South-End Supply of Large Industrial Spaces Falling

BELLEVUE, WA-The first quarter of 2004 has been promising for the large space segment of the South End industrial market. According to the latest report from locally based Pacific Real Estate Partners, the amount of large space continued to decline through the first three months of the year, continuing a trend that began in mid-2003. All told, large availabilities in south King County and north Pierce County have declined by 20% since mid-2003, according to the report. Of course, the drop in availability corresponds with an increase in demand. According to the report, there are 22 properties in South King County and North Pierce County with plus-100,000 sf spaces available for a total of just over 3 million sf. The median asking shell rate is currently $0.288 per sf per month, triple-net. The rate is off 1.4% from the end of the year.The good news is there are 13 companies actively looking in the market for plus-100,000 sf space, with a combined need of nearly 4 million sf. Moreover, there is very little industrial construction planned to get underway in time for completion prior to the end of the year.”We are hopeful that the market will continue (to tighten) through the rest of ’04, which could allow for a rise in effective rental rates by next year,” says Pacific Real Estate principal W. Scott Carter. “We will definitely see some new construction in 2004 with deliveries late in the year or early 2005; hopefully, supply we be relatively matched to demand.”In the 50,000-sf to 100,000-sf range, there are 35 properties sitting on some 2.4 million sf of space, which compares to 1.47 million sf of demand from 20 companies. Planned construction of plus 50,000-sf buildings in 2004 totals about 4 million sf, with the vast majority set to occur in Pierce County.In February, Carter and partner Leslie Boudwin landed the largest industrial lease transaction of the year, representing the owners of a speculative 492,000-sf industrial building in Sumner, WA in a three-year lease with Norvanco International, a Sumner-based third party logistics firm.The building was the first product in Sumner Corporate Park, an eventual three-million-sf industrial park rising from a 150-acre former turf farm near SR 167. The partners in the development are Bellevue-based Knapp Development, St. Louis-based Michelson Commercial Realty & Development LLC and Seattle-based investment advisors Washington Capital Management.