The newest report from real estate firm Kidder Mathews shows Pierce County continuing to pace Puget Sound in industrial market activity.
With an abundance of developable land, the area continues to lead the way both in leasing and development. On the leasing side, Pierce achieved 1,053,174 square feet of positive net absorption in the quarter and nearly 1.8 million s.f. through the first half of the year. Two buildings — North Country Sumner Business Park, Building A (267,703 s.f.) and LogistiCenter at I-5 in Lakewood (210,700 s.f.) were completed.
With absorption outpacing deliveries, the vacancy rate dropped from 5.06 percent to 4.25 percent. Average asking blended rents continue to increase, now at $0.55 per square foot, a $0.04-per-square-foot increase over the past quarter.
On the development side, 13 buildings totaling 4,286,469 s.f. are underway. Notable projects include Prologis Park Tacoma Buildings A & B (222,925 s.f. and 770,195 s.f.), with Building B pre-leased to UPS. Other projects include IPT Tacoma Logistics, Buildings A & B (837,620 s.f. and 286,525 s.f.), DCT Blair Logistics, Buildings A & B (542,750 s.f. and 428,228 s.f.), Panattoni’s Lakewood Tacoma Gateway (467,526 s.f.) and The Viking (438,065 s.f.). Of the projects under way, 1.4 million s.f. is pre-leased.
Development hot spots include Sumner, Port of Tacoma, Fife, and Dupont. Overall, there is another 3.5 million s.f.) in the pipeline. Of these, Dupont Corporate Center (the former Intel development) is under contract for intended demolition of some of the existing buildings and redevelop with industrial. The buyer is rumored to be one of the active developers in the region.
Significant move-ins this quarter include Furniture Factory Direct (111,147 s.f.) at Fife 70 East, and UPS (125,919 s.f.) in Building A at IAC Port 167. On the sales side, Lakewood 512 sold for $12,949,900 ($96 /s.f.), with Berkeley Partners out of San Francisco was the buyer. Centerpoint acquired the Goodwill property at 3120 S. Pine Street for $11.0 million ($56/s.f.).
Pierce County’s forecast is for shell rates to range between $0.35 to $0.55/s.f./month, NNN, plus add-on office rates of $0.70 to $0.95/s.f./month. Industrial building sale prices will range from $50/s.f. for older buildings to $100 to $140/s.f. for new or smaller buildings. Land values typically range between $10/s.f. and $16/s.f.