Kent Valley
• The Kent Valley industrial market yet again realized significant market contraction with -711,191 sf of negative absorption and a 96 basis point increase in vacancy to 6.66% in the fourth quarter.
• While the risk has reportedly somewhat diminished, the looming threat of flooding in the Kent Valley, due to concerns about the integrity of the Howard Hanson Dam, has been a driving force for vacancy in the Kent Valley. Tenants have been moving out of the market and sublet vacancy is on the rise as tenants continue to search for contingency space in other markets.
• Rental rates in the Kent Valley have dropped as much as 10-15% in some areas. There has been an increase in landlord concessions in the form of rent abatement for prospective tenants and existing tenants in an effort to avoid vacancies.
Seattle Close-In
• The Seattle Close-In industrial market continued to soften in the fourth quarter 2009. Vacancy rates increased just over 2% from one year ago when the vacancy was at 3.53%. In addition, vacancy rates increased 63 basis points from 4.93% in the third quarter to 5.56% in the fourth quarter and absorption posted at approximately a -200,000 sf.
• The Central Seattle submarket was hit the hardest this quarter, giving back nearly 210,000 sf to the market. This was due in part to Korry Electronics contraction from this area; they vacated over 150,000 sf in the fourth quarter from 801 & 810 Dexter Ave. N.
Pierce County
• The Pierce County industrial market has shown continued stabilization and growth again in the fourth quarter with a 34 basis point decline in vacancy and 254,842 sf of positive net absorption.
• Pierce County has become a target for many tenants exiting the Kent Valley with recent leases inked by previous Kent Valley residents, Owens & Minor at 4301 W Valley Hwy E and Service Paper Company at 4501 W Valley Hwy E.
• The Puyallup-Sumner submarket saw positive activity with leases inked by PODS and Roadrunner at the 3520 142nd Ave E - Sarvent Building and National Oak Distributors at the 2824 142nd Ave - Trussco Building.
• Pierce County experienced a vacancy spike at the onset of the recession, however since then the Pierce County industrial market has been a strongpoint for the northwest industrial markets and has consistently shown growth throughout the turbulent 2009 real estate market. Year-to-date the Pierce County industrial market boasts 1.6 million square feet of positive net absorption in 2009, with additional leasing and occupancies set to take place in the first quarter of 2010.
Eastside
• Vacancy rates increased 35 basis points to end the fourth quarter at 8.29%; this is up from the third quarter posting of 7.94%.
• Flex space accounts for nearly 50% of the total vacancies in the Eastside Industrial market.
• The Bellevue, Kirkland, and East King County submarkets were the strongest with a combined net absorption of nearly 100,000 sf.
• Redmond industrial tenants returned nearly 177,000 sf, effectively increasing the vacancy rate in the submarket 2.1% to post a fourth quarter rate of 8.3%. The increase is due largely to TTM vacating their three buildings at NE 67th (approximately 100,000 sf) and Genie Industries vacating their Park 180 location (approximately 70,000 sf).
• The 520 Corridor continues to post the lowest vacancy rate of the Eastside Industrial submarkets falling 7 basis points to post a fourth quarter rate of 4.5%.
• While a fair amount of tenants in the 3,000 – 6,000 sf range moved out of the Bellevue industrial submarket, Advanced H20 leased 100,000 sf of warehouse space at the Bellevue Distribution Center causing quarter-over-quarter vacancy rates in the submarket to decrease nearly 3% to 8.1%.
Northend
• Vacancy decreased 36 basis points to end the fourth quarter at 8.82%, down from a third quarter posting of 9.18%.
• The Mill Creek/North Creek submarket is one of the strongest submarkets in the Northend, posting a fourth quarter vacancy rate of 3.0%.
• Tenants in the Northend industrial market absorbed 13,000 sf during the fourth quarter.
• Goodwill took occupancy of their 108,000 sf space at Casino Road Corporate Park (2208 W Casino Rd.) in the South Everett submarket.
• The Everett CBD submarket has the highest industrial vacancy rate in the Northend at 28.6%. The vacant 408,000 sf Nord-Jed-Wed warehouse building contributes to the high vacancy rate as the building comprises 20% of the 2.2 million sf Everett CBD submarket.
• Four of the eight Northend industrial submarkets posted positive absorption: Mill Creek/North Creek, South Everett, South Snohomish and Woodinville absorbed a combined 155,000 sf during the fourth quarter.
About Colliers International
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 occupiers, developers and investors worldwide. The organization’s 12,700 employees span the globe in 294 offices in 61 countries. On a worldwide basis, Colliers manages more than 1 billion square
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In the Puget Sound region, Colliers has over 80 brokers located in the Seattle, Bellevue, Tacoma, and Olympia offices. Colliers’ sales and leasing professionals are listed on CoStar’s Puget Sound Power Broker list. Find out more at www.colliersmn.com.
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