Driving the improvement was nearly one million sf of absorption in the 95.5-million-sf Kent Valley sub market, which saw its vacancy rate drop from 7.73% to 7.31%. Other submarkets either didn't absorb much or gave back space during the quarter, resulting in region-wide net absorption of 772,082 sf, according to the report.
A significant contributor to the Kent Valley's first quarter absorption was the delivery and subsequent lease-up of the 492,000-sf Summit building at Sumner Corporate Park. CBRE senior associate John Sullivan, who brokered the lease for the building owner, says the lease may be a sign of things to come.
"There are several 'big box' tenants out in the market looking to land (and) the southern Puget Sound region is currently the most accommodating to these sizable requirements with its list of large proposed projects and build to suit options ready to break ground," says Sullivan. "It's likely that we'll see other similarly sized, single-tenant deals happening south of Kent in the near future."
The Seattle Close-In submarket, meanwhile, gave back 151,259 sf after two quarters of positive absorption, but remains the tightest submarket with a vacancy of just 5.26%. CBRE senior associate Bob Swain says there has been a firm increase in tenant activity in the 3,000-sf to 20,000-sf range in the submarket. "Many of these tenants have been operating in tight quarters, holding off the added expense of taking down more space even though they've needed it," he says. As a result, over the next couple of quarters Swain says its likely many tenants in the Close-In submarket will look to either grow or make moves to more efficient space for their operations.
The Snohomish County and Eastside industrial submarkets also did not perform well, giving back 158,138 sf and 26,593 sf, respectively. The 8.7-million-sf Snohomish submarket saw its vacancy rate jump about two percentage points to 20.81% during the quarter. Vacancy in the 21.1-million-sf Eastside sub market remained largely unchanged at 16.02%.
Holding its own was the 11.7-million-sf Tacoma/Fife submarket, which saw its vacancy rate fall from 9.79% at the start of the year to 9.17% by mid-March on the strength of about 72,000 sf of positive absorption. Similar to the southern portion of the Kent Valley, CBRE believes the Tacoma/Fife submarket is ripe for development due to the availability of vacant land and its proximity to the Port of Tacoma. "The Port of Tacoma set records in 2003 with it's spending on capital projects and its considerable growth in container volume," says CBRE associate Monte Decker. "Port officials expect 2004 to be another record year for cargo volume, which will continue to get the attention of tenants and encourage growth as they increase their volume over the Port of Seattle."
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