Thurston County’s industrial market was one of the most active on the development side in 2016, and according to real estate firm Kidder Mathews, the capital county continues the trend so far this year.
One project, Medline’s distribution center in Lacey (700,000 square feet), was delivered in the quarter. With absorption of 476,050 s.f. in the quarter, the vacancy rate now stands at 4.10 percent, compared to 2.24 percent from the prior quarter. This, however, is temporary, as 200,000 s.f. of Medline’s building is leased to two tenants who won’t take occupancy until the next quarter.
Three smaller projects (64,200 s.f.) are under construction with deliveries expected later this year.
Several projects are in the pipeline. IDS has just closed on 97 acres at about $3.00/s.f. (Hogum Bay Logistics Center) with plans for a five-building, 1.6 million s.f. warehouse and manufacturing development.
Long term, Thurston County has a substantial amount of land available for development. There is over 4.6 million s.f. in the pipeline, the highest of the six submarkets identified by Kidder Mathews in Puget Sound. Several projects in Tumwater have been delayed due to environmental issues regarding the Mazama pocket gopher, listed as an endangered species.
Average asking rents are up $0.02/s.f. over the past quarter to $0.46/s.f., with warehouse rents ranging between $0.38 to $0.40/s.f. on larger spaces and office add-on rates between $0.75 to $0.90/s.f. Smaller spaces are $0.45 up to $0.55/s.f. on the shell with office add on at $0.85 to $0.90/s.f. Building sales are expected to range from $50 to $100/s.f. Land values range between $4.00 to $7.00/s.f., with some smaller lots being offered at up to over $8.00/s.f.