EVERETT – Marked by economic uncertainty and elevated construction costs, apartment construction is not penciling out financially and projects are being shelved as a result in Snohomish County as well as Puget Sound, according to commercial real estate firm, Kidder Matthews.
“With construction costs and capital costs where they stand, projects designed for a different market no longer penciled, and owners opted to clear them from the pipeline rather than carry them forward,” Kidder Matthews reported in their latest study that tracks apartment development deliveries over the past 10 years. “Importantly, this is a story about development math, not market fundamentals,” the report continues, saying, “feasibility remains difficult across nearly every submarket, including areas like Bellevue with the strongest long-term fundamentals in the region. The pipeline contraction reflects developers responding rationally to today’s economics, not a loss of confidence in Puget Sound.”
Kidder Matthews analysis of Snohomish County says, “Compared with the broader Puget Sound region, Snohomish’s pipeline is more modest, suggesting that developers remain selective as they balance long-term demand with today’s financing and construction environment. In this area, current construction is concentrated in a few key markets. Everett leads the county with 698 units underway, followed by Marysville (532 units) and Stanwood (516 units).” Stanwood’s increase in units currently under construction is 91% compared to 2021. Marysville’s under construction inventory is up 18% and Everett 4%, showing the growth in the outlying areas of Snohomish County. These percentages do not include projects that are “approved” or “in review” for permit approval–only active construction.
Kidder Matthews’ study tracks apartment development deliveries over the past ten years and analyzes three phases of today’s development pipeline. The research and data cover the four-county region (King, Snohomish, Pierce, and Kitsap counties), encompassing more than 110,000 planned apartment units and over 500 individual apartment developments. Kidder Mathews is the largest fully independent commercial real estate firm in the Western U.S.
In the report’s preface, Kidder Matthews executives write, “This past year marked a shift in the Puget Sound development pipeline. For the first time this cycle, a meaningful number of developers chose to formally shelve projects rather than extend timelines, driving a decline in both approved projects and projects in review. In prior years, developers largely responded to challenging economics by extending permits and holding entitlements while waiting for conditions to improve. Over the last twelve months, many took a more decisive approach.”
The upshot of those project cancellations translates to favorable supply dynamics for the projects and sites that remain. Owners of well-located land are positioned to benefit as development economics recover.
Financing has been a big impact on developer decisions to pull the plug on building apartments rather than play a temporary waiting game, with the report saying, “tighter lending pushed developers to make harder decisions about permitted projects. While some permitted sites will trade hands and move to construction, this year marked the first time many owners formally cancelled projects rather than hold entitlements, contributing to the decline in approved inventory.”
Snohomish County’s development pipeline has become increasingly measured with relatively limited construction activity and a smaller forward pipeline than neighboring King County. Here, just 1,746 units are currently under construction (4% of inventory), alongside 711 approved units (1%) and 5,793 units in review (12%).
Lynnwood was singled out in the Kidder Matthews report, saying the jurisdiction stands out as the highest-growth submarket in the last five years, but has already delivered most of its near-term growth and currently has no new supply under construction.
Based on percentages, the cities with the largest increase in apartment unit inventory since 2021 are Arlington at 111%, Lake Stevens at 83%, Stanwood at 68% and Marysville at 37%. Mountlake Terrace increased apartment unity inventory 34% in the last five years, Lynnwood and Everett were at 33% and 7% respectively.
Outside of Seattle and suburban King County, Snohomish, Pierce, and Kitsap counties showed the same pattern in sharper relief in Kidder Matthews analysis. Construction activity increased across all three counties, but the inventory of approved projects declined sharply as shovel-ready developments either broke ground or were cancelled without being replaced. Collectively, the three counties now contain nearly 6,000 units under construction but only around 1,100 approved units, underscoring how few projects clear today’s feasibility bar.