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Too Much Multifamily?

Too Much Multifamily?
It's the biggest question in Seattle multifamily: When is enough enough? (It's also the biggest question at Thanksgiving dinner.) We put the query to Essex Property Trust's Bryan Meyer, who surprised us with his answer: We may already be there.
Essex Property Trust's Bryan Hester at the Glendale Country Club in Bellevue.
Here's Bryan at our Future of Downtown Bellevue event this past summer. (He'll be back as a panelist for our Multifamily Summit this Thursday at the Four Seasons. Sign up here!) Construction costs are likely going up 25% during the next two years, Bryan tells us. He predicts those costs, combined with rent stagnation, will shut down the pipeline of proposed projects.

Wallace Properties President and COO Kevin Wallace at his Bellevue office.
Wallace Properties prez Kevin Wallace points out that the new supply of apartments is concentrated in Ballard, the U-District, and "the downtown/SLU/Capitol Hill/First Hill ring." He predicts some happy renters in the short term because over the next three years, each of these areas will more than double its stock of apartments 10 years or less in age. "For long-term holders with conservative leverage, this bulge in supply won't be a problem, assuming the pipeline wanes in 2016." Rents may not grow at 6% per year as some expected, but new units will be absorbed by Amazonians, Microsoftians, med-techs and downtown hipsters (our terms, not Kevin's).
The Seattle Monorail.
We asked Bryan and Kevin to share something cool about recent projects. Bryan: "Our tenants at our Expo project in lower Queen Anne actually commute to work via the monorail." (Talk about transit-oriented development.) Kevin tells us that Wallace's Capitol Hill project Citizen of the Pike/Pine has been 99% occupied for 16 straight weeks. ("That's cool, at least in my book," he says.)