nationally—signaled that construction pipeline is mostly flat. institutional interest in the Puget Sound region remains strong.

Notable Deliveries

Parkside - Phase II SEATTLE EASTSIDE

BLU Jackson

Building Name Building Address # Units City Submarket Developer BLU 75 102nd Ave NE 136 Bellevue Downtown Bellevue Continental Properties LLC Jackson 2401 S Jackson St 532 Seattle Atlantic MF Vulcan Inc. Parkside - Phase II 15551 NE Turing St 664 Redmond Overlake MF Lincoln Property Trust

Colliers International | Puget Sound Q2 2020 Multifamily Report RESEARCH & FORECAST REPORT PUGET SOUND REGION | Q2 2020 | MULTIFAMILY

Investment Sales Activity*

Investment Volume by Submarket (2015 to present) Investment Volume

Investment volume is down and cap rates are up over the quarter, but both investment volume and cap rates are down over the year, since Q2 2019. Cap rates on the Eastside and in Pierce County were higher than the region overall, but as the Eastside continues to see population growth in both e-commerce and tech demographics, we expect cap rates will compress. In Seattle, however, they have slowly started to decompress.

Deal Volume by Submarket (2015 to present) Deal Volume by Quarter

As depicted above, sales volume fell substantially (33% quarter over quarter and 367% year over year). The current pandemic may have only heightened what was expected, as the newly introduced graduated excise tax pushed many deals from 2020 forward to the latter quarters of 2019.

Pricing by Submarket (2015 to present) PricingPricing by Quarter $450,000 600

500

$300,000 400

300 Average Price per Unit $150,000 200 1234123412341234123412 Average Price per Squre Foot 2015 2016 2017 2018 2019 2020

Price per Unit Price per SF

Price per unit increased 9.4% quarter over quarter, and 36% year over year. Price per square foot decreased 12% quarter over quarter and increased 22% year over year owing largely to the profile of data rather than any fundamental change in value. Overall, the trend is toward dependable assets with strong collections that provides investors confidence while the market stabilizes.

*Note: Only multifamily deals with 50+ units were analyzed for the graphs on this page. Partial interest sales were omitted.

Colliers International | Puget Sound Q2 2020 Multifamily Report RESEARCH & FORECAST REPORT PUGET SOUND REGION | Q2 2020 | MULTIFAMILY

Development Pipeline

Onni SLU 1200 Stewart 1901 Minor 800 Stewart 1916 Boren 8th & Pine SEATTLE

2020 2021 2022 2023 2024 2025 EASTSIDE AMLI Bellevue 10 Bellevue Square Four 106 Burnstead TOD Spring District Residential Towers

Notable Seattle Developments Property Name Property Address # of Units Developer Submarket Delivery Onni SLU 1120 Denny Way 1,128 Onni Group South Lake Union MF 2021 Onni SLU - Phase II 1120-1122 John Street 1,200 Onni Group South Lake Union MF 2021 1200 Stewart Street Building 1200 Stewart Street 1,050 Westbank Denny Triangle MF 2021 Block V 2301 Seventh Avenue 610 Onni Group Denny Triangle MF 2021 Shoreline Place 15505 Westminister Way N 1,358 Merlone Geier Management, Inc. Shoreline MF 2022 1901 Minor Avenue Building 1901 Minor Avenue 706 Crescent Heights Denny Triangle MF 2022 800 Stewart Street Building 800 Stewart Street 568 Lincoln Property Company Denny Triangle MF 2022 4th & Columbia 719 4th Avenue 964 Crescent Heights Downtown Seattle MF 2023 1916 Boren Avenue Building 1916 Boren Avenue 666 GZI Boren LLC Denny Triangle MF 2023 8th & Pine 802 Pine Street 609 Fana Capitol Corporation Denny Triangle MF 2024

Notable Eastside Developments Property Address # of Units Developer Submarket Delivery AMLI Spring District 1227 124th Avenue NE 204 AMLI - AMLI Mark24 Bel-Red MF 2020 888 108th Avenue NE Building 888 108th Avenue NE 158 David Meissner Downtown Bellevue MF 2020 Bellevue 10 10050 NE 10th Street 102 Binjian Limited Partnership Downtown Bellevue MF 2022 Bellevue Square Residential Towers 433-493 Bellevue Way NE 250 Kemper Development Company Downtown Bellevue MF 2022 11058 Main Street Building 11058 Main Street 336 BML Development Corp. Downtown Bellevue MF 2022 Four 106 350 106th Avenue NE 326 RTL Investments LLC Downtown Bellevue MF 2023 100 112th Avenue NE Building 100 112th Avenue NE 145 PMF Investments Downtown Bellevue MF 2023 Northup Way Mixed Use 12863 Northup Way 404 Holland Partner Group Bel-Red MF 2023 680 106th Avenue NE Building 680 106th Avenue NE 180 Onni Group Downtown Bellevue MF 2024 Burnstead TOD NE 12th Street & 120th Avenue NE 420 Pine Forest Properties, Inc. Bel-Red MF 2025

Colliers International | Puget Sound Q2 2020 Multifamily Report Market Statistics - 20Q2 - Puget Sound

Inventory Average Occupancy Effective Effective Effective Rent Concession Units Units Under Occupancy (Units) SF/Unit Change YOY Rent/Unit Rent/SF Change YOY Value Delivered Construction King County

Studio * 706 92.8% 0.0% 1,940 $2.73 0.0% 1.8% * *

1 beds * 787 93.9% 0.0% 1,855 $2.35 0.2% 1.4% * *

2 beds * 822 93.8% 0.0% 1,888 $2.30 0.2% 1.5% * *

3+ beds * 982 93.4% 0.6% 2,141 $2.19 0.8% 1.2% * *

All Units 218,848 787 93.8% 0.1% 1,830 $2.33 0.2% 1.4% 1,410 15,551

Inventory Average Occupancy Effective Effective Effective Rent Concession Units Units Under Occupancy (Units) SF/Unit Change YOY Rent/Unit Rent/SF Change YOY Value Delivered Construction Snohomish County

Studio * 799 94.9% -0.4% $1,475 $1.83 1.1% 0.4% * *

1 beds * 872 94.7% 0.0% $1,552 $1.78 0.8% 0.7% * *

2 beds * 892 94.7% -0.1% $1,550 $1.74 0.9% 0.7% * *

3+ beds * 1,090 94.6% 0.1% $1,665 $1.63 1.8% 1.5% * *

All Units 42,066 888 94.7% -0.2% $1,538.00 $1.74 0.9% 0.7% - 1,596

Studio * 787 95.2% 0.7% $1,276 $1.64 4.6% 0.7% * *

1 beds * 833 95.3% 0.1% $1,294 $1.56 3.3% 0.5% * *

2 beds * 870 95.3% 0.1% $1,318 $1.52 3.4% 0.5% * *

3+ beds * 1,046 96.6% 0.3% $1,490 $1.45 3.7% 0.6% * *

All Units 55,547 854 95.4% 0.1% 1,294 $1.52 3.4% 0.5% - 706

Inventory Average Occupancy Effective Effective Effective Rent Concession Units Units Under Occupancy (Units) SF/Unit Change YOY Rent/Unit Rent/SF Change YOY Value Delivered Construction Puget Sound

Studio * 764 92.6% -0.5% $1,848 $2.56 0.2% 1.7% * *

1 beds * 831 94.0% -0.3% $1,714 $2.12 0.6% 1.3% * *

2 beds * 861 93.9% -0.3% $1,733 $2.07 0.6% 1.3% * *

3+ beds * 1,039 93.8% 0.3% $2,017 $2.03 1.1% 2.0% * *

All Units 315,894 812 94.1% -0.3% $1,693.00 $2.09 0.7% 1.2% 1,410 17,853

Net Absorption & Completions Rent & Occupancy Trends 4,000 $2.20 95.0%

3,500

$2.10 3,000 94.5%

2,500 $2.00

2,000 94.0%

$1.90 1,500

1,000 93.5% $1.80

500

0 $1.70 93.0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020

Net Absorption (Units) Completions (Units) Effective Rent Occupancy

RESEARCH: In the midst of the COVID-19 outbreak, information and data is emerging at a quick Jacob Pavlik, MRED Nicholas Carlsen and uneven rate. The information contained herein has been obtained from sources Research Manager | Puget Sound & Portland Research Analyst | Seattle deemed reliable at the time the report was written. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is Dir +1 503 499 0093 Dir +1 206 223 1440 assumed for any inaccuracies. Readers are encouraged to consult their professional [email protected] [email protected] advisors prior to acting on any of the material contained in this report.