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2Q’11 PUGET SOUND MARKET REPORT

Puget Sound Retail Market CO NSUM E R C ON F ID E N C E I S K E Y The Puget Sound retail market continues to be

PUGET SOUND RETAIL SUBMARKETS MAP

a stable marketplace, maintaining an overall vacancy rate of less than 7% since 2009 and a rate

5

between 6% and 6.3% over the last five quarters. EVERETT CBD

With population growth on the rise, net migration up, and growth in the office and

S SNOHOMISH COUNTY

S EVERETT/ HARBOR POINTE Puget Sound

industrial markets, the Puget Sound retail market is poised for expansion and growth. The downtown Seattle retail market is one of

EDMONDS/ LYNNWOOD

the stronger and more established retail centers

MILL CREEK/ WOODINVILLE

BOTHELL

405

in the region with its diverse tenant mix, limited available space and high traffic flow both on foot and in cars. The two major downtown retail centers, Westlake Center and Pacific Place saw a steady flow of consumers in the first half of 2011 as market conditions steadily improved.

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

The Eastside retail market is concentrated in the Bellevue CBD at the adjacent retail centers

SEATTLE CBD

MERCER ISLAND

S SEATTLE

PIONEER SQ/ WATERFRONT

of Bellevue Square and Lincoln Square, which

COAL CREEK/ ISSAQUAH

90

RENTON/TUKWILA

have also seen increased consumer traffic and SEATAC/ BURIEN

activity with the improved market conditions and influx of Microsoft employees now working and

5

living within blocks of the retail center.

LEGEND

The Northend and Southend retail markets are also experiencing positive growth.

KENT

Northend Retail Submarkets FEDERAL WAY/ AUBURN

These

suburban retail areas have and will continue to see increased consumer traffic as market conditions

Eastside Retail Submarkets Seattle Retail Submarkets

TACOMA

Pierce County Retail Submarkets

improve and the core retail areas become more crowded. They will also be positively affected by Boeing’s ramp up in production, and job growth will follow in

retail center anchored by AMC, Target, Burlington and Barnes &

order to support the manufacturer’s needs.

Noble.

The Tacoma retail market continues to be a stagnant market

Overall, the Puget Sound retail market is still seeing stagnation

as much of the downtown core is wrought with retail storefront

as it awaits regional market stability. However, as consumer

vacancies. The Tacoma Mall area continues to be one of the

confidence rises, job growth increases and personal income

stronger retails centers in Tacoma, anchored by major tenants

levels rise, the overall retail market will begin seeing higher

such as Sears, JC Penny, Nordstrom, Macy’s and Best Buy. The

profits, more consumers and additional retail developments.

Lakewood Towne Center has also become a strong Tacoma area (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


2Q’11 PUGET SOUND MARKET REPORT

Puget Sound Retail Market The Puget Sound retail market encompasses all five markets, spanning

HISTORICAL VACANCY RATES & RENTAL RATES

from Everett to Tacoma. There are a total of 13,480 buildings that fall

7.0%

into this classification, totaling over 171 million square feet. The second

6.0%

quarter vacancy rates in these markets ranged from 3.3% in Downtown

5.0%

Seattle to 8.2% in the Southend. Net absorption remained in positive

$20.00

4.0%

$15.00

3.0%

$10.00

territory, with the largest gains on the Eastside and in Tacoma. Asking

2.0%

rental rates continue to be on pace with last year, averaging $18.31 per

1.0% 0.0%

square foot.

$25.00

$5.00

2006

2007

Rental Rates

Puget Sound Retail Overview Market Area

2008

INVENTORY Buildings

SF

Direct Vacancy

Sublet Vacancy

Total Vacancy

2009

2010

2011

$0.00

Vacancy Rates

ABSORPTION 2Q Absorption YTD

AVERAGE RENT & EXPENSES Rent NNN

Downtown Seattle

3,093

31,435,923

3.2%

0.1%

3.3%

70,552

140,289

$20.39

$8.00

Eastside

1,504

27,018,228

6.3%

0.2%

6.5%

68,847

140,655

$21.77

$8.00

Northend

3,178

43,348,424

6.3%

0.2%

6.5%

33,321

116,906

$17.66

$5.50

Southend

1,793

29,840,806

7.8%

0.3%

8.1%

(32,688)

(52,387)

$15.91

$4.50

Tacoma

3,972

40,184,292

6.5%

0.1%

6.6%

199,895

151,899

$15.83

$4.50

PUGET SOUND

13,540

171,827,673

6.1%

0.2%

6.3%

339,927

497,362

$18.31

$6.10

2006

2007

2008

2009

2Q’10

3Q’10

4Q’10

1Q’11

2Q’11

Downtown Seattle

3.7%

3.7%

3.5%

4.8%

4.8%

4.0%

3.7%

3.4%

3.3%

Eastside

4.5%

4.2%

4.8%

7.1%

6.8%

7.0%

7.0%

6.8%

6.5%

Northend

4.7%

3.8%

4.0%

5.9%

6.4%

6.7%

6.9%

6.8%

6.5%

Southend

4.9%

5.5%

6.4%

7.9%

8.0%

7.7%

7.9%

8.0%

8.1%

Tacoma

5.0%

4.4%

5.8%

7.0%

6.9%

7.0%

7.2%

7.3%

6.6%

PUGET SOUND

4.6%

4.3%

4.9%

6.5%

6.6%

6.5%

6.6%

6.4%

6.3%

Historical Rents (NNN) Market Area

Historical Total Absorption

2007

2008

2009

2010

Market Area

Downtown Seattle

$23.42

$24.42

$22.23

$20.20

Downtown Seattle

2Q’10

3Q’10

4Q’10

2010

1Q’11

2Q’11

(35,163)

240,011

115,984

373,650

69,737

70,552

Eastside

$34.09

$31.95

$24.98

$21.88

Eastside

140,907

(59,179)

Northend

$20.93

$20.77

$17.94

$17.64

Northend

(31,665)

(103,473)

876

73,776

71,808

68,847

(73,047)

(319,258)

83,585

Southend

$22.05

$19.93

$17.11

$16.30

Southend

69,567

75,703

33,321

(64,013)

26,759

(19,699)

(32,688)

Tacoma

$18.52

$18.34

$16.77

$15.82

Tacoma

(25,405)

PUGET SOUND

$23.80

$23.08

$19.81

$18.37

PUGET SOUND

118,241

(36,309)

(74,142)

(63,994)

(47,996)

199,895

116,753

(94,342)

90,933

157,435

339,927

Average Asking Lease Rates Market Area

LEASE RATES (NNN) Rent NNN

OPERATING EXPENSES* (PSF) TI's Parking

Downtown Seattle

$20.39

$8.00

$10-$20/SF

Free

Eastside

$21.77

$8.00

$15-$30/SF

Free

Northend

$17.66

$5.50

$10-$25/SF

Free

Southend

$15.91

$4.50

$10-$25/SF

Free

Tacoma

$15.83

$4.50

$10-$20/SF

Free

PUGET SOUND

$18.31

$6.10

$10-$30/SF

Free

(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

*Prior years as of 4Q

Historical Total Vacancy Market Area

2Q11_Puget_Sound_Retail_PDF  

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