CoStar: As Portland Struggles to Keep Up, Seattle’s Apartment Pipeline is Larger Than Ever

CoStar Analytics reports that Portland multifamily construction has declined to its lowest level since the early 2010s, while deliveries in the Seattle market continue to reach new highs. 

Apartment absorption (the difference between move-ins and move-outs) surpassed the delivery of new units by 40% in Seattle and just 25% in Portland over the past 12 months. 

Demand for multifamily units continues to increase in the region, driven by a lack of supply and strong population and job growth, supporting average annual rent increases above 10% in both markets.

Though the pandemic slowed the delivery of new units in the Puget Sound, the report notes that Seattle has recovered quickly and is on pace to deliver a record-high 12,000+ units in 2022, while Portland deliveries are expected to reach just 3,300 units — the lowest annual total in the metro since 2013.

CoStar analysts cite a number of potential factors in explaining the disparity, including different approaches to the inclusionary zoning program that has recently come under fire in Portland, writing

"The Seattle city council voted through an inclusionary zoning policy of its own but coupled the requirements with additional benefits for developers, allowing them to build taller, denser buildings in wide swaths of the city. In Portland, there was little added benefit for developers and an exception for smaller buildings."

In 2022, the report concludes, Seattle will face the challenge of sustaining enough demand to absorb the pending wave of deliveries, while Portland will likely continue to struggle to meet housing needs.