Snapshots

Seattle-Bellevue construction cost leveling out post-COVID

Cost growth abates as developers shift into a holding pattern

August 31, 2020

 

  • Puget Sound construction cost growth through the first half of 2020 was the lowest since 2010 as projects across the region experienced COVID-related delays. After steep job losses in April, construction employment has recovered most jobs lost, but remains down 8 percent from pre-COVID levels.

  • As office development volumes increased slightly in the first half of 2020, permits for multihousing fell from 14,884 units to 4,863 units, the lowest level since 2011. The temporary shift away from the University District amidst in-person class cancellations and shifting urban/suburban dynamics has had a profound impact on multihousing demand. 

  • While multihousing construction has been highly concentrated in urban submarkets since 2010, suburban markets have proven more resilient post-COVID. The suburbs managed slight month-over-month rent growth and only modest concession increases, whereas urban markets experienced negative rent growth and doubled concessions.

  • Expect more delays in construction starts as developers wait and see whether the return to the office will renew the allure of urban living or if the shift to the suburbs is more than a short-lived occurrence.