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October 25, 2017

Seattle-area newcomer Dermody makes another big South Sound industrial play

Puget Sound Business Journal

Marc Stiles

Warehouse developer Dermody Properties has closed a big deal in the South Puget Sound market for the second time in as many weeks.

Dermody on Tuesday said it acquired the Meridian Campus Corporate Park in Lacey to develop a big distribution center, the latest in a string of such projects.

The park has three buildings built eight years ago. They total nearly 460,000 square feet on 18 acres. Construction will start next month on a 320,000-square-foot distribution center.

Architect Dale Couture of Tahoma Design Group designed the new building/ Poe Construction is the general contractor.

Reno, Nevada-based Dermody didn't say how much it paid to buy the property from CalSTRS (the California State Teachers' Retirement System). Commercial real estate company Kidder Mathews' third-quarter report put the price at $42.1 million.

The industrial market south of Tacoma has become important for regional distributors that don't need to be in the pricier, closer-to-Seattle South Seattle and Kent Valley markets.

"What they give up in travel time to Seattle and Bellevue, they gain in rental savings," said Kidder Mathews Senior Vice President Tony Miltenberger. "We will continue to see others like Dermody looking for opportunities farther south."

Electrolux recently leased a distribution center in Lakewood developed by Dermody.

Rents for best-in-class warehouse space in the turbocharged region's industrial market are rising faster than anywhere else in the world, according to a recent report by commercial real estate company CBRE. The result is a building boom in the region. Two dozen buildings totaling 6.4 million square feet are under construction, according to Kidder Mathews.

Growing online sales are the primary driver as Amazon.com Inc. and other e-tailers compete for distribution center space with global delivery companies like UPS, FedEx and DHL. Increased container volumes at the Northwest Seaport Alliance and population growth are also contributing to the growth.

Privately owned Dermody has been in business for 57 years and entered the Seattle market in 2014. The company's Puget Sound portfolio measures 1.2 million square feet.

Dermody Northwest Region Partner Phillip Wood said Meridian's three buildings were 88 percent occupied when it bought the property. Tenants are Providence Health and Services, Crown Beverage, International Paper and Hawks Prairie Furniture.

The industrial park's corporate neighbors include such companies as Home Depot, Target and Trader Joe's.

Monte Decker and Andrew Hitchcock of CBRE will market the Meridian property for lease.

For the full story, visit: Puget Sound Business Journal

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