With construction season under way, it appears apartment buildings will be one of the more popular projects in Bellingham.
More than 450 apartment units are either under construction or in the design/permit phase in Bellingham, significantly more than in recent years. While several projects are in the downtown district, some are scattered in other parts of town, including near Western Washington University as well as the Fairhaven and Barkley neighborhoods.
One reason for the plethora of apartment construction comes down to supply and demand: A recent study indicates the already low vacancy rate in Whatcom County continues to drop, and rents are still on the rise.
Last fall Whatcom's apartment vacancy rate was 1.7 percent, down from 2.2 percent a year earlier. The average monthly rent rose to $801, up $19 from a year ago, according to a survey from the Runstad Center for Real Estate Studies at the University of Washington.
"Absolutely that's a low vacancy rate," said Glenn Crellin, associate director at the Runstad Center. "With your (vacancy) rate, I would expect that it is time to build."
In Bellingham, some of the larger apartment construction projects already under way include the 112-unit Cornerstone building in Barkley Village, a 60-unit building near Depot Market Square and a 38-unit building on North State Street near Boulevard Park.
The apartment vacancy rate has dropped across the state from 5.1 percent in September 2011 to 4.5 percent in September 2012, according to the survey. During that same period the average rent increased $37 to $989 a month.
The average rent is weighted toward King County, which has most of the apartment units and an average rent of $1,141 a month. Typically the apartment market is considered normal when the vacancy rate is around 5 percent.
Crellin said the increase in apartment occupancy and rent is partly a byproduct of an improving economy. As the job situation improves, families that moved in together as a result of the recession to save money are now looking for their own places. Recent college graduates that had moved back in with parents while looking for work are also more apt to look for their own apartment after finding work.
Tom Follis, a real estate appraiser at Wm. T. Follis Realtors, said in Whatcom County the increase in college student population and the lack of apartment construction during the economic downturn are big factors. He said these new apartments are needed to help keep rental rates under control, adding that if rental rates continue to rise it will soon be cheaper to make a monthly mortgage payment on a purchased home.
"I would say if the vacancy rates rise to about 4 or 5 percent, then rental rates will start to level off," Follis said. "Right now landlords can be very picky and can get substantial deposits. Tenants are at the behest of the market right now."