Nearly 92 percent of the 31,000 new market-rate apartments that have opened in Seattle this decade have been luxury units, with an average rent just under $2,000 a month, according to the rental firm RealPage as reported by the Seattle Times.
A new apartment in Seattle rents, on average, for 71 percent more per square foot than one built in the 1960s, according to data provided by market research firm Apartment Insights as reported by the Seattle Times.
Now two firms are making a conscious effort to build apartments with rents accessible to “workforce” households. “Workforce” is defined by the firms as households making $40,000 to $80,000 a year, or 60 to 120 percent of the city’s median income.
Spectrum Development and the investment firm Laird Norton Properties say they plan to build at least 1,000 new “workforce apartments” in the near future, reports the Seattle Times.
The first units are scheduled to become available in 2019, with others likely to open over the following five years in neighborhoods where people work and want to live, but where rents have become too expensive. The developers have their eye on locations near transit, schools and stores, in places like First Hill and Pioneer Square.
Middle class Seattle residents like teachers, firefighters, journalists and health care professionals have felt the squeeze in the rental market. About 92 percent of the 31,000 new market-rate apartments that have opened in Seattle this decade have been luxury units, with an average rent just under $2,000 a month, according to the rental firm RealPage.
To offer cheaper rents than other new apartments, Spectrum plans on cutting out the high-end amenities that drive up construction costs and rents in most luxury units. The buildings will generally be smaller and absent of underground parking garages, concierge services and air conditioning, amenities that higher-income transplants to Seattle have come to expect.
In a city like Seattle where the cost of land and construction are sky high, most developers and investors focus on the luxury buildings which are proven moneymakers. The trend is so ingrained that Spectrum had trouble finding a partner to accept lower initial profits for its workforce housing projects.
But as Peter Orser, a former homebuilder who is now chair of the University of Washington’s Runstad Center for Real Estate Studies tells the Seattle Times, there are a limited number of residents who can afford luxury rentals. “If it was easy (to build workforce housing), people would be doing it,” Orser says. “Because, frankly, the risk is lower — there are many more renters making 100 percent of the median income than 200 percent. At some point you’re going to run out of people making $123,000.”
Seattle is set to build as many as 60,000 new apartments this decade. That’s more new construction than in the previous 50 years combined. However, about one-third of those units haven’t been constructed yet, meaning developers still have an opportunity to decide how fancy they want to build their buildings.
Spectrum Development and Laird Norton Properties say they are putting $500 million into workforce housing because they don’t want to see the city gentrified to the point where mid-level workers can no longer live in Seattle.
“We would like others to join us and expand beyond the $500 million,” Jeff Vincent, CEO of Laird Norton Properties tells the Times. “Why can’t the industry and private landowners turn this into a billion-dollar initiative to develop workforce housing?”