Panattoni Adding 485,000 SF to Kent Valley Project

SUMNER, WA-Panattoni Development Co. has broken ground for a 360,000-sf building at Rainier Park of Industry, its 85-acre business park here, and has a 20-acre land sale and development deal pending with City Beverage for a 125,000-sf distribution warehouse at the north end of the park.Rainier Park of Industry sits one mile from the new 24th Street interchange with Highway 167. The speculative development project will be the second building constructed within the park. The first building, a 235,000-sf warehouse constructed in 2003, is 100% leased to Simmons Manufacturing, Starpipe Products and PODS of Seattle. The asking lease rates for that facility were $0.31 per sf per month for larger tenants and $0.35 for smaller tenants. “The industrial market is gaining a lot of momentum,” says Bart Brynestad, the former head of real estate for Opus Northwest whom Panattoni hired away earlier this year to complete its existing projects in the market while also drumming up new opportunities. In addition to Rainier Park of Industry, Brynstad also is responsible for developing a 30-acre property Panattoni owns in Everett. Panattoni is not alone in its effort to capitalize on the strong Southend industrial market. Developers of Sumner Corporate Park, an eventual three-million-sf development along Highway 167, has broken ground for its second building, a 380,000-sf warehouse. The first building, a 492,000-sf warehouse, was leased before completion to Norvanco Inc., a locally headquartered third party logistics firm that inked a three-year deal.Bellevue-based Knapp Development is one of four partners in Sumner Corporate Park, a 150-acre former turf farm. Knapp and St. Louis-based Michelson Commercial Realty & Development LLC held the option on the land. 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 of the first building.That successful lease-up of that building 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. Also competing for tenants is Fife Commerce Center, a new two-building, 800,000-sf industrial complex in nearby Fife, that is being developed by a joint venture of Seattle-based Northwest Building LLC and Iowa-based Principal Global Investors. The development site is located on 70th Avenue East between 20th Street East and Valley Avenue East, about one mile from Interstate 5. The first building on the 40-acre site will be 346,000 sf and available to tenants in April 2005. Principal Global Investors is putting up the vast majority of equity for the project, with Northwest Building being the local development partner. The timing of the second building, which has not yet been announced, likely will be dependent on the successful lease-up of the first building, a build-to-suit deal or a significant early commitment by a tenant or two. Northwest Building officials say the launch of the project without any significant preleasing was sparked in part by the tight market for industrial buildings in the county, and a recent CB Richard Ellis report backs that up. The 11.7-million-sf Port of Tacoma/Fife industrial submarket has seen availability decrease over the past three quarters with vacancy going from 10.20% to 6.96%, according to the report.