All the folks hired by the Puget Sound’s growing companies need a place to live when they relocate. Here’s how many of them find housing.
Each time Costco hires, say, a recent college graduate from the Midwest, or Google lures an experienced software engineer from the East Coast, Lee Curtis potentially has another piece to try to fit into the Eastside housing puzzle.
Curtis is president of corporate housing for Aboda, a Redmond company that provides temporary housing for the influx of workers relocating to the region from across the country and around the world. Aboda contracts with businesses and relocation-management companies to provide new-to-the-area employees furnished apartments, typically for 30 to 60 days, while the new arrivals settle in and look for more permanent digs. The company also owns nine houses on the Eastside it has made available for larger families with kids and pets.
Even with the rash of new apartments on the Eastside and in Seattle, Aboda is working hard to keep up with the unprecedented demand for short-term corporate housing. When the company began 28 years ago (as Northwest Suites), it was chiefly to help Microsoft house its interns. Today, Aboda works with more than 400 companies, the largest of which have been on well-publicized hiring sprees.
Amazon and Boeing are leading the way. The corporate behemoths accounted for more than 40 percent of all jobs created in the region over the past five years, directly or indirectly, according to Seattle Mayor Ed Murray’s 2016 proposed city budget report.
Issaquah-based Costco also is on a tear, increasing its number of full-time U.S. employees from 92,000 to 117,000 between 2011 and 2015. Google is in the process of doubling the 1,000 workers at its just-expanded Kirkland campus, and Amazon has 26,500 workers in Washington state.
While the number of new hires has been rising, the number of apartments available to house them, temporarily or otherwise, has been stagnant for most of that growth period. Construction of new apartments and condominiums all but came to a halt during the recession, leaving developers racing to catch up over the past two years.
The result: In the fourth quarter of 2015, the apartment vacancy rate in King and Snohomish counties was 4.32 percent, up from the previous quarter’s 4.05 — the lowest rate in the 10 years Apartment Insights Washington has tracked the metric.
“The market’s tight, which is continuing to put a lot of demand pressure on the supply side,” Curtis said. His employer is competing not only within the industry, but also against the general populous. Curtis notes there are far more millennials in the area than there were a few years ago, and that means more renters.
Aboda rents apartments that are spread throughout the more than 100 multifamily communities on both sides of Lake Washington. In some cases it rents entire buildings for up to five years. At any given time, Aboda tenants will fill more than 2,600 individual units, Curtis said.
Apartment communities usually reserve 5 to 15 percent of their stock for short-term rentals, leaving those units as empty shells. Aboda takes care of furnishing and cleaning, orders cable TV, and pays utility bills and HOA fees — all gratis to the tenants, of course, as part of their company’s relocation package.
A typical apartment is like “a nice, four-star hotel,” Curtis said, but larger: 800 to 900 square feet. About 60 percent of the company’s housing stock consists of two- or three-bedroom units rented to families. The one-bedrooms typically rent to single workers or couples. And each summer, Aboda contracts with the University of Washington to use its dorms to house thousands of interns for Amazon and other companies.
The Redmond firm has its own furniture, cleaning, and property-management divisions. Its size allows it to leverage economies of scale to solve thorny issues, such as the time last year a major client informed Aboda on a Wednesday that it needed 50 additional apartments ready to occupy by that Saturday. “That,” said Curtis, “was intense.”
On the other end of the temporary housing spectrum sits Kathy Brekke, founder of A Plus Housing in Kirkland. Her 10-person company rents 100 corporate apartments in winter and quadruple that number during summer.
“Sometimes it’s a race for us to get to (a vacant apartment) before another company does,” Brekke said. “If we can get 10 units within one property, that’s heaven for us.”
To secure bulk rates, most property managers require a minimum three-month lease. This can lead to a difficult juggling act, Brekke said. She recalls a time when, years ago, her company would split the cost of three-month leases on 80 apartments with another company. The corporate tenants wanted to pay month-to-month. When they left unexpectedly after two months, Brekke had to relinquish the units.
“Rent is 50 percent of our invoice,” she said. “We can’t afford to let apartments sit vacant.”
After surviving “nightmare” years in 2009 and 2010, Brekke said A Plus Housing is returning to its peak, just as analysts debate whether regional job growth will be able to keep pace with the explosion of new apartment units.
There were 5,182 apartment units under construction on the Eastside at the start of the year, according to the Apartment Insights Washington fourth-quarter 2015 report. Regionwide, the report said 2016 should break the record of 10,056 units completed, which was set in 1989. Last year, 9,446 new units opened.
Puget Sound employment growth, meanwhile, is forecasted to outpace the national average in 2016, at 2.3 percent, and to stay ahead of the nation as growth slows the following years.
“We have a unique situation in Seattle,” said Aboda’s Curtis. “Look at the economic indicators, especially Amazon. The velocity of their hiring affects everything else. As long as there’s that pull into the region, it’s good.”
Aboda recently expanded into Portland and San Francisco, and is exploring sites on the East Coast. It’s a boutique industry, Curtis said, but a stable one. “The need (for transitional housing) tends to be there most of the time.”
This article originally was published in the April 2016 issue of 425 Business.