“Affordable” housing is a relative term. With the rapid increase in the costs of single-family housing in Seattle, alternative living spaces such as condominiums and high end multi-family housing has arrived in the Seattle commercial real estate market place. For years the Washington State Condominium Act passed in 1989 served as a guarantee for litigation and the home owners and developers shied away from creation of that type of product. Responsible developers such as Vulcan still will not engage in this development as previously built projects were not profitable.
The Act was not applicable to the conversion of existing multi-family projects and one can reasonably project that a wave of conversions will occur. The problem is that as apartment rents have dropped, leasing has slowed due to oversupply. What is interesting is that the activity is really taking place at the two extremes of the market. The sale of studios and one-bedroom units in the $500-700,000 range is dynamic. We are talking here of prices in excess of $1,000 per square foot. At these prices, the risk factor is materially less.
The other end of the market for high end luxury units is enjoying a resurgence. Empty nesters have realized substantial gains in their single-family properties and want to have amenities without worries. They can afford it by simply selling the old family home.
This begs to address the middle market. The professionals at Seattle Commercial Real Estate can easily envision a legislative environment changing the onerous provisions of the Condominium Act and a broad spectrum of conversions and new construction in multi-family housing in the form of condos.