In a transaction that closed on May 31, 2017, Seattle-based Security Properties continued its buying spree by spending $85.5 million to acquire the 289-unit Echo Lake Apartment Homes community also known as The Blakely in Shoreline, according to public records. The per unit price comes to approximately $295,848. The seller was an entity associated with Spokane-based Inland Group, a developer of high density residential and commercial projects.
The listing brokers on the sale were Giovanni Napoli and Philip Assouad, both senior vice presidents with Kidder Mathews in Seattle.
The development was constructed in 2009, and it is located just off State Highway 99. The complex is comprised primarily of one bedroom apartments (124) and two bedroom apartments (70). It also offers 6 studios, as well as 9,000 square foot retail component. Some of the amenities at the complex are a laundry service, a fitness center, a spa, pool, game room and media center/movie theater. Rents in the building go for $1,310 for a studio, $1,685 for a one-bedroom apartment and $1,815 for a two-bedroom apartment, according to apartments.com.
Security Properties has been on a buying spree over the last year, and it has acquired several communities in Washington, Oregon, Nevada, Arizona and Tennessee. In May, the apartment investor paid $26 million to acquire the 124-unit Bordeaux Apartment Homes community in Bothell. Earlier in the year, in February, Security Properties acquired the Beaumont Grand Apartment Homes in North Lakewood for $35.2 million. This was on the heels of a December 2016 $78.7 million purchase of The Heights at Bear Creek, a 226-unit apartment complex in Redmond, and an October 2016 $78 million purchase of One Jefferson, a 347-unit, Class A multifamily property located in Lake Oswego, OR with Pacific Life Insurance Company.
The company also just last month opened the 309-unit Sparc in Bellevue’s Spring District. In addition, it broke ground on the second apartment community in the same neighborhood last November that will feature 279 units in a yet-to-be named complex.
According to a recent, first quarter of 2017 Kidder Mathews multifamily report for King, Pierce, Snohomish, Thurston & Kitsap Counties, the regional apartment market vacancy rate is currently 3.4 percent, well below the 20-year average of 4.9 percent. Vacancy last peaked at a rate of 7.2 percent in fall of 2009 as the recession was fully felt. Occupancy increased ever since, with vacancy oscillating from 3.3 percent to 4 percent over the past three years as consistent demand has nearly matched the significant amounts of new inventory.
Sales velocity in the Puget Sound Region previously peaked in 2005 with 267 sales ($2.64 billion in volume), according to the report. So far in 2017, the first quarter sales are off 2016’s activity, primarily due to a limited number of institutional sales. It has been reported that this pull-back was based on the increased risk of near-term weak rent growth and a fulfillment of allocations to this property type. It is expected that total sales volume for 2017 will still be good, but likely closer to the long-term average around $3 billion. The general long-term outlook for the Puget Sound region continues to be better than most markets nationwide, but there are definite signs that the market trends will be changed by the combination of slower job growth and the 2017/2018 spike in new unit deliveries. Rental rates have reached historic highs. However, the rent growth rates have slowed in core markets already, a trend that is expected to continue over the next few years, stated the report.