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1Q’11 PUGET SOUND MARKET REPORT

Puget Sound Retail Market CO NSUM E RS RE T U RN The Puget Sound Retail Market has been

PUGET SOUND RETAIL SUBMARKETS MAP

consistently strong over the last five years, maintaining an overall vacancy rate of less than

5

7%. EVERETT CBD

An expanding population and strong regional employment both help to bolster this vital

S SNOHOMISH COUNTY

S EVERETT/ HARBOR POINTE Puget Sound

component of our regional economy. The Seattle Retail Marketplace continues to be strong and has not seen a vacancy rate above

EDMONDS/ LYNNWOOD

5% in the last five years. The core Seattle Retail

MILL CREEK/ WOODINVILLE

BOTHELL

405

Market, with its strong tenant mix and limited amount of available space, enables retailers to capitalize on the business traffic during the day and the surrounding residential communities during the evening hours. Retail centers such as Westlake Center and Pacific Place have seen a consistently higher flow of traffic since the holiday season and can begin to fully capitalize

NORTHGATE/ N SEATTLE

KIRKLAND

BALLARD/ U DISTRICT

QUEEN ANNE/ MAGNOLIA

520 CORRIDOR SUBURBAN BELLEVUE BELLEVUE CBD I-90 CORRIDOR

REDMOND

520

LAKE UNION

SEATTLE BELLEVUE

CAPITAL HILL/ CENTRAL DIST. BELLTOWN SEATTLE CBD

MERCER ISLAND

S SEATTLE

PIONEER SQ/ WATERFRONT

on growing consumer confidence and spending.

COAL CREEK/ ISSAQUAH

90

RENTON/TUKWILA

The Eastside Retail Market’s stability in the SEATAC/ BURIEN

Bellevue CBD is driven by Bellevue Square and Lincoln Square, which was recently approved for

5

a 1.6M SF expansion by The City of Bellevue.

KENT

LEGEND

Consumer activity will remain strong as the

Northend Retail Submarkets FEDERAL WAY/ AUBURN

number of Microsoft employees now working and living within blocks of this retail center continues to grow.

Eastside Retail Submarkets Seattle Retail Submarkets Pierce County Retail Submarkets

TACOMA

In addition to the retail core of downtown Bellevue,

suburban

retail

centers

such

as

needs, there will be an increased demand for retail areas that

Issaquah’s Pickering Place have also seen expansion, with

can support a growing population.

companies like Costco growing its presence in the area and

The Tacoma Retail Market has been flat in the last year with

expanding its headquarters.

little change. However, with a high volume of returning soldiers

The Northend and Southend Retail Markets have also

to JBLM, retail growth can be expected. One of the areas of

been experiencing positive growth. These traditionally more

note will be Point Ruston, a mixed use retail community on

suburban areas will see heightened activity as Boeing ramps up

Tacoma’s northwestern waterfront. The site will feature retail,

to begin production on their newly acquired tanker contract. As

restaurants, a movie theater, hotel and a mile long boardwalk

more suppliers move to these areas to accommodate Boeing’s

along the waterfront.

(4 2 5 ) 9 7 4- 4000

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S EAT T L E | BEL L EVU E | TA COM A | PORTLA N D


1Q’11 PUGET SOUND MARKET REPORT

Puget Sound Retail Market M A RKET S TAT IS T IC S A ND HIS TORI CA L T RE N D S

HISTORICAL VACANCY RATES & RENTAL RATES 7.0%

$25.00

6.0%

$20.00

5.0% 4.0%

$15.00

3.0%

$10.00

2.0% $5.00

1.0% 0.0%

2006

2007

Rental Rates

Puget Sound Retail Overview Market Area

2008

INVENTORY Buildings

2009

Direct Vacancy

Sublet Vacancy

Total Vacancy

1Q

YTD

2011

$0.00

Vacancy Rates

ABSORPTION SF

2010

AVERAGE RENT & EXPENSES Rent NNN

Downtown Seattle

3,105

32,347,157

3.3%

0.1%

3.4%

69,737

69,737

$19.68

$8.00

Eastside

1,827

30,807,169

6.6%

0.2%

6.8%

71,808

71,808

$21.85

$8.00

Northend

2,675

38,769,069

6.4%

0.4%

6.8%

83,585

83,585

$17.26

$5.50

Southend

1,753

29,476,356

7.6%

0.4%

8.0%

(19,699)

(19,699)

$16.20

$4.50

Tacoma

3,841

39,907,053

7.2%

0.1%

7.3%

(47,996)

(47,996)

$15.73

$4.50

PUGET SOUND

13,201

171,306,804

6.2%

0.2%

6.4%

157,435

157,435

$18.14

$6.10

2006

2007

2008

2009

1Q 2010

2Q 2010

3Q 2010

4Q 2010

1Q 2011

Downtown Seattle

3.7%

3.7%

3.5%

4.8%

4.7%

4.8%

4.0%

3.7%

3.4%

Eastside

4.5%

4.2%

4.8%

7.1%

7.2%

6.8%

7.0%

7.0%

6.8%

Northend

4.7%

3.8%

4.0%

5.9%

6.2%

6.4%

6.7%

6.9%

6.8%

Southend

4.9%

5.5%

6.4%

7.9%

8.2%

8.0%

7.7%

7.9%

8.0%

Tacoma

5.0%

4.4%

5.8%

7.0%

6.8%

6.9%

7.0%

7.2%

7.3%

PUGET SOUND

4.6%

4.3%

4.9%

6.5%

6.6%

6.6%

6.5%

6.6%

6.4%

Historical Rents (NNN) Market Area

Historical Total Absorption

2007

2008

2009

2010

Market Area

1Q 2010

2Q 2010

3Q 2010

4Q 2010

2010

1Q 2011

Downtown Seattle

$23.42

$24.42

$22.23

$20.20

Downtown Seattle

52,818

(35,163)

240,011

115,984

373,650

69,737

Eastside

$34.09

$31.95

$24.98

$21.88

Eastside

(8,828)

140,907

(59,179)

876

73,776

71,808

Northend

$20.93

$20.77

$17.94

$17.64

Northend

(111,073)

(31,665)

(103,473)

(73,047)

(319,258)

83,585

Southend

$22.05

$19.93

$17.11

$16.30

Southend

(54,498)

69,567

75,703

(64,013)

26,759

(19,699)

Tacoma

$18.52

$18.34

$16.77

$15.82

Tacoma

71,862

(25,405)

(36,309)

(74,142)

(63,994)

(47,996)

PUGET SOUND

$23.80

$23.08

$19.81

$18.37

PUGET SOUND

(49,719)

118,241

116,753

(94,342)

90,933

157,435

Average Asking Lease Rates Market Area

LEASE RATES (FULL SERVICE) Rent NNN

OPERATING EXPENSES* (PSF) TI's Parking

Downtown Seattle

$19.68

$8.00

$10-$20/SF

Free

Eastside

$21.85

$8.00

$15-$30/SF

Free

Northend

$17.26

$5.50

$10-$25/SF

Free

Southend

$16.20

$4.50

$10-$25/SF

Free

Tacoma

$15.73

$4.50

$10-$20/SF

Free

PUGET SOUND

$18.14

$6.10

$10-$30/SF

Free

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S EAT T L E | BEL L EVU E | TA COM A | PORTLA N D

Prior years as of 4Q

Historical Total Vacancy Market Area


1Q11_Puget_Sound_Retail