Dr. Mueller is one of the leading researchers on the commercial and apartment building investment cycle but I have big questions about Seattle being placed at the bottom of the cycle in his latest Cycle Monitor report. According to MPF Research there currently are 6,000 new units under construction in Seattle (see here) and Essex Property Trust estimates that there will be 10,000 units coming on line in the next three years (see here). In fact the NMHC lists Seattle as one of three US markets in danger of overbuilding (see here).
Reis Reports is showing that while rents are up about 1% QoQ in Q1 2012, vacancy is starting to rise in all but 2 submarkets (see here). Over all Seattle vacancy is still around 4% so where do you think this market is in the cycle?
My take is that Seattle is near (or at) the peak in the cycle with “Increasing Vacancy/ New Construction” as Dr. Mueller defines the Hypersupply, post peak phase, nowhere near the “Declining Vacancy/ No New Construction” he sites for the Recovery phase where he lists Seattle currently. In an April 2012 post I said the Seattle apartment market was peaking and the data continues to show just that.
Take a look at where your market and sector is listed and let us know if you agree or disagree with where the Cycle Monitor shows it is. Overall Dr. Mueller’s research and conclusions about how the cycle works and how important it is to successful investing is critical but I can only conclude that he is getting bad data when it comes to the Seattle apartment building investment market.