It may seem like a distant future…
But when your investment horizons are measured in 5-7 year hold periods and you need to assess future decisions today, 2025 suddenly feels much closer.
The market was nothing short of frenetic from 2012 to 2018, yet those “in the know” were busy much earlier, preparing in 2009 for what resulted in exceptional success over the last five years.
If you haven’t checked your calendar recently, setting oneself up for success in the 2020s starts today. But trying to find the next market that will offer outsized-but-predictable returns is not easy.
To help you get started, we’ve analyzed five markets that are exciting prospects for the next market cycle:
- Bothell / Kenmore
- Beacon Hill
- White Center
Migratory Patterns are Changing
Once upon a time, the Seattle renter-set lived the traditional “American Dream.” As they grew up, coupled up, and moved on up (seeking more living space), the prospect of home ownership led them east to Bellevue, Kirkland, and Mercer Island.
But times have changed – and so have home values. Buying a starter home within stroller-shot of urban amenities in Eastside markets isn’t what it once was: affordable.
The Millennial lifestyle analysis – let’s call it “lattes to Pilates” – also continues to evolve. Forward-thinker’s needs are now more aptly described as “Biergarten to kindergarten,” and the availability of such amenities is influencing the next cohort of young Seattleites planting deeper roots.
All Signs Point North
According to a real-life Queen Anne Millennial, “I have quite a few friends who have moved to Edmonds over the last year or so. Not only is it more affordable, but you’re more likely to have a yard (almost everyone I know has a dog). And if you’re planning to have a family anytime soon, the school district has a great reputation.”
The northern migration from urban Seattle amounts to more than a case study of one. Edmonds has a real draw and we are loving it as a top renter’s market entering the next market expansion. Look north – and now is the time to start!
2. Bothell / Kenmore
Everything Old is New Again
Nearly 15 years in the making, Bothell’s Downtown Revitalization Plan is reshaping the entire feel of Downtown Bothell. Whether comparing it to Market Street in Ballard or California Ave in West Seattle, Bothell’s evocatively-named Main Street will soon rise again as a main attraction for urban residents seeking the live – work – play lifestyle.
Similarly, Bothell’s urban neighbor to the west, Kenmore, provides the perfect waterfront-adjacent, retail-grid framework for re-urbanization.
Hub, Meet Spoke
As American cities evolve from suburban sprawl to Europe’s “hub-spoke” model, Bothell and Kenmore are clear winners for the next market expansion.
The prescient developers and investors who got an early start here are now reaping the rewards, but ample opportunities remain for new urban housing and walkable retail close to major job centers, supportive of the long-term lifestyle goals of a maturing Millennial demographic.
3. Beacon Hill
In any other major US metropolitan city (San Francisco, Chicago, New York), you are on a train for at least 45 minutes before spotting any remnants of affordability. Yet, sitting at my desk in downtown Seattle, I can literally see the streets of Beacon Hill.
Ten years ago, apartment developers and investors spoke of Columbia City as they do Beacon Hill today: a market not yet ready to flourish.
Cut to a flourishing Columbia City in 2019. If you’re planning for the next 5-7 years, you’ll recognize Beacon Hill as a market on the cusp of a major expansion.
Riding the Rail
Likes moths to a flame, apartment developers and investors are speculating all along the East Link light rail corridor, yet a lack of concerted excitement remains for Beacon Hill. This is a guaranteed miss by the market.
Beacon Hill’s report card reads like the recipe for a concentration of urban expansion:
In our industry, a new trend is always too far into the future to be investment worthy…and then in two snaps it’s too expensive. Beacon Hill is a made market!
4. White Center
Crime. Grime. Dilapidated storefronts. A few hipster diamonds in the rough. I’m not yet talking about White Center – I’m describing Capitol Hill’s not-too-distant past. This IS the DNA of the next hipster paradise!
Hungry and thirsty 20-to-30 somethings are invading White Center for Proletariat Pizza, Beer Star, Bok-A-Bok Fried Chicken, Boss Drive-in, Full Tilt Ice Cream, Noble Baron, Dottie’s Doublewide…and the list goes on, and on, and on.
Do you know what this cohort of people is otherwise called? R-E-N-T-E-R-S
If You Give a Mouse a Cookie
Renters first find markets through their food/drink/nightlife offerings, and then inhabit apartments where they like to spend time. The formula is simple: feed their hunger, quench their thirst, and keep them entertained. Then you’ve captured an audience of renters.
Transformations take time, but some happen quicker than others – especially in markets that are quite small (opportunities in Columbia City were all but gobbled up during one market expansion). If you have the stomach for a bit of grit, and the gut for good returns, look no further than an early investment in White Center.
More than Just Alliteration
If you didn’t read our last newsletter Is Burien the Next Ballard?, then you missed my analysis of one of our favorite markets for the next market cycle.
Here’s the highlight reel:
Though not an “obvious” market because it is further from Seattle than Ballard, Burien possesses most all the constituent elements that make Ballard such a wonderful apartment market – and, in some cases, more.
Growth Spurt Ahead
Ballard’s ascension this market cycle was nearly unparalleled. However, to capture outsized returns as we enter the next market expansion, investors will need to change their thinking to mitigate risk while identifying the right “less obvious” investments.
Burien’s urban framework is one sure sign of future growth. The existing mass-transit system, walkable downtown, and growing allure for new restaurants and Millennial home buyers are all attributes that should be leading investors to this less-obvious market.
The Puget Sound region is poised for continued growth, and early investment in Burien will prove immensely profitable.
Bonus: And for the Truly Prescient
Already have the above boxes checked for 2025? Well, then we have a few more markets that offer exciting prospects (and investment returns) to the prescient investor.
Take a look at:
- Downtown Everett
- Lake City
- Downtown Renton
- Downtown Kent
- Downtown Tacoma
If you’re considering selling your apartment building in one of Seattle’s top markets and exploring new opportunities for 2025 and beyond, call us for a valuation and to discuss which emerging market best fits your investment criteria.
Allow us to Turn Our Expertise into Your Profit!