A San Francisco company acquired a multifamily property in Federal Way in February, the most recent demonstration of investors capitalizing on the suburban shift from Seattle that real estate experts are currently seeing.
Fowler Properties Acquisitions (FPA) paid nearly $46 million for a 388-unit apartment property that was originally built in 1978. The price was approximately $16.7 more than Bridge Investment Group Holdings paid a little over three years ago.
“This trend, in part, reflects home buyers’ changing preferences, as they seek amenity-rich, dense and walkable areas that are often closer to their workplace.”
The Landing is located on an 11-acre parcel at 31004 19th Place SW. The new owners have renamed it Miro at Dash Point. FPA is a fully integrated real estate investment firm with offices in San Francisco, Newport Beach, Atlanta, Dallas, Denver and Portland. Its property management is directed through Trinity Property Consultants of Irvine, Calif., which manages a over 23,000 apartment units across the country.
Utah-based Bridge Investment Group focuses on multifamily, selected commercial office, senior housing and medical offices.
Fowler is hardly the first Bay Area investor to be attracted to the Puget Sound multifamily market. “We sell the majority of our properties to investors based out of San Francisco,” said David Young, a managing director for JLL. “They see a bigger runway in Seattle than they do in their market. Rents here are still low compared to San Francisco or L.A., so they’re all over us every time we have a building out to market.”
Urban home values continue to outpace the value of homes in the suburbs in most top-tier metros, as city life gains popularity and high-end condos fill the sky in cities with fast-changing downtowns, like San Francisco, Boston, Washington, and Seattle, according to residential valuation website Zillow.
However, while millennials’ preference for urban living may be all the rage now, real estate economists expect this generation to follow the pattern of previous generations as they age and form families, migrating back into the suburbs in search of space and affordability. This tilt toward suburban living will likely be accompanied by a change in preferences as they seek walkable neighborhoods with urban amenities, the company said in a recent report.
“This trend, in part, reflects home buyers’ changing preferences, as they seek amenity-rich, dense and walkable areas that are often closer to their workplace,” said Dr. Svenja Gudell, Zillow’s chief economist. “In the future, this lifestyle trend will change some suburbs as we know them, and they’ll start to feel more urban as buyers move further from city centers in search of affordable housing in communities that still feel urban.”
Federal Way is one area already feeling the impact of this shift, and investors are preparing to reap the benefits by renovating their properties to offer the desired modern amenities. “Generation Y is moving into Seattle taking urban tech jobs with a $112,000 salary,” said Young. “Life changes will require them to move out of their one-bedroom into somewhere that offers more space and where their children can attend school for free.”
The average house is selling for only $271,312 in Federal Way, which calculates to approximately $151 per square foot, and the average rent is $1873 per month, according to Trulia. The vacancy rate sits at 4.5 percent, which is 50 basis points lower than it was last year.