By Meghan Hall
The fourth quarter saw the vast majority of major transactions located in Seattle’s downtown core and Bellevue, with several apartment assets trading for top dollar. Now, the town of Edgewood, located just east of Tacoma, has seen the closing of its own large apartment sale. In a deal that closed on the 23rd, but only just recorded on December 26th, Kent-based Carrera Management Inc. sold The Arbors at Edgewood Apartments for $67.4 million, or about $255,000 per unit. The buyer was an entity based in Dallas, Texas, referred to as Arbor Owner LLC.
Built in 2016, the development totals 254 units and is located along 20th Street and Meridian Ave. in Edgewood, Wash. According to the property’s website, the complex has one-, two-, and three-bedroom units ranging in price from about $1,380 per month up to more than $1,800 a month for the largest units. Individual units feature hardwood floors, private patios and balconies, granite countertops, fire places and stainless-steel appliances.
Community amenities include covered parking, a fitness center, media room, dog park, pool and playground. Other services such as on-site management and maintenance, night patrol, 24-hour availability and valet trash are included.
According to a fourth quarter multifamily market report released by Marcus and Millichap, out-of-state and institutional investors, such as the entity who purchased The Arbors at Edgewood, are expected to remain active in the Seattle-Tacoma metro. Already, states the report, these investors have driven down the average cap rate to one of the lowest recorded in the nation, in the mid- to upper-four percent range. Pierce County, along with Snohomish, will continue to achieve greater interest and yield for new property owners as tech expansion continues and an increasing number of employees fuel rental demand in municipalities outside of Seattle’s urban core.
In East Pierce County, multifamily vacancy sits at just 3.6 percent, with the average effective rate increasing 7.2 percent year-over-year to $1,480 per month. Southwest Pierce County has seen similar increases; with a vacancy rate of 3.3 percent, its average effective rents increased by 7.1 percent year-over-year to reach $1,245 per month. Nearby South Tacoma saw its rents increase at the fastest rate, at a change of 8.3 percent. Its rents reached $1,285 per month. In comparison, the South Lake Union and Queen Anne neighborhoods in downtown Seattle saw their average rents increase by a more modest 3.4 percent, with average rental rates reaching more than $2,200 per month.
These numbers continue to encourage a healthy investor appetite for property throughout the region, notes Marcus and Millichap. The average price for multifamily properties increased by 2.2 percent over the past year, reaching about $241,000 per unit as transaction velocity increased. As demographics and employment are expected to remain healthy, and with strong property metrics to boot, investor interest in Seattle’s suburbs will likely continue.