Washington’s Hard-Fought Rent Increase Cap Is a Sign of Things to Come

Tuesday, April 29, 2025

• Rent cap in the Cascades: Washington has become the third state to pass statewide rent control, and probably not the last.

• Industrial reset: U.S. industrial vacancies climbed to 7.1% in early 2025, the highest level since 2015, raising new questions about the sector’s momentum.

• LEED update: The USGBC updated LEED standards with new emissions targets and a focus on decarbonization, quality of life, and conservation.

• Today’s webinar: Join us at 1:00 PM ET to learn how data and tech are helping multifamily leaders adapt to tighter margins and rising renter demands. Sign up

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Editor’s Pick

Washington’s Hard-Fought Rent Increase Cap Is a Sign of Things to Come

The state of Washington has passed a statewide rent increase cap, becoming the third state to do so. Typically, rent caps are passed at the municipal level because of how difficult it can be to move them through all branches of state government. Washington legislators succeeded after a years-long battle over the terms. These kinds of bills might become more common as politicians face increasing pressure from constituents about the growing cost of living driven by rent growth.

The rent cap bill changed over years of negotiation between politicians and real estate industry organizations. Initially, the bill proposed a seven percent cap on rent increases. Opposition countered with a ten percent cap, similar to what has been in place for years in states like California. Ultimately, the two sides settled on a formula: a seven percent increase plus inflation, with a maximum cap of ten percent. The rent cap applies only to renewals, and new buildings are exempt for the first 12 years after occupancy.

Other changes to the bill include scrapping an exclusion for single-family homes and removing a provision that would have created a landlord resource center to help navigate the new rules. The bill passed at the very end of the Washington state legislative session. It was even delayed at the last minute because the bill’s name still referenced the landlord resource center, even though it had been removed from the legislation.

Washington is a Democrat-majority state and one that is particularly active on renter rights. Its largest cities have some of the most progressive renter protection laws in the country, including requirements for landlords to give tenants up to 180 days’ notice before a rent increase and, in some cases, forcing landlords to rent to the first qualified applicant to reduce favoritism. Washington also participated in one of the original studies that implicated RealPage for allegedly using software to raise rental prices. Washington was one of the first states to file a lawsuit against RealPage.

Washington might not be an outlier. As renter protections are rolled back at the federal level, pressure is growing on politicians in Democratic states to pass renter-friendly laws. The real estate industry generally believes the best way to lower housing costs is by building more supply. Yet with construction costs rising because of tariffs and labor shortages, cities and states have few levers to pull to spur new development. This has pushed regulators toward alternatives that may be less beneficial for the real estate industry—and possibly even for the citizens the rules are meant to protect.

Overheard

Technology

Industrial Vacancies Hit 7.1% as Supply Boom Cools

As of the first quarter of 2025, the U.S. industrial real estate sector has experienced a significant increase in vacancy rates, reaching 7.1%—the highest level since 2015. This marks the 11th consecutive quarter of rising vacancies, following a low of 3.6% in 2022. The surge is attributed to a slowdown in the recent development boom, with new supply deliveries decreasing to approximately 65 million square feet in Q1 2025 from a peak of 162 million square feet in Q3 2023. Despite this, net absorption remains positive, with markets like Dallas/Ft. Worth, the Inland Empire, and Phoenix leading in industrial space absorption.

Regionally, the Midwest reported the lowest vacancy rate at 5.4%, while the West experienced the most significant year-over-year increase, rising 158 basis points to 7.1%. The South and Northeast also saw substantial increases, with vacancy rates climbing to 8.3% and 7.2%, respectively. Notably, Charleston reported the highest vacancy rate in the country at 21%, up 814 basis points year-over-year. Colliers anticipates that as the current development cycle winds down, new supply will align more closely with demand, potentially leading to a peak in vacancy rates. But, economic uncertainties and ongoing tariff ambiguities may delay a significant rebound in demand in the near term.

Fast Take

LEED Certification Standards Have Been Updated

This week the U.S. Green Building Council announced the anticipated new version of its LEED building certification requirements. The updates incorporated feedback from two separate public comment periods and build upon the rating system that the organization hopes will "further define what it means to be a high-performance building today.”

The three areas of focus of the updates were decarbonization, quality of life, and ecological conservation and restoration. Decarbonization requirements in particular got a lot more detailed with the update and now include reduction targets for operational, embodied, refrigerant, and transportation emissions.

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