Vancouver, Washington, Area Attracts Most Multifamily Demand on West Coast This Year
California markets continued dominating apartment demand on the West Coast. However, among the 330 odd neighborhoods that CoStar tracks in California, Washington and Oregon, Vancouver, Washington and downtown Seattle ranked among the top three for absorption, the net change in occupied units from one period to the next. Over the past year, downtown Seattle saw 1,433 units absorbed, and Vancouver, Washington, recorded 1,083 units of absorption.
Vancouver, a city of just under 200,000 people located on border between Washington and Oregon, is considered part of the two-state Portland–Vancouver–Hillsboro Metropolitan Statistical Area. Despite Vancouver’s impressive absorption performance, the area has also been Portland’s most active over the past year in terms of multifamily construction, with more than 3,000 new apartment units completed. Most of the leases signed over the past year have been in new four- and five-star properties. The average vacancy, in turn, is rising, with the current 8.3% reading for the Vancouver market having risen 410 basis points over the past year.
By unit count, Vancouver has proven to be reliable in terms of resident relocations and net positive migration readings. Clark County — which encompasses Vancouver — led the entire Portland–Vancouver–Hillsboro metropolitan area in terms of population growth in the 2022 U.S. Census release, with a percentage gain of 0.82%.
In the Seattle metropolitan area north of Vancouver, downtown Seattle topped the list for gains in apartment residents. According to data from the Downtown Seattle Association, the broader downtown now tops 100,000 residents, an increase of more than 70% since 2010. CoStar’s definition of “downtown” is geographically smaller than DSA's, but even that shows incredible growth over the same period. According to CoStar data, about half of the total inventory of apartment units downtown was built within the last 15 years.
New construction has pushed the vacancy rate higher in downtown Seattle, although the neighborhood typically sees vacancy rates higher than the overall Seattle region. Vacancy for downtown Seattle sits around 8.6%, compared to the region-wide average of 6.9%. Downtown’s vacancy cooled from a high of 13.1% in 2022, when a significant number of newly completed units hit the market. Overall vacancy rates include projects in lease up, which can push those figures higher in fast-growing neighborhoods.
Other Oregon areas near the top include Eugene, home to the University of Oregon, and Bend/Central Deschutes County, an area widely considered Oregon’s outdoor recreation mecca. With 452 and 322 units absorbed over the past year, respectively, both markets benefit from a strong student renter base, population and wage growth and options for renters in the form of newly completed units. In Bend, single-family home prices are also prohibitively expensive.
In Washington, other Seattle areas posted strong multifamily absorption, specifically, Redmond, Tacoma and Lake Union, which collectively absorbed nearly 2,000 renter households in market-rate units. Lake Union and Redmond are benefiting from calls for returns to offices by large tech companies in those areas, and Tacoma has seen significant growth from new construction over the past couple of years.
In terms of Oregon and Washington’s highest-performing areas, population growth and an ample supply of new units should help Vancouver maintain its standing as a top neighborhood for apartment demand. Downtown Seattle is similarly poised to remain not just one of the top neighborhoods for residential growth on the West Coast, but one of the top downtowns for residential growth across the country.
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