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July 29, 2015

Office space still weak, Warehouse strong

Business Examiner

South King and Pierce Counties' commercial office real estate picture remains dark, despite the sunny skies over Metro-Seattle. The new second-quarter assessment of the market from Kidder Mathews brokerage shows a vacancy rate of 14.3 percent, tied with Pierce County for the region's highest.

In contrast, the core downtown Seattle office vacancy is 12.8 percent with asking rental rates up 20 percent in the first quarter, and there are now 17 office buildings under construction in the Seattle market.

The relatively lower value Industrial market -- the largest collection in the state being in South King County -- continues to see strong demand, with vacancy rates falling to 4.14 percent, compared to 9.06 percent in 2011.

Pierce County's Industrial sector at 67.9 million sq. ft. is the second largest in the Puget Sound region, and new construction is pushing the open space rate up a bit, now at 7.7 percent. The two areas with the weakest performance -- South Hill Puyallup and Lakewood -- also have the most warehouse properties.

Thurston County's Industrial market continues to do well, with small tenant leasing activity pushing the available space down to 7.34 percent.

Kidder Mathews makes its research reports available on the Internet at this link.

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