1Q’11 PUGET SOUND MARKET REPORT
Eastside & Northend Industrial/Flex Market STABLE AN D GROW IN G The Eastside and Northend Industrial/Flex Markets were relatively quiet in the first quarter of 2011, with a rise in vacancy
EASTSIDE AND NORTHEND INDUSTRIAL/FLEX SUBMARKETS MAP
in the Eastside and minimal change in the Northend. The Eastside market, in particular, has seen significant tenant activity and growth in the high tech and bio tech sector, with a multitude of tenants continuing to scour the market for expansion space. Rental rates, vacancy, absorption and concessions were mostly et S oun d
activity continues to be steady, which bodes well for further
5
Pug
indicator of market stability. As we head into the second quarter
EVERETT
MUKIL TEO
unchanged during the first quarter, which can be an early
growth and an anticipated recovery.
MONROE
During the recent recession, one of the primary methods used LYNNWOOD
by landlords to combat falling rental rates on their properties was to offer additional concessions. Most landlords were giving
BOTHELL
more than would normally be offered in both free rent and tenant
WOODINVILLE
5
improvements to entice tenants and maintain reasonable rental
405
rates. Since the margin now needs to be closed, it is anticipated we will see a decline in concessions before rental rates start to rise again. will strengthen as occupancies occur for leases signed this the market are looking for space down the road as well, with
Wa s
hin
Looking ahead to later in 2011 we forecast the markets 520
SEATTLE
Lake
quarter and market momentum continues. Tenants currently in
REDMOND
gto
n
KIRKLAND
90
occupancies to occur in 2012 or 2013.
BELLEVUE
BELLEVUE
The recent Boeing tanker contract award, along with Boeing ramping up production across their entire line is great news for
West Seattle
ISSAQUAH
the Eastside and Northend Industrial Markets. Boeing is also bringing more of their work back in-house, which is expected to help the Eastside and Northend Industrial Markets significantly. It is expected that there will be noticeable growth among the vendors and suppliers that service Boeing in 2011-2012.
LEGEND Northend Industrial Submarket Eastside Industrial Submarket
There is continued optimism that absorption is around the corner and market growth is likely. Although it may be slow, the Northend and Eastside Industrial/Flex Markets will eventually benefit greatly from Boeing’s ramp up. For right now though, we will have to settle for stability and moderate growth.
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S EAT T L E | BEL L EVU E | TA COM A | PORTLA N D
1Q’11 PUGET SOUND MARKET REPORT
Eastside and Northend Industrial Market The Eastside and Northend Industrial Markets consist of ten submarkets,
HISTORICAL VACANCY RATES
with 724 buildings and a total of 28,944,690 SF. The overall vacancy rate
16.0%
in the Eastside Market edged up slightly from the end of 2010, while
14.0%
remaining even in the Northend Market. Asking rental rates remain
12.0%
farily consistent with 2010 rates. The largest number of signed leases,
10.0%
year to date, have been in the Woodinville and Redmond submarkets,
8.0%
while Woodinville and Mukilteo have seen the largest gains in positive
6.0% 4.0%
net absorption since the beginning of the year.
2005
2006
2007
Eastside and Northend Industrial Overview Market Area
INVENTORY Buildings SF
2008
2009
2010
2011
Vacancy Rates ABSORPTION
Direct Vacancy
Sublet Vacancy
Total Vacancy
1Q
YTD
AVERAGE RENT & EXPENSES Shell Office
CONCESSIONS Shell
Bothell
31
1,096,891
4.4%
1.6%
6.0%
(45,356)
(45,356)
$0.50-$0.60
$1.00-$1.20
4-6 months
Woodinville
136
5,395,595
9.9%
0.3%
10.2%
27,517
27,517
$0.45-$0.60
$0.95-$1.20
4-6 months
Kirkland
43
1,576,880
10.0%
1.3%
11.3%
(5,480)
(5,480)
$0.45-$0.60
$0.95-$1.25
4-5 months
Monroe
48
1,590,449
21.0%
2.3%
23.3%
(4,917)
(4,917)
$0.40-$0.55
$0.95-$1.15
4-7 months
Redmond
104
3,829,067
9.2%
0.5%
9.7%
1,148
1,148
$0.50-$0.60
$1.00-$1.25
3-6 months
Bellevue
69
2,909,088
7.5%
0.0%
7.5%
(98,691)
(98,691)
$0.50-$0.65
$1.10-$1.25
3-5 months
Issaquah
14
719,574
7.1%
0.0%
7.1%
(2,757)
(2,757)
$0.50-$0.65
$1.10-$1.25
3-6 months
EASTSIDE INDUSTRIAL
445
17,117,544
9.9%
0.6%
10.5%
(128,536)
(128,536)
$0.45-$0.65
$0.95-$1.25
3-7 months
Everett
157
7,859,901
12.6%
0.4%
13.0%
(15,353)
(15,353)
$0.45-$0.60
$1.10-$1.25
3-6 months
Mukilteo
59
2,201,977
18.4%
0.0%
18.4%
30,651
30,651
$0.50-$0.65
$1.10-$1.25
3-6 months
Lynnwood
63
1,765,268
6.3%
0.8%
7.1%
(14,442)
(14,442)
$0.50-$0.65
$1.10-$1.25
3-6 months
NORTHEND INDUSTRIAL
279
11,827,146
12.7%
0.4%
13.1%
856
856
$0.45-$0.65
$1.10-$1.25
3-6 months
Historical Total Vacancy 2004
2005
2006
2007
2008
2009
1Q 2010
2Q 2010
3Q 2010
4Q 2010
Bothell
18.8%
18.1%
13.6%
2.8%
0.3%
0.0%
0.0%
0.0%
1.6%
1.8%
6.0%
Woodinville
14.1%
11.9%
8.1%
4.9%
4.6%
10.9%
11.1%
10.2%
11.3%
10.7%
10.2%
Kirkland
32.0%
12.7%
3.1%
10.8%
3.7%
14.4%
13.8%
13.7%
10.7%
10.9%
11.3%
Monroe
3.6%
3.6%
8.1%
10.4%
8.9%
24.2%
25.8%
24.8%
23.1%
23.0%
23.3%
Redmond
10.2%
9.5%
5.0%
3.9%
4.3%
8.9%
7.9%
9.0%
9.9%
9.7%
9.7%
Bellevue
6.5%
4.1%
22.2%
12.2%
5.2%
5.4%
3.9%
2.0%
2.7%
4.2%
7.5%
Issaquah
42.2%
32.5%
22.5%
10.1%
6.4%
6.9%
6.7%
7.0%
7.0%
6.7%
7.1%
EASTSIDE INDUSTRIAL
13.9%
10.4%
10.3%
7.4%
4.7%
10.2%
9.9%
9.4%
9.8%
9.8%
10.5%
Everett
18.0%
15.9%
18.7%
9.2%
11.2%
15.7%
16.3%
14.9%
14.2%
12.8%
13.0%
Mukilteo
17.2%
16.0%
13.9%
10.8%
9.4%
11.6%
13.4%
14.6%
20.2%
19.8%
18.4%
Lynnwood
6.7%
12.0%
7.0%
7.0%
4.8%
7.5%
7.4%
6.9%
7.1%
6.3%
7.1%
NORTHEND INDUSTRIAL
16.0%
15.3%
15.8%
9.1%
9.9%
13.7%
14.4%
13.6%
14.2%
13.1%
13.1%
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
Bothell
Woodinville
46
313,272
11
62,905
Kirkland
18
98,863
1
Monroe
13
94,970
Redmond
20
115,136
Bellevue
29
221,443
Issaquah
1Q 2011
Market Area
1Q 2010
2Q 2010
3Q 2010
4Q 2010
2010
1Q 2011
-
-
(17,096)
(2,998)
(20,094)
(45,356)
Woodinville
(9,312)
48,213
(60,658)
33,796
12,039
27,517
7,125
Kirkland
8,667
1,019
48,200
(3,878)
54,008
(5,480)
1
4,100
Monroe
(26,262)
15,646
26,925
2,318
18,627
(4,917)
8
188,180
Redmond
39,921
(41,961)
(34,139)
4,878
(31,301)
1,148
7
45,046
Bellevue
44,807
52,599
(17,922)
(43,489)
35,995
(98,691)
Issaquah
1,790
(2,540)
-
2,190
1,440
(2,757)
EASTSIDE INDUSTRIAL
59,611
72,976
(54,690)
(7,183)
70,714
(128,536) (15,353)
5
18,220
1
2,540
EASTSIDE INDUSTRIAL
133
886,215
31
318,896
Everett
39
643,109
3
9,201
Everett
(45,322)
111,190
54,107
110,737
230,712
Mukilteo
9
31,970
1
3,705
Mukilteo
(39,185)
(26,092)
(124,594)
8,333
(181,538)
30,651
Lynnwood
14
60,244
-
-
Lynnwood
1,481
10,202
(4,977)
15,165
21,871
(14,442)
NORTHEND INDUSTRIAL
62
735,323
4
12,906
(83,026)
95,300
(75,464)
134,235
71,045
856
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NORTHEND INDUSTRIAL
S EAT T L E | BEL L EVU E | TA COM A | PORTLA N D
Prior years as of 4Q
Market Area
1Q’11 PUGET SOUND MARKET REPORT
Eastside and Northend Flex Market The Eastside and Northend Flex Markets are comprised of nine submarkets, with 360 buildings and a total of 12,157,024 SF. The overall vacancy rate in the Eastside Market edged up slightly from the end of 2010, while remaining even in the Northend Market. Asking rental rates remain farily consistent with 2010 rates. The largest number of signed leases, year to date, has been in the Redmond submarket and the Woodinvillesubmarket saw the largest gain in positive net absorption
HISTORICAL VACANCY RATES 25.0% 20.0% 15.0% 10.0% 5.0% 0.0%
since the beginning of the year.
2005
2006
2007
Eastside and Northend Flex Overview Market Area
2008
2009
2010
2011
Vacancy Rates
INVENTORY Buildings SF
ABSORPTION Direct Vacancy
Sublet Vacancy
Total Vacancy
1Q
YTD
AVERAGE RENT & EXPENSES Shell Office
CONCESSIONS Shell
Bothell
56
2,704,864
20.3%
1.4%
21.7%
9,948
9,948
$0.50-$0.60
$1.10-$1.25
1-3 months
Woodinville
13
409,282
8.7%
4.4%
13.1%
20,564
20,564
$0.50-$0.60
$1.00-$1.25
3-6 months
Kirkland
43
1,264,755
22.3%
0.0%
22.3%
(21,515)
(21,515)
$0.50-$0.65
$1.10-$1.25
1-3 months
Redmond
129
4,036,594
13.9%
0.9%
14.8%
(28,012)
(28,012)
$0.50-$0.65
$1.10-$1.25
2-4 months
Bellevue
47
1,219,958
16.2%
0.0%
16.2%
(8,516)
(8,516)
$0.50-$0.65
$1.10-$1.25
3-5 months
Issaquah
12
267,600
4.4%
0.0%
4.4%
1,916
1,916
$0.50-$0.65
3-5 months
EASTSIDE FLEX
300
9,903,053
16.5%
0.9%
17.4%
(25,615)
(25,615)
$0.50-$0.65
$1.10-$1.25 $1.00-$1.25
Everett
18
1,191,111
10.7%
8.4%
19.1%
8,606
8,606
$0.50-$0.60
$1.05-$1.25
3-6 months
Mukilteo
13
594,296
13.3%
0.0%
13.3%
-
-
$0.50-$0.60
$1.05-$1.25
3-6 months
Lynnwood
29
468,564
12.4%
0.0%
12.4%
(8,199)
(8,199)
$0.50-$0.60
$1.05-$1.25
3-6 months
NORTHEND FLEX
60
2,253,971
11.8%
4.4%
16.2%
407
407
$0.50-$0.60
$1.05-$1.25
3-6 months
1-5 months
2004
2005
2006
2007
2008
2009
1Q 2010
2Q 2010
3Q 2010
4Q 2010
1Q 2011
Bothell
25.9%
23.3%
19.1%
14.8%
21.5%
23.1%
22.7%
21.4%
20.1%
21.1%
21.7%
Woodinville
8.4%
2.8%
8.0%
9.8%
9.6%
8.3%
8.6%
9.5%
18.1%
18..1%
13.1%
Kirkland
18.3%
17.1%
13.9%
12.7%
16.1%
22.2%
20.6%
19.8%
19.9%
20.6%
22.3%
Redmond
26.7%
24.8%
11.6%
8.4%
7.6%
11.7%
11.9%
12.7%
13.9%
14.2%
14.8%
Bellevue
10.0%
8.8%
8.7%
11.4%
10.5%
17.0%
18.3%
18.4%
16.1%
15.5%
16.2%
Issaquah
33.6%
1.9%
4.7%
13.5%
8.6%
6.0%
6.6%
4.9%
4.5%
5.1%
4.4%
EASTSIDE FLEX
22.7%
19.9%
13.3%
11.2%
12.9%
16.5%
16.4%
16.3%
16.5%
16.9%
17.4%
Everett
13.6%
15.9%
10.2%
14.9%
8.8%
8.1%
8.5%
8.5%
20.2%
19.9%
19.1%
Mukilteo
58.6%
36.6%
16.2%
15.3%
13.7%
20.5%
20.5%
20.5%
13.3%
13.3%
13.3%
Lynnwood
20.1%
17.2%
11.3%
7.2%
6.7%
12.1%
15.0%
14.7%
10.8%
10.6%
12.4%
NORTHEND FLEX
28.5%
25.0%
19.9%
10.4%
9.7%
12.2%
13.0%
12.9%
16.4%
16.2%
16.2%
Historical Leasing Activity Market Area
Historical Total Absorption
2010 Leases
2010 SF
YTD 2011 Leases
YTD 2011 SF
1Q 2010
2Q 2010
3Q 2010
4Q 2010
2010
Bothell
42
223,637
5
11,856
Bothell
6,782
36,050
36,087
(26,113)
52,806
9,948
Woodinville
6
8,194
6
7,083
Woodinville
(1,269)
(3,758)
(35,660)
515
(40,172)
20,564
Kirkland
18
58,040
5
13,068
Kirkland
21,106
10,192
(1,560)
(8,657)
21,081
(21,515)
Redmond
82
231,921
14
44,466
Redmond
(5,347)
(33,978)
(46,613)
(12,515)
(98,453)
(28,012)
Bellevue
35
106,785
6
12,726
Bellevue
(15,308)
(1,588)
27,864
7,562
18,530
(8,516)
Issaquah
4
8,797
1
1,916
Issaquah
(1,613)
4,533
1,000
(1,547)
2,373
1,916
187
637,374
37
91,115
EASTSIDE FLEX
4,351
11,451
(18,882)
(40,755)
(43,835)
(25,615)
Everett
8,606
EASTSIDE FLEX
Market Area
1Q 2011
Everett
6
25,180
1
5,286
(3,806)
-
(140,221)
4,476
(139,551)
Mukilteo
10
232,645
-
-
Mukilteo
-
-
42,534
(76)
42,458
-
Lynnwood
24
42,109
3
2,311
Lynnwood
(13,813)
1,338
18,535
759
6,819
(8,199)
NORTHEND FLEX
40
299,934
4
7,597
NORTHEND FLEX
(17,619)
1,338
(79,152)
5,159
(90,274)
407
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Prior years as of 4Q
Historical Total Vacancy Market Area