Demand for rentals fuels south county building boom

LYNNWOOD — Newly erected buildings that await siding and windows peek down from the highway toward Martha Lake.

A few blocks and a freeway overpass away, giant machines have cleared the scraggly woods fronting I-5 to make room for hundreds of apartments. Farther west, at Alderwood Mall Parkway, another project with nearly 500 apartments in buildings of up to six stories is moving through the permit process.

A building boom is under way in the area where 164th Street meets I-5, just north of Lynnwood city limits.

All of the bustle is breathing new life into a few long-dormant construction sites and putting scores of people to work.

It’s happening in part because post-recession homebuilders are making a deliberate market zag. They’re targeting a generation of “renters by choice,” who are leery of committing to a mortgage. They’re hoping to lure tenants to high-density living with manageable commutes to Everett, Seattle and the Eastside. And they’re taking advantage of county building regulations that encourage just that sort of thing.

“Developers are going after transit-oriented locations, and certainly that is one,” said Tom Hoban, CEO of Everett-based Coast Group of Companies, whose business includes managing multi-family housing. “This is going on in Kent. This is going on in the Rainier Valley.”

The mushrooming urbanization of the 164th Street corridor is part of the biggest spurt of permitting activity in Snohomish County since 2008, when the recession really hit hard here. Housing for more than 1,000 families now is under construction or awaiting final approval. Beyond the apartments already in the pipeline, the county has had serious discussions about two other nearby projects with another 400 apartments, county land-use manager Tom Rowe said.

From the county policymakers, it’s the ripening fruit from years spent planning out high-density zones called urban centers.

For developers, it’s a logical business plan for a market in which financing for single-family homes is tight, and many customers, young and old alike, prefer to rent. That includes baby boomers looking to downsize as well as a demographic bulge of younger people who have seen the past few years of housing turmoil, and opted to steer clear.

“You put all of that together and the demand line for apartments looks pretty impressive, so it’s no surprise that there’s supply coming on line to meet the demand,” Hoban said.

A townhouse and apartment project on 164th at Larch Way is the furthest along of the large, multi-family developments taking shape in the area.

It began in 2006 as Martha Lake Town Center, named after the lake on the other side of the highway. The housing market collapsed and the project stalled. Goodman Real Estate of Seattle later bought the 7.6-acre property and broke ground last year, renaming the project Altia.

For months, it’s kept an array of subcontractors busy from early morning until dark, in the rain, fog and frost.

One chilly morning last week, a painter shimmied up a two-story ladder to whiten trim on a townhouse, one of 50 at the site. Meanwhile, a crew from Frunz Construction of Arlington smoothed out steaming, pecan-colored concrete to make townhouse driveways.

Formerly unemployed laborers, such as Lonnie Riley with Elk Heights Excavation of Cle Elum, are happy for the work.

“It’s been so slow, it really has,” said Riley, 38. “I live down in Graham and they called me from Cle Elum, so things are starting to get moving; that’s a good thing.”

One of the company’s excavators was preparing the ground to pour a foundation for a three-story building. Elsewhere on the Martha Lake site, framers, electricians and plumbers were laying the groundwork for 180 apartments.

“The townhouses are in the mix because this was a stalled development from pre-recession,” said Brad Reisinger, a Goodman Real Estate development manager. “In the pre-recession plan, the majority of the site was a townhouse development.”

Rather than selling the units, the idea now is to rent them out, starting in spring. Construction on the entire project is expected to finish late this year.

“We don’t plan to do any condos,” Reisinger said. “I’m finding a lot of renters by choice, instead of historically renters by need.”

The same developer has a 383-apartment project called Tivalli in the works on Ash Way, north of 164th Street. Construction is expected to begin soon, following the County Council’s approval of a development agreement earlier this month.

It’s one of two urban center developments visible on the west side of I-5, near the Ash Way park-and-ride lot.

The other, a 395-apartment development under construction next door, is to be set aside for affordable housing. The Washington State Housing Finance Commission helped Vintage Housing Development of Newport Beach, Calif., line up $60 million in tax-exempt bonds and low-income housing tax credits, covering the lion’s share of the project’s costs.

The goal is to induce developers to create quality affordable housing that minimizes urban sprawl, said David Clifton, assistant director of the commission’s Multifamily Housing &Community Facilities Division.

“Why do builders get involved? Because to them it pencils out,” Clifton said.

To qualify, renters must earn no more than 60 percent of the area’s median household income for 2013. That means the cap is about $36,000 for one person and $52,000 for a family of four. A one-bedroom apartment would rent for $975, including utilities, and a two-bedroom for $1,170. The agency, which does not use state tax dollars, would check up on the community to make sure it adheres to rent, income and maintenance guidelines.

“Right now, all the studies are showing that in Snohomish County, if they build it, there are people ready to move in,” Clifton said.

A fourth project called Avalon Alderwood is expected to go up across Alderwood Mall Parkway from the 164th Street Fred Meyer shopping complex. Plans call for 491 apartments, in 10 buildings of three to six stories.

Developer AvalonBay Communities, Inc. of Bellevue received a green light in December from the county hearing examiner. Final County Council approval is pending in the coming weeks.

Avalon and the Tivalli community on Ash Way are being built under urban center regulations the county established in 2010. The idea was to combat urban sprawl by promoting housing in areas with convenient access to transit, shopping and other amenities. The 164th Street corridor is one of seven designated urban center zones in the county’s unincorporated areas.

Since then, one urban center — Point Wells, near Woodway — has dominated public discussion because the scale of the project is controversial. Opposition to the 3,000-condo waterfront development proposed there has focused its lack of access to any major highway and its contrast with the surrounding neighborhoods made up almost entirely single-family homes.

The county’s other urban centers have attracted little to no opposition. They’re all located along I-5, Highway 99 or other major thoroughfares.

Cities are charting out their own urban zones. That includes Lynnwood, which stands — some day — to annex the projects taking shape on its northern border.

“With very few exceptions, our land-use plan is consistent with the county’s,” said Paul Krauss, Lynnwood’s community development director.

Krauss called urban centers the best way to maximize investments in public transit, which is supposed to include light rail in Lynnwood by 2023. Of course, not everyone takes the bus or train, so traffic challenges will be part of the landscape.

“But that’s a long-term concern for most Lynnwood arterials,” Krauss said.

Noah Haglund: 425-339-3465,

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