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July 12, 2017

Lots of construction in South King's industrial market

Business Examiner

According to a recent report from real estate firm Kidder Mathews, South King County trails only Pierce among markets in Puget Sound when it comes to industrial construction.

With 651,783 square feet under construction, builders are active around South King's industrial zones. That square footage includes North Auburn Logistics (261,553 s.f.); CenterPoint Kent (220,800 s.f.); Exotic Metals, a 126,448 s.f. owner-user building; and West Valley 182 (42,982 s.f.).

The submarket - which, for the purposes of Kidder Mathews' report, also includes areas such as Burien and Tukwila - had 406,167 s.f. in deliveries in the quarter, including Bridge Pointe Burien (241,140 s.f.) and Des Moines Creek Business Park Phase III, Building 3A (150,103 s.f.).

However, the submarket experienced negative net absorption of -229,275 s.f. in the second quarter, which pushed the vacancy rate up to 2.81 percent from 2.24 percent. Still, there are a couple of pending leases that should help boost leasing later this year.

Average asking rents continue to climb, now at $0.65/s.f. - $0.04/s.f higher than last quarter. For smaller spaces (under 10,000 s.f.), shell rates range from $0.45 to $0.55/s.f.; $0.42 to $0.45 for spaces between 10,000 s.f. and 20,000 s.f.; and $0.32 to $0.44 for spaces larger than 20,000 s.f., depending on age and quality. Office add-on rates vary from $0.65 to $0.90, depending on age and quality of the build-out. Building sale prices are expected to range from $100 to $150/s.f. Land values will range between $12.00 to $19.00/s.f. for fully improved sites, with the higher prices further north.

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