Goodman rings up $58M sale of Lynnwood apartment complex

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A privately held California company is the new owner of a 230-unit Lynnwood apartment complex that Seattle-based Goodman Real Estate developed five years ago.

Beverly Hills-based FSC paid Goodman $58 million for the garden-style Altia property, 16520 Larch Way, just off of Interstate 5 near Martha Lake. The sale shows that investors remain interested in acquiring assets in the suburbs where rents are rising faster than in Seattle.

It is Snohomish County’s second largest apartment sale of 2019 after the $113.5 million sale of the 372-unit Bailey Farm Apartments in Bothell.

Altia is 98 percent occupied with average per square-foot rents at $1.90 per square foot, said real estate broker David Sorensen of Berkadia’s Seattle office, which listed the property for Goodman.

FSC isn’t new to Seattle. Five years ago the company paid $24 million for a 100-unit property in Seattle’s University District, but Seattle rent growth is slowing with an excess of supply.

In and around downtown, 3,780 new residential units — mostly apartments —opened last year in 28 projects, while 66 projects totaling 8,728 units were under construction at the end of 2018, according to the Downtown Seattle Association.

Demand hasn’t kept up with supply in Central King County, where the monthly average rent declined 3.7 percent from the third quarter of 2017 to $1,805 last fall, according to Seattle-based Commercial Analytics. During the same period, Snohomish County average rent increased 4.3 percent to $1,344.

Yet new suburban supply remains slack, Sorensen said.

Of the 87 developments totaling more than 16,860 units on Berkadia’s list of Puget Sound region projects under construction, 54 are in Seattle. Lynnwood has none. And of the region’s 115 projects totaling nearly 22,600 units Berkadia lists as planned, only two totaling 237 apartments are in Lynnwood.

New development in first-ring suburbs is not expected to pick up due to rising construction costs. The number of development sites in close-in suburbs for sprawling, garden-style projects is limited, leaving developers to build more costly podium-style, taller buildings. No matter whether those are built in city or in the suburbs, construction costs are about the same, and that makes builders loath to proceed, Sorensen said.

His colleague, Ben Johnson, said the Lynnwood and Mill Creek submarkets have seen “extremely strong performance over the past 24 months” and Berkadia anticipates this will continue.

Johnson and Sorensen listed Altia with Berkadia Senior Managing Director Kenny Dudunakis.