According to the latest report from CB Richard Ellis, Tacoma was sporting a 9.73% direct office vacancy rate, the highest in the Tacoma/Federal Way submarket, which was averaging 8.16% as of the end of June. Kendall says the vacancies here, as opposed to Seattle and Eastside submarkets, are due more to a general sagging of the economy than to the high-tech meltdown.
"Only between 7% and 11% of our total technology group has gone away," says Kendall. "So, we are still confident in our small technology community." Kendall attributes the healthier high-tech climate of Tacoma to the much lower rents that were being paid by its tenants in comparison to the exorbitant numbers being reaped by Seattle and Bellevue owners during the dot-com heyday.
The county's industrial market, meanwhile, has plenty of space under construction, despite the 11% overall vacancy rate. As of the end of June, the Tacoma/Fife submarket--some 59% of new construction in the entire Puget Sound, according to the CBRE report. "For the first time in history, spec manufacturing buildings are going up in Frederickson—-20 miles east of Tacoma," says Kendall.
And, as for the Pierce County apartment market, Kendall says there is a strong push from municipal and county authorities to entice more high-density residential development to Tacoma, particularly in the Downtown area. The largest such project currently underway is Thea's Landing, being developed by a group known as Team Tacoma. That $35.5-million project will include 189 mid- to-upper-end apartment units and 45 condominiums.
For the first half of the year, the CBRE report says Pierce County's apartment rents grew 3.95%--the most in all of Puget Sound. Vacancy, at a respectable 3.60%, was on the low side of Pierce County's four-year average of 4.01%. From an investment standpoint, 13 properties changed hands in the first half of 2001. The $33 million aggregate sales price translates to an average price per unit of $52,852 and a cap rate of 9.47%, also the highest in Puget Sound.
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