Chicago-based apartment owner Waterton once had multiple properties in Seattle. Even though it exited the market in 2019, company executives closely monitored the metro.
“We've always looked at Seattle,” said Kevin Ibasco, vice president of acquisitions. “It has always been a target market for us. We've been tracking it and pursuing acquisitions across the Seattle MSA.”
But buying in Seattle — always a competitive market for investors — was easier said than done. However, the recent interest-rate fueled slowdown provided an opening.
“Historically, we've been competing with high-net-worth groups and groups that have to raise equity or syndications,” Ibasco said. “Those groups are not necessarily getting a ton of traction from their equity partners. And so I think they have been somewhat forced to the sidelines.”
With the competition diminished, Waterton returned to the Seattle area with the purchase of a 123-unit garden-style apartment community, 128 on State in Kirkland, Washington, on March 20.
“We were seeing a window where groups like us, with our capital structure, were able to pursue some of these transactions, while some of our more traditional competitors are on the sidelines,” Ibasco said. “So I think that little window was something we wanted to take advantage of.”
The property sits on 1.5 acres and offers a mix of studio, one- and two-bedroom apartments. In 2007, it was originally built as a condo with steel-framed and concrete construction, floorplans larger than competing product in the market and 80% of units featuring a den.
Waterton plans to renovate the apartments at 128 on State with quartz countertops, tile backsplashes and refinished cabinets in kitchens; new tile and tub surrounds in bathrooms; new carpeting in bedrooms and updated lighting and plumbing fixtures throughout the units. It intends to update the lobby, hallways and landscaping with modern furniture and finishes, including a new yoga studio in the fitness center.
“The units themselves and the amenities are in their original condition,” Ibasco said. “So I think it provides a good opportunity to come in and upgrade the units to compete more with the newer-construction properties and give it more of a modern feel.”
The local economy surrounding 128 on State includes specialty retail, technology and manufacturing. “It's walkable to downtown Kirkland, which has a lot of restaurants, bars, coffee shops and outdoor amenities,” Ibasco said. "I think it's a very desirable place to live, and it attracts a lot of people on the east side to live there.”
Kirkland’s location also provides access to Seattle’s largest technology firms, including Google, Microsoft, Meta and Amazon. Even though many of those firms have announced layoffs, Waterton still likes the market.
“The long-term fundamentals are still pretty strong, and incomes are still very strong,” Ibasco said. “Not all the layoffs are concentrated in the Seattle metro. The [companies] hired so much during the pandemic. And I think we're still benefiting from a lot of that positive momentum. I think this blip is something that we are just keeping an eye on.”
Click here to sign up to receive multifamily and apartment news like this article in your inbox every weekday.
