Clark County’s tight rental market may loosen up in the next year or so. More than 800 apartment units are under construction and about 3,700 are in the pipeline, according to the fall 2016 Apartment Report from Multifamily NW, which represents local property managers.
The Portland metropolitan market is described as “maybe not red hot anymore, but moderately warm” due to thousands of newly completed apartments becoming available.
Despite the incoming supply, rental vacancies remain low in Clark County, one of the cheapest places to rent in the metro area. At 2.2. percent, east Vancouver has the lowest rental vacancy rate in the region, according to the report that surveyed 1,173 rental properties.
Clark County’s incoming supply of apartments pales in comparison with Portland’s. In Portland, there are more than 7,000 apartments under construction and more than 15,000 proposed. Suburban construction is lagging, the report said, “despite lower land values, low vacancies and increasing rents.”
Clark County’s
apartment marketby the numbers
$1.20
Average rent per square foot in Vancouver.
2.2%
Vacancy rate in east Vancouver.
4.1%
Vacancy rate in west Vancouver.
11
Apartment complexes under construction.
842
Units under construction.
30
Apartment complexes proposed.
3,694
Units proposed.
$901
Rent for a studio apartment in
west Vancouver.
Source:
Multifamily NW
Developers simply get more money for apartments in Portland, said Patrick Barry with Barry & Associates.
“I think everyone’s looking at the dollar per square foot on rent,” said Barry, who’s a certified general appraiser and contributed to Multifamily NW’s report. “Everyone’s fighting for those renters who can pay $2.50 to $3.50 per square foot. I think, generally, there’s less of those renters in suburban areas.”
On average, apartments rent for about $1.20 per square foot in Vancouver, the report said. The smaller the apartment, the higher the cost per square foot. A studio in west Vancouver averages $2.07 per square foot, coming out to about $900 for the unit. In east Vancouver, a studio will cost $1.73 per square foot, or about $836 for the unit.
Many renters who have the means are willing to pay more to rent in walkable urban areas. That’s why many new apartments are being built in downtown and uptown Vancouver, Barry said. Clackamas County, Ore. — another Portland suburb — doesn’t have a downtown area comparable to Vancouver’s, and it also doesn’t have as many apartments under construction.
As long as this area keeps adding jobs and the vacancy rates remain under 4.5 percent, construction won’t slow down anytime soon, Barry said.
“No one wants to miss this market, so as soon as they can get a shovel in the ground, they’re going to do it,” he said. “Real estate is a cyclical market. It’s going to decline eventually. It’s just a matter of when.”
Clark County continues to be a relief valve for renters priced out of Portland, what Multifamily NW calls the flight to affordability. West Vancouver is more expensive and has a higher vacancy rate (4.1 percent) than east Vancouver.
One of the results of a hot rental market is that few properties in Clark County offer rental incentives, such as a free month of rent when signing a yearlong lease, the report said. And, most tenants foot the bill for water, sewer and heat, and about half of renters have to pay extra for garbage service — utilities that in some cases used to be covered by the cost of rent.
When supply will meet up with demand, creating a more balanced rental market, isn’t clear.
“With recent increases in the pace of construction, we expect the overall vacancy rates to creep up. However, we do not expect vacancy rates to approach 5 percent for at least 12-18 months and possibly longer,” the report said. A vacancy rate of 5 or 6 percent is considered healthy.
