Market Dynamics Resetting

The Puget Sound region is seeing a tapering in construction activity after record-setting inventory growth in 2024. Only 11.6K units are expected to be delivered in 2025, down 22% from last year. The pipeline contracted significantly with new construction starts down over 80% from this time last year, representing the lowest level in over a decade. This drop in supply, coupled with healthy leasing velocity, is setting the stage for a recovery in rent growth and occupancy over the next 12–24 months.

Vacancy Turning Point & Rent Growth Return

The market-wide vacancy in the Seattle MSA has plateaued after several years of upward drift. High-end apartments remain the most challenged largely due to the bulk of recent deliveries being concentrated in this tier. Notably, central urban neighborhoods like Capitol Hill, South Lake Union, and Downtown are showing solid absorption, benefiting from improved perceptions of safety, return-to-office momentum, and tourism tailwinds. Rent growth is once again trending positive after tepid performance throughout much of 2023 and 2024. Average asking rents in the Seattle metro are up over the past year, with stronger performance seen in submarkets where new deliveries have subsided and demand is consistent. Lake Union now leads the metro in rent growth after years of construction driven softness. New properties continue to offer concessions, especially in areas with high delivery volumes. Rent acceleration is likely in 2026, particularly in Eastside markets like Bellevue and Redmond, which maintain tight vacancy and limited new supply.