Research & Forecast Report

RESEARCH & FORECAST REPORT PUGET SOUND REGION Q3 2020 | MULTIFAMILY

YOY YOY YOY YOY Occupancy Rate Number of Sales New Supply (Units) Rental Rate (PSF) 93.5% FORECAST 9 FORECAST 1,601 FORECAST $2.05 FORECAST

Overview Key Takeaways Multifamily product in Puget Sound, though stymied, remained resilient · Rents for Puget Sound decreased 1% quarter over quarter down to through the first two quarters of Covid-19 uncertainty. In King County, where $2.05, fueled by a 2.6% drop in King County rents. 70% of the regional apartment stock is located, rent collections fell to 76.4% · Occupancy is down 60 basis points year over year for the region, though in September 2020 according to NMHC Rent Payment Tracker, compared it has increased in Pierce and Snohomish Counties. to 81.2% in September 2019. Though, this drop is within the historical range of healthy. Concessions are on the rise as rental rates, in some cases, are · Total investment volume by dollar amount increased 282% from $165M on the decline. Occupancy and rents contracted in King County by 1.2% in Q2 to $630M in Q3. and 2.6%, respectively, while Pierce and Snohomish counties both saw · Average cap rates for the Puget Sound increased 10 bps from 4.4% to substantial bumps in rents of 4.6% and 2.5%, respectively. The flight to 4.5% quarter over quarter. suburban locations continues to be the trend, as investors and developers · Deliveries and units under construction both saw a slight boost, look to capitalize on growing tenant demand. On the development side, 1,601 increasing 13.5% and 2.2%, respectively. new units were delivered, while units under construction increased by 2.2% to 18,249 units across the region.

Notable Deliveries

Helm Postmark SEATTLE EASTSIDE

THERE WERE NO NOTABLE DELIVERIES ON Iron Flats West THE EASTSIDE IN Q3 2020 U Place

Kinect at Broadway Midtown 64

Building Name Building Address # Units City Submarket Developer Postmark 17233 15th Ave NE 243 Shoreline Shoreline MF The Wolff Company Iron Flats West Jackson 802 NE 66th 144 Seattle Northeast Seattle MF Emerald Bay Equity Helm 128 127th St SE 192 Everett Silver Lake MF The Wolff Company Midtown 64 6800 S 246th St 365 Kent Kent MF Goodman Kinect at Broadway 3214 Broadway 140 Everett Everett MF American Capital Group U Place 4609 Union Bay Pl NE 243 Seattle Ravenna ZQH Investment

Colliers International | Puget Sound Q3 2020 Multifamily Report RESEARCH & FORECAST REPORT PUGET SOUND REGION | Q3 2020 | MULTIFAMILY

Investment Sales Activity*

Investment Volume by Submarket (2015 to present) Investment Volume

Q3 saw a significant rebound in investment volume from Q2, jumping from $165M to $630M (282%). The closing of the Kiara sale from Holland Partner Group to Toronto-based Oxford Properties Group for $320M bolstered the quarter substantially, and adjusting for this leaves a moderate, but still healthy, 88% improvement. Cap rates increased slightly from 4.4% to 4.5%, still well below the five-year average of 4.9%.

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

Deal volume also increased substantially between Q2 and Q3, from 438 units to 1,528 units (249%), and from 3 to 9 sales (300%). Though these are both substantial rebounds and positive signs for the market, they are still down from their five-year averages of 2,480 units (-38%) and 15 sales (-40%). As uncertainty slowly continues to lift over the next few quarters, deal volume will trend closer to the five-year averages, though it remains to be seen where those deals will land geographically with the viability of office space in the central business districts still in flux.

Pricing by Submarket (2015 to present) Pricing by Quarter

Per unit pricing stood at $358K at the close of Q3, down 17.5% quarter over quarter and up 45% year over year. Price per square foot, at $476, was a 7.6% quarter over quarter increase and 44.7% year over year increase. While COVID-related uncertainty continues to blanket the market and region, we expect volume to stay low relative to five-year averages and force money towards more dependable assets, keeping upward pressure on pricing.

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

Colliers International | Puget Sound Q3 2020 Multifamily Report RESEARCH & FORECAST REPORT PUGET SOUND REGION | Q3 2020 | MULTIFAMILY

Development Pipeline

Aspect Totem Lake Frye Towers Bower 1200 Stewart Onni SLU 2019 Boren Polaris at SeaTac

2020 2021 2022 2023

AMLI Yesler Alexan Block V Beam 1516 2nd Spring District Terrace

Under Construction

Property Name Property Address # of Units Developer Submarket Delivery Onni South Lake Union - Phase II 1120-1122 John St 1,200 Onni Group South Lake Union MF Q4 2021 Onni South Lake Union 1120 Denny Way 1,128 Onni Group South Lake Union MF Q1 2021 1200 Stewart St 1200 Stewart St 1,050 Westbank Projects Corporation Denny Triangle MF Q4 2021 Aspect Totem Lake 12550-12650 120th Ave NE 851 CenterCal Properties, LLC Totem Lake MF Q4 2020 Block V 2301 Seventh Ave 610 Onni Group Denny Triangle MF Q2 2021 Ovation Apartments 1101 8th Ave 548 Lennar Multifamily Communities First Hill MF Q2 2021 Yesler Terrace 209 12th Ave S 525 Lowe Enterprises Inc First Hill MF Q4 2020 Copper Gate 4750 Auburn Way N 500 Inland Group North Auburn MF Q4 2020 1516 2nd Ave 1516 2nd Ave 498 Plus Investment USA Downtown Seattle MF Q2 2022 Frye Residential Towers 707 Terry Ave 486 Westbank Projects Corporation First Hill MF Q4 2020 Denny Centre 2014 Fairview Ave 437 Bosa Properties, Inc. Denny Triangle MF Q1 2021 2301 E Union St 2301 E Union St 429 Lake Union Partners Mann MF Q4 2021 2019 Boren Ave 2019 Boren Ave 393 Holland Partner Group Denny Triangle MF Q2 2022 The Waverly 200 8th Ave N 374 Greystar South Lake Union MF Q3 2021 Polaris at SeaTac 15245 International Blvd S 365 Inland Group Seatac MF Q1 2023 Radiate Apartments 15808 Bear Creek Pky 360 Fairfield Residential Downtown Redmond MF Q4 2020 Bower 11811-11821 NE 128th St 339 Lennar Multifamily Communities Totem Lake MF Q4 2020 Alexan Shoreline 15560 Westminster Way 330 Trammell Crow Residential Company Shoreline MF Q2 2021 Beam Apartments 8209 144th Pl SE 321 Intracorp Homes May Creek MF Q1 2021 1029 S Jackson St 1029 S Jackson St 321 Intracorp Homes Chinatown MF Q1 2021

Colliers International | Puget Sound Q3 2020 Multifamily Report Market Statistics - Q3 2020 - 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 90.6% -2.2% 1,843 $2.60 -5.0% 2.1% * *

1 beds * 786 92.5% -1.4% 1,796 $2.28 -3.0% 1.6% * *

2 beds * 822 92.4% -1.3% 1,831 $2.23 -2.8% 1.6% * *

3+ beds * 982 93.2% 0.2% 2,052 $2.10 -0.4% 1.7% * *

All Units 218,927 786 92.7% -1.2% 1,778 $2.26 -2.6% 1.5% 1,409 16,163

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 * 785 91.4% -1.8% $1,439 $1.82 1.2% 0.6% * *

1 beds * 871 94.5% 0.3% $1,553 $1.78 2.5% 0.7% * *

2 beds * 891 94.6% 0.2% $1,551 $1.75 2.5% 0.6% * *

3+ beds * 1,089 94.5% 0.1% $1,681 $1.65 4.5% 1.0% * *

All Units 42,328 886 94.6% 0.1% $1,540.00 $1.74 2.5% 0.6% 192 1,207

Studio * 787 95.5% 1.5% $1,302 $1.67 5.1% 0.5% * *

1 beds * 834 95.7% 1.4% $1,324 $1.60 4.7% 0.4% * *

2 beds * 871 95.8% 1.4% $1,349 $1.56 4.7% 0.4% * *

3+ beds * 1,042 96.8% 0.8% $1,521 $1.48 4.2% 0.4% * * Rent & Occupancy Trends All$2.20 Units Criteria: 55,609 RCA, >50 Units, Seattle Proper 855 (see image in folder), NO95.8% partial interest 1.2% 95.0% 1,327 $1.56 4.6% 0.3% - 879

$2.10 Inventory Average Occupancy 94.5% Effective Effective Effective Rent Concession Units Units Under Occupancy (Units) SF/Unit Change YOY Rent/Unit Rent/SF Change YOY Value Delivered Construction $2.00

94.0%Puget Sound Studio$1.90 * 759 91.1% -1.8% $1,773 $2.47 -4.1% 2.0% * *

1 beds * 830 93.3% -0.7% 93.5% $1,681 $2.09 -1.3% 1.3% * * $1.80 2 beds * 861 93.3% -0.6% $1,702 $2.03 -1.1% 1.3% * *

$1.70 93.0% 3+ bedsQ1 Q2 Q3 Q4 * Q1 Q2 Q3 Q41,037Q1 Q2 Q3 Q493.9%Q1 Q2 Q3 Q40.5%Q1 Q2 Q3 $1,946 $1.97 0.6% 3.0% * * All Units 2016 316,864 2017 812 2018 93.5% 2019 -0.6% 2020 $1,664.00 $2.05 -1.0% 1.2% 1,601 18,249 Effective Rent Occupancy

Net Absorption & Completions Rent & Occupancy Trends

4,000 $2.20 Criteria: RCA, >50 Units, Seattle Proper (see image in folder), NO partial interest 95.0%

3,500

3,000 $2.10 94.5% 2,500

2,000 $2.00

1,500 94.0%

1,000 $1.90

500 93.5% 0 $1.80

-500

-1,000 $1.70 93.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

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

Net Absorption & Completions

4,000

3,500 RESEARCH: 3,000 In the midst of the COVID-19 outbreak, information and data is emerging at a quick Jacob Pavlik, MRED Nicholas Carlsen 2,500 and uneven rate. The information contained herein has been obtained from sources deemed reliable at the time the report was written. While every reasonable effort Research Manager | Puget Sound & Portland Research Analyst | Seattle 2,000 has been made to ensure its accuracy, we cannot guarantee it. No responsibility is Dir +1 503 499 0093 Dir +1 206 223 1440 1,500 assumed for any inaccuracies. Readers are encouraged to consult their professional [email protected] [email protected] 1,000 advisors prior to acting on any of the material contained in this report.

500

-500

-1,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2016 2017 2018 2019 2020

Net Absorption (Units) Completions (Units)