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March 30, 2015

No leases at Portside Industrial Center yet, but still hope

Business Examiner

Zachariah Bryan

There is a lot of optimism surrounding Fife's Portside Industrial Center - formerly Portside Business Center, a 466,000 square-foot, six-building industrial development that has been built on speculation.

Jones Lang LaSalle Executive Vice President Matt O'Brien, who has been working with the property since its acquisition, said there has been "very strong interest," though no business have yet signed any leases.

He predicts that will change after the newly redubbed complex opens, which should be by July 1.

"Typically, in our market, we don't see a lot of pre-leasing. A lot of times, the building has to be completed to see lots of lease activity," he said. "We're not concerned. The market dynamics are very much in our favor."

Those market dynamics include leasing activity in the Puget Sound area - which he described as "currently strong" - and the fact that Portside's square footage niche has little competition locally.

Most development in Pierce County, explained O'Brien, targets larger users: around 200,000 square feet and up. Portside, on the other hand, is aiming to attract tenants seeking spaces between 20,000 and 75,000 square feet.

"There's not much construction catering to that size of user in the market right now," O'Brien said.

Laurel McQuade, economic development director at the city of Fife, backed up O'Brien's claim.

"Looking for 50,000- to 60,000-square-foot properties, there were only four that I could even find, and one of those was Portside," she said. "A couple of businesses are (currently) looking for space just like this. The market is really opening up, especially since the economy has (been) going up."

McQuade said she had received a few calls already about such a property, and in general, businesses calls to her office have picked up in the past nine months, especially since the beginning of 2015.

"When they start calling cities and economic development boards, it's probably a year or year and a half (before) they want to move into somewhere. It definitely shows people are looking to expand," she said.

There is some evidence that speculative building is finding success in the South Sound. Businesses have been filling out spec buildings in Sumner, according to city officials. Samsung is taking part of the Wenatchee building (see below), and a hospitality supply company is moving into part of the Titan Building. GKN Aerospace and Composite Solutions are also in the midst of moving into new buildings in the city.

In Pierce County, the vacancy rate for the industrial market increased to 6.36 percent in the fourth quarter of 2014, as delivery of new product outpaced leasing activity, according to Kidder Mathews.

But, the report acknowledged, this is viewed as temporary, as there are several tenants who have signed leases but will not take occupancy until 2015. Portside Business Center is among the 10 projects totaling 1.7 million square feet that are currently under way.

McQuade listed several reasons as to why Portside would make an attractive home for businesses.

"Geography works so well for importing and exporting which is good for warehouses, transportation and manufacturing as well," she said. "We are sandwiched between the port and SeaTac and I-5 and SR 167 and all of these other cities where business is huge."

But the No. 1 reason that a business might choose Fife over nearby cities that offer the same amenities, she said, is the list of tax incentives that are offered.

There is some evidence that speculative building is finding success in the South Sound. Nearby, businesses have been filling out spec buildings in Sumner, according to city officials. Samsung is taking part of the Wenatchee building and a hospitality supply company is moving into part of the Titan Building. GKN Aerospace and Composite Solutions are also in the middle of moving into new buildings.

Representatives from Colliers who manage several of the buildings could not be reached for comment.

In Pierce County, the vacancy rate for the industrial market increased to 6.36 percent in the fourth quarter of 2014, as delivery of new product outpaced leasing activity, according to Kidder Mathews. But, the report acknowledged, this is viewed as temporary, as there are several tenants who have signed leases but would not take occupancy until 2015. Portside Business Center is among the ten projects totaling 1.7 million square feet that are currently underway.

McQuade listed several reasons as to why Portside would make an attractive home for businesses.

"Geography works so well for importing and exporting which is good for warehouses, transportation and manufacturing as well," she said. "We are sandwiched between the port and SeaTac and I-5 and SR 167 and all of these other cities where business is huge."

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