2Q’11 PUGET SOUND MARKET REPORT
Eastside & Northend Industrial/Flex Market STEADY M A RK E T The Eastside and Northend industrial markets continue to show signs of slow stabilization.
EASTSIDE AND NORTHEND INDUSTRIAL/FLEX SUBMARKETS MAP
Although Eastside vacancy rates improved slightly over first quarter they continue to remain stubbornly high compared to last year. The Northend market is following a similar path, with only slight improvements over one year ago. et S oun d
sector will begin to realize larger gains when there is significant
5
Pug
primarily to renewed Boeing production. The Eastside market
EVERETT
MUKIL TEO
The moderate increase in Northend activity can be attributed
improvement in the residential, commercial and building trade
MONROE
industries; however, technology and small manufacturing LYNNWOOD
companies are showing signs of strength. The flex markets are still weak, with both the Eastside and
BOTHELL
Northend markets experiencing only a slight improvement over the last quarter.
WOODINVILLE
5
Absorption has been moving into positive
405
territory, which is a welcomed trend in this sluggish market sector. Looking forward to the third and fourth quarters of 2011, the shoulders of last quarter’s tanker contract awarded to Boeing manufacturing across the board. The surge in production will
Wa s
hin
Northend market should see increased tenant activity. On the 520
SEATTLE
Lake
the aerospace giant has also announced a ramp up in airplane
REDMOND
gto
n
KIRKLAND
90
have a positive impact on those companies that are located
BELLEVUE
BELLEVUE
nearby and provide support services to this manufacturing West Seattle
powerhouse.
ISSAQUAH
In late June the Port of Everett celebrated its 1,000th barge carrying aerospace parts for the 747, 767 and 777 models, a sign that Boeing is on a steady course to raise its plane output. As tenant demand increases and space options decrease, the Northend should see a rise in rents and decline in concessions
LEGEND Northend Industrial Submarket Eastside Industrial Submarket
to balance the supply to demand ratio. Similarly, the Eastside is poised for improving tenant activity as the economy continues to gain momentum. Several large tenants, including Saltworks, are expanding operations in the Woodinville market, which will help contribute to positive growth in that submarket. (4 2 5 ) 9 7 4- 4000
w w w. pa c i fi c -re.c om
S EAT T L E | BEL L EVU E | TA COM A | PORTLA N D
2Q’11 PUGET SOUND MARKET REPORT
Eastside and Northend Industrial Market The Eastside industrial market is comprised of seven submarkets, 447
HISTORICAL VACANCY RATES
properties and totals just over 17 million square feet. The Northend
18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%
industrial market has a total of 295 properties spanning three submarkets and totals just over 12 million square feet. Both markets outpaced the first quarter, moving well into positive net absorption territory. Overall vacancy rates trended in the same direction, with the Eastside finishing at 9.4% and the Northend finishing just above 12%.
N O RT H
END
EA STS IDE
2005
2006
2007
2008
2009
2010
2011
Eastside and Northend Industrial Overview INVENTORY Buildings SF
Direct Vacancy
Sublet Vacancy
Total Vacancy
ABSORPTION 2Q Absorption YTD
AVERAGE RENT & EXPENSES Shell Office
CONCESSIONS Free Rent
Bothell
32
1,210,694
0.2%
0.0%
0.2%
7,000
(3,000)
$0.50-$0.60
$1.00-$1.20
4-6 months
Woodinville
136
5,385,289
9.9%
0.0%
9.9%
2,492
30,009
$0.45-$0.60
$0.95-$1.20
4-6 months
Kirkland
43
1,576,880
9.1%
1.3%
10.4%
13,556
8,076
$0.45-$0.60
$0.95-$1.25
4-5 months
Monroe
48
1,591,296
20.2%
2.3%
22.5%
2,200
(2,717)
$0.40-$0.55
$0.95-$1.15
4-7 months
Redmond
105
3,856,247
9.1%
0.5%
9.6%
1,342
2,490
$0.50-$0.60
$1.00-$1.25
3-6 months
Bellevue
68
2,883,008
5.5%
0.0%
5.5%
60,696
(37,995)
$0.50-$0.65
$1.10-$1.25
3-5 months
Issaquah
15
731,980
6.4%
0.0%
6.4%
4,588
1,831
$0.50-$0.65
$1.10-$1.25
3-6 months
EASTSIDE INDUSTRIAL
447
17,235,394
9.0%
0.4%
9.4%
91,874
(1,306)
$0.45-$0.65
$0.95-$1.25
3-7 months
Everett
176
8,234,876
11.4%
0.3%
11.7%
52,709
37,356
$0.45-$0.60
$1.10-$1.25
3-6 months
Mukilteo
59
2,208,128
18.4%
0.0%
18.4%
(641)
30,010
$0.50-$0.65
$1.10-$1.25
3-6 months
Lynnwood
60
1,686,432
6.6%
0.8%
7.4%
(4,933)
(19,375)
$0.50-$0.65
$1.10-$1.25
3-6 months
NORTHEND INDUSTRIAL
295
12,129,436
12.0%
0.3%
12.3%
47,135
47,991
$0.45-$0.65
$1.10-$1.25
3-6 months
*5 year deal
Market Area
2004
2005
2006
2007
2008
2009
2Q’10
3Q’10
4Q’10
1Q’11
2Q’11
Bothell
18.8%
18.1%
13.6%
2.8%
0.3%
2.2%
2.1%
2.1%
0.0%
0.8%
0.2%
Woodinville
14.1%
11.9%
8.1%
4.9%
4.6%
10.9%
10.2%
11.3%
10.7%
10.2%
9.9%
Kirkland
32.0%
12.7%
3.1%
10.8%
3.7%
14.4%
13.7%
10.7%
10.9%
11.3%
10.4%
Monroe
3.6%
3.6%
8.1%
10.4%
8.9%
24.2%
24.8%
23.1%
23.0%
23.3%
22.5%
Redmond
10.2%
9.5%
5.0%
3.9%
4.3%
8.9%
9.0%
9.9%
9.7%
9.7%
9.6%
Bellevue
6.5%
4.1%
22.2%
12.2%
5.2%
5.4%
2.0%
2.7%
4.2%
7.5%
5.5%
Issaquah
42.2%
32.5%
22.5%
10.1%
6.4%
6.9%
7.0%
7.0%
6.7%
7.0%
6.4%
EASTSIDE INDUSTRIAL
13.9%
10.4%
10.3%
7.4%
4.7%
10.2%
9.4%
9.8%
9.8%
10.5%
9.4%
Everett
18.0%
15.9%
18.7%
9.2%
11.2%
15.7%
14.9%
14.2%
12.8%
13.0%
11.7%
Mukilteo
17.2%
16.0%
13.9%
10.8%
9.4%
11.6%
14.6%
20.2%
19.8%
18.4%
18.4%
Lynnwood
6.7%
12.0%
7.0%
7.0%
4.8%
7.5%
6.9%
7.1%
6.3%
7.1%
7.4%
NORTHEND INDUSTRIAL
16.0%
15.3%
15.8%
9.1%
9.9%
13.7%
13.6%
14.2%
13.1%
13.1%
12.3%
Historical Leasing Activity Market Area
Historical Total Absorption
2010-Leases
2010-SF
YTD 2011-Leases
YTD 2011-SF
Bothell
2
24,311
2
9,000
Woodinville
46
313,272
24
176,007
Kirkland
18
98,863
3
Monroe
13
94,970
Redmond
20
115,136
Bellevue
29
221,443
11
Issaquah
Market Area
2Q’10
3Q’10
4Q’10
2010
1Q’11
2Q’11
-
(17,096)
(2,998)
(20,094)
(10,000)
7,000
Woodinville
48,213
(60,658)
33,796
21,351
27,517
2,492
15,385
Kirkland
1,019
48,200
(3,878)
45,341
(5,480)
13,556
4
23,615
Monroe
15,646
26,925
2,318
44,889
(4,917)
2,200
11
201,172
Redmond
(41,961)
(34,139)
4,878
(71,222)
1,148
1,342
81,918
Bellevue
52,599
(17,922)
(43,489)
(8,812)
(98,691)
60,696
Bothell
5
18,220
2
6,140
Issaquah
(2,540)
-
2,190
(350)
(2,757)
4,588
EASTSIDE INDUSTRIAL
133
886,215
57
513,237
EASTSIDE INDUSTRIAL
72,976
(54,690)
(7,183)
11,103
(93,180)
91,874
Everett
39
643,109
10
113,221
Everett
111,190
54,107
110,737
276,034
(15,353)
52,709
Mukilteo
9
31,970
3
23,137
Mukilteo
(26,092)
(124,594)
8,333
(142,353)
30,651
(641)
Lynnwood
14
60,244
3
12,932
Lynnwood
10,202
(4,977)
15,165
20,390
(14,442)
(4,933)
NORTHEND INDUSTRIAL
62
735,323
16
149,290
NORTHEND INDUSTRIAL
95,300
(75,464)
134,235
154,071
856
47,135
(4 2 5 ) 9 7 4- 4000
w w w. pa c i fi c -re.c om
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