To Media Representatives, Our Clients and the Public: As Colliers International pursues the highest level of clarity in our market research efforts, we have made several changes to the process we use in gathering and presenting market data. As a result of these changes, Colliers market reports and statistics will now give a more accurate snapshot of the state of the Puget Sound commercial real estate market. - Our submarket boundaries have been redefined to reflect the consensus of property owners and tenants.
- The set of properties which we report upon has been expanded to include owner-occupied buildings.
- Office building classifications have been changed to reflect the evolving standards of the market.
We sincerely hope these changes will not cause confusion to those who rely upon our statistics and reports. Readers should be aware that our new reports are not directly comparable with reports released by Colliers in the past. For updated historical rental rate, vacancy and other statistics which include the newly expanded property set, please contact the Colliers Market Research Department. In addition, please feel free to contact us with any other questions or comments regarding the Puget Sound commercial real estate market. Sincerely, Peter B. Truex Senior Manager - Puget Sound
Puget Sound 1st Quarter 2009 Industrial Highlights **Note – The Kent Valley and Seattle Close-In market statistics do not include owner/user properties. Kent Valley** - The market vacancy rate increased from 4.56% to 4.94% versus fourth quarter 2008 but is nearly unchanged from first quarter 2008.
- The Seatac and Auburn submarkets both experienced positive absorption totaling over 200,000square feet. Auburn’s distribution space was in the highest demand with a positive net absorption of over 180,000 square feet during the first quarter for 2009.
- Kent distribution space was the softest real estate market with over 450,000 square feet of negative absorption. The increase in vacancy was largely due to tenants moving out of the Northwest Corporate Park buildings.
- Electrolux leased nearly 200,000 square feet of warehouse space at the Goodyear Regional Distribution Facility in the Auburn submarket. This location will serve as their Northwest distribution center.
Seattle Close-In** - Vacancy increased 14 basis points from 3.80% in fourth quarter 2008 to 3.94% in first quarter 2009 resulting in a negative first quarter absorption of 72,694 square feet.
- Industrial space in North Seattle remained in high demand with vacancy rates dropping 69 basis points from 3.95% in fourth quarter 2008 to 3.26% first quarter 2009 and a positive net absorption of over 100,000 square feet.
- Manufacturing buildings are still the tightest industrial product with 2.04% vacancy rate. Vacancy rates for manufacturing range from 0.84% in West of Duwamish submarket to 6.77% in East Hill.
Pierce County - Pierce County saw a slight rise in vacancy from 9.93% to 10.03% due to a combination of new deliveries with vacancy and downsizing within many companies.
- The market witnessed 190,000 square feet of positive absorption this quarter fueled by Toysmith’s move-in at their 288,000 BTS at Benaroya Business Park in Sumner.
- Puyallup-South Hill continues to have vacancy woes with nearly 3.4 million square feet of vacancy; this constitutes nearly 50% of Pierce County’s total vacancy.
- Morning Sun vacated 167,000 SF at Trans-Pacific Industrial Park in Fife, after closing its doors for good.
- Port of Tacoma’s vacancy is still affected by Portside DC and Port Commerce Center’s nearly 1 million vacant square feet, a market that sits at 8% vacancy.
- North End Tacoma, Tacoma CBD and University Place all finished the quarter with less than 5% vacancy.
- Frederickson is awaiting the 900,000 SF Whirlpool Distribution Center expected to be completed in 3rd Quarter 2009.
- Large warehouses have seen as much as 10% drop in lease rates in the 1Q 2009. These rents have dropped this quarter as expected to combat the weakened economy and induce more tenants.
Eastside - Eastside industrial vacancy rates increased 41 basis points from 5.42% in Q4 2008 to 5.83% in Q1 2009.
- The Newport/Issaquah, Bellevue and East King County submarkets were the strongest submarkets with a combined net absorption of 33,519 square feet.
- Redmond posted the highest negative absorption with -79,495 square feet where vacancies increased from 4.04% to 4.96% from Q4 2008 to Q1 2009.
- Sky High Sports recently signed a 40,000 square foot lease at the Teledesic Building in the Bellevue Industrial submarket. The company plans to occupy the space during third quarter 2009.
- First quarter Eastside industrial posted a negative 88,000 total square feet of absorption; the East King County submarket posted the highest rate of absorption (24,000 SF) due to Microsoft occupying 47,000 square feet at Redmond Ridge Corporate Center Building 20.
Northend - Northend market vacancy increased to 7.36%; up from 6.26% in Q4 2008.
- The Everett CBD submarket reports the highest vacancy rate at 32.9%. Driving the increase in vacancy are three vacant buildings that account for 23% of the total Everett CBD inventory. These buildings include: the recently constructed Sound View Center (buildings A and B totaling 99,600 SF) and the Nord-Jed-Wed building (408,731 SF).
- The Mill Creek/North Creek submarket remains in high demand with only 1.64% vacancy. The Mill Creek/North Creek submarket also gave back the least amount of product during the first quarter posting a negligible -165 square feet.
- Northend Industrial gave back nearly 365,000 square feet by the end of first quarter 2009. The move outs were concentrated in the South Snohomish, South Everett and Edmonds/Lynnwood submarkets with South Snohomish posting the largest move out by Cyrk, vacating 116,000 square feet of warehouse space in the Fryelands.
- Nearly 210,000 square feet of new product was delivered to the Northend Industrial market during the first quarter; nearly 85% of these new deliveries were vacant at press time.
Colliers Macaulay Nicolls Inc. (CMN), operating as Colliers International, is a leading global real estate services company that provides a full range of services to real estate users, owners and investors worldwide. Colliers operates in 293 offices in 61 countries. Services include brokerage, property management, hotel investment sales and consulting, corporate services, valuation, consulting and appraisal services, mortgage banking and research. Colliers International is a worldwide affiliation of independently owned and operated companies. Locally, Colliers professionals serve clients throughout the Puget Sound area. Find out more at www.colliersmn.com/Seattle.
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