Seattle is among the top rent-paying cities in the country

What has pushed Seattle to be among the ranks of other major cities such as New York, Los Angeles and San Francisco?

Rent.

Seattle jumped onto Zillow’s top 10 list of cities that paid the most rent in the country last year. It’s the No. 10 city where renters collectively paid the most rent in the nation &#8212 a total of $10.2 billion in rent during 2015.

Seattle-based real estate company Zillow composes the list each year. Seattle has consistently placed at No. 13 on Zillow’s list, far behind top 10 regulars such as New York, Chicago and Miami.

Seattle has experienced an annual rise of about $500 million over the past five years. But to make the top 10 in 2015, Seattle’s total paid rent shot up by nearly $2 billion. In 2014, Seattle paid $8.3 billion in rent. A total of $6.8 billion was paid in 2010.

Seattle knocked Philadelphia off the 2015 list, which firmly held the No. 10 spot over the past four years.

Who is paying all this rent in Seattle?

It’s easy to look to Seattle’s tech boom to cite why so much rent was paid in 2015. But the spread of the tech industry in Seattle is not the only reason people are moving to the city, and in turn, creating demand for housing and higher rents.

“In many urban areas in the United States, millennials &#8212 and others like my 41-year-old self &#8212 are choosing or creating vibrant central cities with walkable neighborhoods, real downtowns, etcetera,” said CEO and co-founder of Cozy Gino Zahnd. “This back-to-the-city trend has enough gravity that big companies are taking notice.”

“Demand will likely remain high, as long as Seattle’s biggest employers continue to expand,” he said.

Cozy is a Portland-based company providing property management software and services to landlords and renters. Rent is its business and therefore the company has watched cities such as Seattle. And because of the move-to-the-city trend, Zahnd said that many companies are making the move as well.

“In Seattle, we know that Weyerhaeuser is coming to Pioneer Square,” Zahnd said. “Expedia, Microsoft, Facebook, Apple and others also now have significant presence in the core of the city. It isn’t just Amazon anymore.”

Zahnd noted that from November 2014 to November 2015, about 20,000 more people found employment in Seattle. Some of this is attributed to the tech industry (5 percent increase over last year), but a greater portion is attributed to the construction industry (6.7 percent increase over last year).

Rental relief?

While Seattle developers have rushed to meet the increased housing demand, it’s likely not enough.

Zahnd notes the building boom is at its peak since 2005, with 10,425 apartment units recently completed or under construction. The city has seen about a 25 percent increase in apartment inventory over the past three years. But the added apartments aren’t expected to ease rising rents or demand.

“It’s unlikely we’ll see any real rent relief in Seattle any time soon,” he said. “While there’s plenty of new construction, these projects tend to focus on luxury units. Nationwide, we aren’t seeing many new units targeted at middle-income earners.”

And there remains more high earners in Seattle hungry for housing.

“It’s unlikely we’re hitting a saturation point, especially on the high end,” Zahnd said.

And while construction is providing a lot of jobs locally, Zahnd also points out that hourly-paid construction workers aren’t likely the ones taking up new apartments in Seattle.

“High-paying employment opportunities combined with lifestyle choices are a bigger driver, and those two things combined also drive housing demand, which drives construction jobs,” Zahnd said.

“Sure people are coming for those construction jobs, but are they living in the luxury high rises they’re building?” he said. “Even with no data, I’m almost certain they are not.”

Rental data provided by Zillow

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