"Re-apartments" blooming

The newest trend in the Seattle rental market is a "re-apartment" — an apartment that was converted to a condo and is now being converted back to a rental.

Also called a "conversion-conversion," the "re-apartment" trend is just starting to hit the local market as condo owners in some areas struggle to sell during the housing slowdown.

"The market wasn't strong enough or the product viable enough to allow them to sell enough of the condos to make it work," said Tom Cain, a partner with Apartment Insights Washington, which each quarter surveys 150,000 apartment units across the region.

No one's tracking the number of properties in the Seattle area that have been converted twice, but the number of apartments that have converted to condos in the last five years in King, Snohomish and Pierce counties was 21,000, said Jay Olson, president of the Washington Multifamily Housing Association.

Last year about 7,000 apartments in the tri-county area have been converted into condos, up about 3 percent from 2006.

An example of the re-apartment trend is the 153-unit Landing at Angle Lake in SeaTac, which was offered up as condos by San Diego-based developer Pacifica Companies in the second quarter of last year.

By the last quarter of 2007, all 153 units were back on the market as rentals, according to Apartment Insights Washington. Pacifica did not return a call for comment.

Kirkland-based developer Mosaic snapped up three apartment buildings to convert into condos last year. After converting a 62-unit building and a 111-unit building in West Seattle, the company decided in December to revert them to rentals for the foreseeable future, said co-owner Dave Kirzinger. The third building, a 239-unit complex in Federal Way, hadn't been changed into condos yet when the decision was made.

The reason was simple: condo sales are slow.

In King County, the number of pending condo sales was down about 36 percent in December, according to the Northwest Multiple Listing Service's latest figures.

"The people of Seattle have spoken and as a developer, we're going to go where the market takes us," said Kirzinger.

"As rentals, they've been really quite strong."

Developers aren't necessarily throwing in the towel when they convert a condo back into a rental — they may just be riding out the housing slump before they offer them up for sale again, said Rob Kellum, chief operating officer of Suhrco Residential Properties.

"They're saying if we know the sales are that slow, let's try to drive some income from our vacant units and put them back on the rental market until we're ready to sell them," he said.

What's also happening in some buildings is a split between rentals and nonrentals as some condo buyers lease out their units and others hang onto them.

That's a trend Kellum has seen among the 16,000 units Suhrco manages across the Puget Sound region.

"There are buildings that people bought with the end plan to convert them and then when they saw the market slow down they backed off that plan and decided to keep it as an apartment," Kellum said.