Kent Valley Insider 3Q Market Report. Arie Salomon, SIOR, CCIM Principal

Transcription

1 Market Report 3Q 2016 Valley Insider Arie Salomon, SIOR, CCIM Principal Jeff Forsberg, CCIM Principal Taylor Hoff, SIOR Partner Channing Associate Vice President Al Robertson Senior Vice President Connor Powell Associate

2 3Q, 2016 Valley Insider Quick Stats VACANCY 3.59% LEASE RATES $0.482 TOTAL ABSORPTION Change from last CURRENT Yr. Qtr. 287,811 These reports are getting boring to write; yes, we lived through another quarter of low vacancy, increased absorption, absurd rent growth and thriving new construction. Where is the drama in this? No one has made a bad acquisition in this period as rent growth has far exceeded anyone s expectations. Losing a big tenant doesn t seem to be a problem since another one seems to be just around the corner. The great recession is officially behind us. The recovery, at least in the Northwest Industrial Market, has happened, is board based and robust. UNDER CONSTRUCTION 6,153,424 Average Shell Asking Rates CLASS A CLASS B 5,000-15,000 SF $0.581 $ ,001-30,000 SF $0.534 $ ,001-60,000 SF $0.498 $ ,001+ SF $0.468 $0.437 Absorption Trends 4Q 3Q 2Q 1Q , , , ,929 1,719, ,739 1,455,654 3,859, , , ,572 1,646,923 2,893, , , , ,982 1,471,934 Our current vacancy rate of 3.59% is at an alltime low. The new construction pipeline of million square feet is also at record levels. Here is our rent growth over the past four years: 4.7%, 6.5%, 11.4% and 9.5%. We recently renewed a larger client in a space we did a deal on in The shell rate then was $0.32 per square foot. Our negotiated renewal rate was $0.46 per square foot. That is a 45% rate increase in a seven-year span. That, my friends, is why the Puget Sound Industrial Market is widely seen as one of the most desirable locations in the nation. Submarket Total RBA Direct Vacant Direct Vacant (%) Sublease Total Vacant w/ Sublease Total Vacant w/ Sublease RENTON 9,125, , % - 233, % SEATAC 3,503, , % 41, , % TUKWILA 11,836, , % - 298, % KENT 47,987,008 1,215, % 103,091 1,318, % AUBURN 21,322, , % 104, , % SUMNER 17,347,724 1,724, % - 1,724, % TOTAL 111,122,331 3,991, % 249,050 4,240, %

3 Population growth in our region and e-commerce are the driving force behind this resurgence. Again, Amazon dominates the conversation leasing 401,076 square feet at Sumner Corporate Park and leasing all of Terreno s 158,168 square foot Cascade Corporate Center in for Amazon Fresh. The thing is, they are not done. We have heard rumors of other pending industrial deals, they currently have over 8,000 job postings in our area, and they just leased an entire 354,000 square foot office building in Bellevue. Ask your Echo speaker how to spell dominance and chances are Alexa will spell A-M-A-Z-O-N. There is a broader ripple effect of Amazon s e-commerce activity. They are providing a lift to suppliers, 3PL companies, and packaging firms. For example, ULINE Packaging and UPS are both looking for close to 1 million square feet in our area, due in part to the expanding business from Amazon s growth. Lease Transactions Valley Lease Activity Industrial Distribution Group Inc. Valley Centre Corporate Park 45,325 SF (4,734 SF Office) COMMENCEMENT 01/01/2017 Sears Logistics Services, Inc. Harvest Business Park 58,534 SF (5,509 SF Office) COMMENCEMENT 10/01/2016 Airefco Inc. Prologis Park Trans-Pacific 63,158 SF (8,173 SF Office) COMMENCEMENT 09/01/2016 Chipman Moving & Storage Seattle Bike Supply 66,500 SF (6,000 SF Office) COMMENCEMENT 08/15/2016 UPS DCT Distribution Center 67,260 SF (0 SF Office) COMMENCEMENT 10/01/2016 Sale activity has been down of late but that is more of a function of lack of product than demand. The most significant transaction last quarter was the International Airport Centers multi-state portfolio sale of which two nice industrial projects in our market were sold to RREEF. The 278,750 square foot SeaKing Industrial Park and the 228,300 square foot East Valley DC sold for $27 million and $23.9 million, respectively. Over the past year, the average sale price on industrial buildings is $114 per square foot a big jump from the $50 to $70 per square foot pricing of the past six or seven years. It s hard for investors to find upside potential at this new price point. DuPont Zones, Inc. NW Corporate Park - 72,000 SF (7,061 SF Office) COMMENCEMENT 11/01/2016 Forward Air, Inc. Rainier Corporate Park - 83,420 SF (6,500 SF Office) COMMENCEMENT 08/01/2016 Amazon.com Cascade Corporate Center 158,168 SF (20,115 SF Office) COMMENCEMENT 12/01/2016 Ikea Property Inc. NW Logistics Center - Phase I 225,000 SF (0 SF Office) COMMENCEMENT 08/28/2016 THE INFORMATION CONTAINED HEREIN HAS BEEN GIVEN TO US BY THE OWNER OF THE PROPERTY OR OTHER SOURCES WE DEEM RELIABLE, WE HAVE NO REASON TO DOUBT ITS ACCURACY, BUT WE DO NOT GUARANTEE IT. ALL INFORMATION SHOULD BE VERIFIED PRIOR TO PURCHASE OR LEASE.

4 Sale Activity SeaKing Industrial Park 278,750 SF YEAR BUILT 1975 SALE PRICE $27,000,000 Sale Transactions Valley Seattle SOLD 10/05/2016 East Valley DC 228,300 SF YEAR BUILT 1987 SALE PRICE $23,900,000 SOLD 10/05/2016 ICON Material Building 283,595 SF YEAR BUILT 1968 SALE PRICE $30,000,000 SOLD 09/01/2016 Platt Electric Building 19,920 SF YEAR BUILT 1988 SALE PRICE $2,300,000 SOLD 09/01/2016 Custom Plus Building 18,400 SF YEAR BUILT 1987 SALE PRICE $2,350,000 SOLD 08/26/2016 East Valley Distribution Center Valley Centre Corporate Park EJ Bartells Building 90,120 SF YEAR BUILT 1969 SALE PRICE $9,576,091 Looking forward, market demand coupled with Renton SOLD 08/14/2016 impressive job growth in region will keep vacancy Tukwila Tukwila Commerce Center 476,765 SF YEAR BUILT 1975 SALE PRICE $45,200,000 SOLD 08/08/2016 levels trending down. Will the election impact us? Will the Feds ever increase interest rates? Will Amazon eventually stumble? History tells us the ride will not last forever, so maybe we should enjoy our Sumner Central - Bldg A 46,200 SF YEAR BUILT 2006 boring positive narrative while it lasts. SALE PRICE $5,100,000 Sumner SOLD 07/18/2016 West 212th, Bldg J 19,286 SF YEAR BUILT 2006 SALE PRICE $3,105,000 SOLD 07/15/2016

5 Sale Lease Local Knowledge, Global Reach While we are experts in the local Valley industrial market, we have a 183,435 SF Fernley, NV 19,320 SF Denver, CO 36,459 SF Bensenville, IL 33,440 SF Romulus, MI 396,000 SF Brownsburg, IN 135,890 SF Hazelton, PA national and global reach through the NAI Global network that can tackle any commercial real estate need. 180,608 SF Ontario, CA 7,500 SF San Diego, CA 110,660 SF DeSoto, TX Our clients choose us for their national business because they trust our ability to Sale Lease manage the sale or leasing process. We ask the right questions, and we interview 9,404 SF Honolulu, HI to find the right local broker to help; we put our client s long-term interest above our own. We are still a local, independently-owned firm, but with our NAI Global platform, we are part of something much bigger. What is Currently Available? Call for details & pricing 180th Street Building 51,960 SF (6,720 office) 4 DH/2 GL & 22 clear Park 234, Building C 37,280 SF (2,864 SF office) 13 DH/4 GL & 24 clear Prologis Park SeaTac 7,344-13,417 SF Multiple doors; airport location SeaTac West Valley Distribution Ctr. III IP Cabot Central 3,950-15,870 SF GL & clear 12,000 SF (734 SF office) 3 DH & 24 clear 63,576 SF (7,693 SF office) 10 DH/ 2 GL & 30 clear 70 East 111,147 SF (14,555 SF office) 20 DH, 1GL & 24 clear Renton Orca Bay Seafood Facility 76,900 SF Food processing cold storage FOR SALE Emerald Corp Pk, Bldg C 110,693 SF (7,945 SF office) Divisible 17 DH, 2 GL & 30 clear THE INFORMATION CONTAINED HEREIN HAS BEEN GIVEN TO US BY THE OWNER OF THE PROPERTY OR OTHER SOURCES WE DEEM RELIABLE, WE HAVE NO REASON TO DOUBT ITS ACCURACY, BUT WE DO NOT GUARANTEE IT. ALL INFORMATION SHOULD BE VERIFIED PRIOR TO PURCHASE OR LEASE.

6 Construction Report 18,466,027 SF City Developer Project Type Year Project Size Available SF Panattoni Development, Inc. West Valley Spec ,235 - Dupont Griot s Garage NW Logistics - Phase I Spec ,000 - FedEx Benaroya - BTS ,000 - DCT DC - Bldg A Spec ,805 - DCT Industrial DCT DC - Bldg B Spec , North Site Spec , South Site Spec ,550 - LBA/Davis Properties Portside Business Center Spec ,000 - Panattoni Development, Inc. 212th Spec ,544 - IDS Real Estate Group Stryker Business Center - 2 BTS ,420 - LakEwood Puyallup NW Building Corp International Airport Centers Lakewood Industrial Park - Bldg 27 Spec ,300 99,100 Lakewood Industrial Park - Bldg 28 Spec , ,300 IAC Port A Spec ,753 - IAC Port B Spec ,176 - Avenue 55 / Cabot Puyallup West Distribution Center Spec , ,592 Renton PACCAR PACCAR Warehouse BTS ,500 - Seatac Panattoni / Metlife Des Moines Creek BP - Phase I Spec ,958 - DCT Industrial DCT White River - Chinook Spec , ,437 DCT White River - Sockeye Spec ,895 - Panattoni Larsen Building Spec ,212 - Bob Stobie Riverside - Surface Solution BTS ,272 - Salmon Creek - Bldg A Spec ,600 - Sumner Tarragon Salmon Creek - Bldg B Spec ,100 69,045 COMPLETED SeaPort Logistics Spec ,180 - Prudential / Michelson Knapp Sumner CP - Cascade Spec , ,000 Avenue 55 Sumner West Spec ,900 - Panattoni Tamarack Building Spec ,190 - Panattoni / Metlife The Steele Building Spec ,850 - Tukwila A&B Properties Interurban Development Spec ,705 2,291 TOTAL 6,465,083 1,057,765

7 City Developer Project Type Year Project Size Available DCT Industrial DCT Hudson Spec , ,652 Federal Way IRG Weyerhaeuser Spec , ,000 Avenue 55 Ave 55 - Development Spec ,000 50,000 DCT Industrial DCT Blair Logistics - Bldg B Spec , ,447 IPT Interfor Sawmill Site Spec ,250,000 1,250,000 CenterPoint CenterPoint Yard Site Spec , ,800 Exotic Metals Exotic Metal BTS BTS ,163 - O Keefe / Terreno Tri State Site Spec , ,000 Ever-West West Valley 182 Spec ,492 43,492 PACIFIC Davis Properties The Pacific Building Spec , ,309 IN PLANNING Seattle Prologis Prologis Seattle (3-story) Spec , ,000 DCT Industrial DCT W.Valley Hwy Spec , ,616 IPT IPT Sumner South Warehouse Spec , ,900 Tarragon SeaPort Logistics - Bldg B&C Spec , ,000 Sumner Turbak Sumner 32 BTS ,141 47,141 Prudential / Michelson Knapp Sumner CP - Glacier Spec ,000 53,000 Principal Financial Group Sumner Golf Course Spec , ,000 TOTAL 5,847,520 5,720,357 City Developer Project Type Year Project Size Available - Laredo Industrial Park Spec , ,040 American Realty Advisors Northcreek Spec , ,533 Federal Way Preferred Freezer Orca / Preferred Freezer Bldg BTS ,000 - DCT Industrial DCT Blair Logistics - Bldg A Spec , ,941 Panattoni Enterprise Center Spec , ,620 Trammell Crow I-5 Commerce Center Spec , ,490 Dermody 167 Spec , ,972 Benaroya New Sound Transport Bldg BTS ,000 - UNDER CONSTRUCTION Prologis Park Tacoma - 1st phase Spec , ,600 Prologis Prologis Park Tacoma - 2nd phase Spec ,088,800 1,088,800 Segale Pacific Gateway Spec , ,000 Morgan Stanley / Tyler Higgins South 234 Spec , ,000 Pacific Davis Properties The Pacific Building Spec , ,309 Crow Holding Puyallup Distribution Center Spec , ,500 Puyallup Davis Properties Summit Business Park Spec ,153 87,153 Renton Group Health Longacres - South BTS ,000 - Panattoni / Metlife Des Moines Creek BP - Phase II Spec , ,192 Seatac Naylor Group WDS Cold Storage Bldg BTS ,000 - Carpinito Brothers Carpinito Sumner - Bldg A Spec , ,650 Sumner Davis Properties Penny Salsa BTS BTS ,000 - Tacoma NewCold Orchard Industrial Center BTS ,000 - TOTAL 6,153,424 4,505,191 THE INFORMATION CONTAINED HEREIN HAS BEEN GIVEN TO US BY THE OWNER OF THE PROPERTY OR OTHER SOURCES WE DEEM RELIABLE, WE HAVE NO REASON TO DOUBT ITS ACCURACY, BUT WE DO NOT GUARANTEE IT. ALL INFORMATION SHOULD BE VERIFIED PRIOR TO PURCHASE OR LEASE.

8 Arie Salomon, SIOR, CCIM Principal Jeff Forsberg, CCIM Principal Taylor Hoff, SIOR Partner Channing Associate Vice President Al Robertson Senior Vice President Connor Powell Associate NAI Puget Sound Properties Commercial Real Estate Services th Avenue NE Suite 340 Bellevue, Washington USA nai-psp.com