By Meghan Hall
While sales of built assets have slowed over 2020, interest in developable land and in-progress projects remains high as investors make plans for the future. Just outside the core Seattle, another such site has hit the market. Documents obtained by The Registry indicate that the Othello TOD Apartments, entitled for 85 units, has been posted for sale. Guidance is about $20 million. The seller, according to public documents, is Parkstone Properties.
The asset is located at 7339 43rd Ave. S. The project is expected to be completed by June of this year, and has been posted for sale to maximize Opportunity Zone benefits to the buyer. According to marketing materials obtained by The Registry, the opportunity zone tax benefit could come to more than $14 million in the coming years.
Kidder Mathews’ Executive Vice Presidents Jerrid Anderson and Dylan Simon, as well as Associate Vice President Brandon Lawler, are marketing the asset for sale. As of this writing, Kidder Mathews had not yet returned The Registry’s request for comment.
With its location, the property allows for direct access to SeaTac, downtown Seattle and the University of Washington. The Othello Light Rail Station, built in 2009, has attracted more than 750 jobs in just a half mile radius of the station, notes the property’s marketing flyer. By 2023, the Light Rail which go from the Othello neighborhood directly to Bellevue and Redmond in 30 minutes.
The property is also adjacent to the Othello Playground and a shopping center anchored by Safeway and Tammy’s Deli and Bakery. Domino’s Pizza and Othello Wok and Teriyaki are also within walking distance.
In recent years, the neighborhood has also expanded rapidly, experiencing 45 percent rent growth, according to Kidder Mathews. Development from major institutional owners such as Wood Partners, Wolff Company, Greystar and Security Properties, among others, has helped to contribute to the district’s growth.
Development around the region continues at high rates, with 11,357 units delivered in 2020. In 2019, 14,189 units were delivered. By the end of last year, another 20,951 units were under construction. Net absorption by the fourth quarter came to 3,149 units, far fewer than the nearly 15,295 units absorbed in 2019. As a result, vacancy crept up to 7.3 percent by year’s end, and average asking rents came to $1,605 per unit. Across property sales, the average price per unit came to $246,907.
“It’s no stretch to say that 2020 was a year of extreme challenges economically, politically, and socially,” remarks Kidder Mathews in its most recent multifamily investment update. “The Seattle and Puget Sound region bore the brunt of many such challenges – and at the frontlines were apartment owners, investors, and developers.”
However, the local investment market is moving forward. In 2020, 227 sales were recorded for a total sales volume of $2.58 billion. Urban King County, where the Othello TOD Apartments are located, was the most active sales market. 77 sales—or about 35 percent of the region’s total transaction volume—took place in Urban King County last year. The submarket also procured the highest average price-per-square foot. While the numbers are far lower than previous years, cap rates held steady at 4.3 percent.
“Reduced supply of available apartment investments resulted in strong demand from investors looking to take advantage of record low interest rates,” states Kidder Mathews. “Although the short- term fundamentals (rental rates, occupancy) weakened, sellers received fair pricing for well operated properties.”
Kidder Mathews adds that limited inventory on the market combined with eager investors make it an ideal time to sell. The brokerage firm predicts that 2021 will be a good year for sellers within the market, and that long-term fundamentals still make investing appealing for many buyers.