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April 25, 2014

Industrial real estate 'consistent & steady'

Business Examiner

During the first quarter, five industrial warehouse projects entered the marketplace totaling 882,982 s.f., according to Kidder Mathews' activity summary. The majority of these were in the Pierce and South King County markets.

Absorption was slightly higher than the deliveries, which is on pace to match or exceed the results of 2013. With absorption slightly outpacing deliveries, the Puget Sound region’s vacancy was at 5.83 percent, a slight decline from the year end vacancy of 5.95 percent. Construction volumes are still active, particularly in Pierce County where nearly 1.8 million s.f. is underway among the 2.1 million s.f. for the region.

Pierce continues to be a very active market on both the leasing and development side. Projects totaling 1,796,455 s.f. are currently under construction, while two others Niagara Bottling Plant (311,000 s.f.) and the Apollo Building (121,652 s.f.) in Sumner were completed. This second largest market now includes nearly 64.8 million s.f.

Net absorption did not keep up with the deliveries in the Pierce County sector, causing a slight bump in vacancy from 5.49 percent to 5.63 percent. Expectations are that the vacant space will be absorbed, including the anticipated move-in of GSA (381,800 s.f.) in Benaroya’s Sumner Distribution Center next quarter.

Thurston County market has seen two consecutive quarters of positive net absorption. In the first quarter of 2014, absorption was 24,831 s.f. The vacancy rate is now at 8.57 percent compared to 8.79 percent at the end of 2013. Given the close proximity to I-5 and several prime sites for development, this market has seen several large distribution facilities constructed over the past few years.

For a more detailed discussion of this industrial real estate market, look to Kidder Mathews' First Quarter report here

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