Leasing agents nervous about Belltown (Seattle) apartment buildup
Friday, July 6, 2001
By MARNI LEFF
SEATTLE POST-INTELLIGENCER REPORTER
Along Western Avenue in Belltown, the pounding hammers, spinning cranes and rising buildings
meld together into an endless, noisy construction site.
When the dust settles in the next six to seven months, 567 new apartments will open in three
projects that line the two blocks along Western between Broad and Cedar streets.
Some real estate experts, who are putting the vacancy rate as high
as 8 percent for the growing Belltown/Denny Regrade
neighborhood, say that as the new projects open and begin
courting tenants, vacancies could climb even higher.
"That area has transitioned a lot, and the market is already starting
to soften up in some ways," said Greg Wendelken, regional
manager for Marcus & Millichap, a real estate investment
brokerage company. "Short term, with the layoffs in the dot-com
sector taking away a lot of the renting pool, we are concerned that
there is too much product on the market."
Real estate experts, however, said that softening has occurred in
the apartment, not the condominium market. That's because
condominiums account for just three of the nine projects under
construction or recently opened in Belltown/Denny Regrade, said
Brian O'Connor of the O'Connor Consulting Group.
"The funny thing is, you look out there and see all those cranes,
but most of the projects aren't condos," he said.
A total of 1,684 new apartment and condominium units have
opened or will open this year in Seattle's core, including
Belltown/Denny Regrade and downtown, as well as parts of
Queen Anne, Capitol Hill and First Hill, O'Connor said.
Just 503 of those units will be
condominiums.
"There is a strong demand for
condominiums in this market," said
Kathryn Armstrong, project manager for
the ellington. More than 90 percent of the
ellington's 204 units have already been
sold, she said.
As far as apartments are concerned,
however, supply is beginning to outpace
demand, O'Connor said.
"Right now, there are a lot of apartments
hitting in mid- to late 2001 and on into
2002," he said. "After that, it slowly
improves."
Even developers, who in January were
extremely bullish about projects in the area
and remain optimistic about the
neighborhood's long-term potential, are
growing edgy.
"Certainly the dot-com failures have not helped the immediate market," said Val Thomas, whose
Klee Lofts and Suites is scheduled to open in November. The two-building project will offer 140
units. "But having a lot of new projects contributes to having more people on the streets and more
demand for services. The neighborhood is moving out of its babyhood and on to its adolescence."
Just across from the Klee construction site, The Olympus is quickly rising. The 14-story concrete
apartment building will offer 327 luxury units with an average rent of about $2,000 a month when it
opens in March.
"We're a little more concerned than we were when we first started," said Joseph Strobele, vice
president of development for Legacy Partners, which is building the project. "But we're not overly
concerned."
Yet in talking to developers, it seems that as new projects open, the game has changed.
Owners of existing projects admit that they are trying hard to rent all of their apartments before the
next building opens.
At the McGuire Apartments, a 275-unit building just a few blocks south and east of the crowded
Western Avenue corridor, about 52 percent of the units have been rented, said Alison Girard,
marketing director for developer Harbor Properties.
"It's of concern to us to know that a lot of new product is coming online," Girard said. "We're
hoping to be leased up by early fall."
Although the process is going well so far, Girard said that the trick for Harbor and other developers
is going to be keeping residents happy -- and getting them to stay put.
About 50 percent of the McGuire's residents moved into the building from other downtown or
Belltown/Denny Regrade apartments, Girard said.
"We hope and we think that the people who live here will have a positive experience and not chose
to move away to someone else's project," Girard said.
To sweeten the deal, Harbor will begin a program to offer its tenants rewards, possibly including
perks such as discounts at the company's ski resorts, which include Stevens Pass, Girard said.
Avalon Belltown, a 100-unit building developed by Alexandria, Va.-based AvalonBay
Communities, is next up, scheduled to open in August. A huge sign hangs on the building's facade
with a toll-free number to call 24 hours a day with leasing inquiries.
"It's a timing thing," said Kevin Wilfley, senior portfolio director in AvalonBay's regional Bellevue
office. "In all development, you minimize the risk by beating your competitor."
Just down the street from the Avalon, at the Klee project site, the pace is fast and furious.
"Belltown is the first new Seattle neighborhood since the turn of the century, when Capitol Hill,
Fremont and Wallingford were built," said Helen Wattley-Ames, who is marketing the Klee project.
"It's the first time in almost 100 years that we've seen anything like this."
P-I reporter Marni Leff can be reached at 206-448-8142 or marnileff@seattlepi.com |
