Demand Sparks 380,000-SF Speculative Industrial Building

SUMNER, WA-With their 492,000-sf first phase building leased out before completion, developers of the eventual three-million-sf Sumner Corporate Park along SR 167 will break ground here this summer on phase two, a 380,000-sf building they also expect to fill prior to its scheduled completion late this year.”Much like what happened with the (first phase), we’re extremely confident in our ability to secure tenants quickly for (phase two),” says Ted Knapp, president of Bellevue, WA-based Knapp Development, one of four partners in the project. “Better yet, we’ll probably get interest long before the building’s even finished.” The confidence lies in the fact that the partnership sees the same situation as when the first phase was initiated: new development of contiguous warehouse space in excess of 200,000 sf is non-existent in the region. By moving forward now, Knapp says they are staying ahead of competitors who will begin moving their projects off the drawing board and into the regional leasing pool as the economy continues to recover and material prices stabilize. “We’re the only ones in town pursuing this size of an industrial project,” says Knapp. “While some might consider it a risk, we’re in this for the long-haul and moving forward now is another opportunity to stay ahead of the market and capitalize on our strategic location.” Knapp Development and St. Louis-based Michelson Commercial Realty & Development LLC held the option on the 150-acre former turf farm that is now Sumner Corporate Park. Washington Capital Management Inc., a Seattle-based investment advisor for Taft-Hartley pension trusts in the Western US, bought into the first phase two years ago then, because of the market, waited until last fall to fund construction. It was worth the wait. With the lack of large modern warehouse spaces available, the speculative 492,000-sf Summit Building was fully leased prior to its completion earlier this year. Norvanco Inc., a locally headquartered third party logistics firm, leased the entire facility for three years. That success prompted Washington Capital to provide the equity necessary for the partnership to exercise its option for the rest of the land and start developing the next phase. Prudential Real Estate Investors also now is an investor in the development, though Washington Capital maintains a majority stake.Until recently, the joint venture had not decided which of two buildings it wanted to develop as phase two, the 379,760-sf Baker Building or the 405,000-sf Rainier Building, as they each would serve different goals. Ultimately, they chose the Baker Building, in part because it will sit at the entrance to the park.Scott Carter of Bellevue-based Pacific Real Estate Partners, the leasing agent for the development, told GlobeSt.com in March that it would be nice to have that building well under way by the time the new SR 167-24th Street Interchange opens this fall and starts bringing exponentially more traffic by the site. The advantage of the Rainier Building, slated for a parcel in the park’s interior, is that it has largely been permitted and could be built in just six months time if a user came along, while the Baker Building still has to go through the permitting process.Had a strong user prospect come along in the last month or so, the Rainier Building might have been the one announced Wednesday as the next phase of development. On the other hand, by going forward with the Baker Building first, they retain the option of quickly adding the Rainier Building into the second phase as a build-to-suit, or as a speculative third phase should the Baker Building start to lease up even before the start of construction.And given the interest shown in the Summit Building by the likes of JCPenney and Procter & Gamble prior to the Norvanco deal, the partnership is probably expecting one of those scenarios to play out. “There’s just not a lot of new space out there today for large industrial users,” says Carter. “We anticipate there will be significant interest from tenants throughout the industrial sector.”