MARKET REPORT
2 Q ’ 11
Puget Sound SEATTLE | EASTSIDE | NORTHEND | SOUTHEND
HEADING INTO POSITIVE TERRITORY The Puget Sound region continues to gain momentum as we wrap up the second quarter of 2011, with most submarkets experiencing a declining vacancy rate, rising rental rates, dwindling supplies of available large blocks of space and renewed enthusiasm on the investment front.
PACIFIC REAL ESTATE PARTNERS, INC.
Puget Sound Market Report ECONO MI C OV E R V IE W
P U G E T S O U N D E M P L OY M E N T G R O W T H B Y S E C TO R
24.00% # Change as of April 21.00% 18.00%
Cumulative Growth 2011-2015 % Change as of April 2011 Forecast
15.00% 12.00% 9.00% 6.00%
Source: Moody’s Analytics
3.00% 0.00% -3.00% -6.00% Construction
Manufacturing
Trade, Transportation & Utilities
Financial Activities
Education & Health Services
Business & Professional Services
Government
Information
Leisure & Hospitality
So und Vita l i t y The Puget Sound Region continued to see signs of strengthening
other sectors such as Information Technology and Leisure/
and stability in the second quarter of 2011. Although employment
Hospitality adding an additional 25,000 new jobs.1
growth fell short of initial expectations the region experienced
The Puget Sound’s aerospace and manufacturing industries
a modest jump in jobs of 1.8%. In addition, there was an 11.9%
have seen an upsurge in activity as a result of Boeing’s escalation
drop in initial unemployment claims, which is another indicator
of production of the 737. The world’s second largest maker of
that we are heading toward more stable ground.
commercial planes plans to boost production to 31.5 planes per
Currently, the Puget Sound’s unemployment rate sits at 8.6%
month (2 per day) by 2014, which will bode well for the majority
and according to Moody’s Analytics it is expected to continue to
of our region.
gradually decline to approximately 6.5% by 2015. This decline
The Ports are seeing continued growth and stability, with Port
will primarily be attributed to strong employment gains in the
TEU’s in the region higher than the same period last year. The
Technology/Business and Professional Services sector, which is
Port of Seattle is up 6.2% from 2010, and the Port of Tacoma is
expected to see 23% growth over the next four years.1
up 7.90% over the same period.
It is anticipated that job growth for traditional office space
Overall, the Puget Sound is poised for a strong recovery
users over the next several years will be led by the Business &
over the next four years with growth in many industries. With
Professional Services sector and the Education & Health Services
the economic climate showing signs of stability and consumer
industries. By 2015 it is expected that these two industries alone
confidence returning the Puget Sound is on track for a steady
will add nearly 35,000 new jobs to the Puget Sound area, with
and robust resurgence.
(1) Moody’s Analytics (2) PPR (Property and Portfolio Research)
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2Q’11 PUGET SOUND MARKET REPORT
Vacancy by Submarket & Class SEATTL E O F F IC E MA RK E T 50.0% 46.9%
CLASS A CLASS B CLASS C
45.0%
42.4%
40.0%
35.0%
30.0%
25.0%
23.7%
19.1%
20.0%
15.0%
15.4%
18.4% 17.0%
16.8%
16.3%
15.7% 13.2%
10.4%
10.3%
10.0%
12.0%
10.5%
9.8% 7.3%
6.2% 4.1%
5.0%
2.3%
1.7%
0.0%
0.0% Seattle CBD
Ballard/ U-District
Belltown/ Denny Regrade
1.6%
0.0%
Capitol Hill/ Central District
Lake Union
Pioneer Square/ Waterfront
Queen Anne/ Magnolia
South Seattle
Excludes Capitol Hill Class A: 2 Buildings 87% Vacant, South Seattle Class A: 3 Buildings 72% Vacant
EASTSI DE OF F IC E MA RKE T 35.0%
29.9%
CLASS A CLASS B CLASS C
30.0%
25.0%
21.1%
20.6%
21.1%
19.7%
19.6%
20.0%
19.2%
17.0%
17.2%
16.2%
15.5%
14.6%
15.0%
14.0%
13.3% 10.3%
10.0%
10.2% 8.0% 6.5%
5.8% 5.0%
6.4%
6.2%
3.8% 2.5%
2.3%
0.9% Bellevue CBD
0.0%
0.0%
0.0% Bothell
520 Corridor
I-90 Corridor
Issaquah
Kirkland
Mercer Island
Redmond
Suburban Bellevue
Excludes Suburban Bellevue Class A: 1 Building 100% Vacant
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pug et so u n d OF F IC E m a rke t m ap
Whidbey Island
EVERETT
NORTHEND
5
Puget Sound
5 405
Lake Washington
S E AT T L E
520
SEATTLE 90
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EASTSIDE
2Q’11 PUGET SOUND MARKET REPORT
p u ge t sou n d I N DUS T R I AL m a rket ma p
Whidbey Island
5
EVERETT
Puget Sound
N orthend
E astside 5
S eattle Bainbridge Island
405 Lake Washington
520
SEATTLE 90
BELLEVUE
KENT
Vashon Island
S o u thend
TACOMA
5
P ier c e Co u nt y
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PACIFIC REAL ESTATE PARTNERS, INC.
Seattle Office Market SEATTLE R E IG N S The Seattle office market ended the second quarter with positive
Seattle OFFICE SubmarketS map
signs on all fronts - experiencing increased tenant activity, 244,000 SF of positive absorption and a decline in vacancy of 20
BALLARD/ U DISTRICT
basis points. The technology sector continues to thrive and has had a major impact on the office market. Organic growth, combined with expansions and relocations all contributed to the sustained
QUEEN ANNE/ MAGNOLIA
520
positive momentum in the CBD and surrounding submarkets.
LAKE UNION
Many of these tech companies are centralizing themselves
DENNY REGRADE SEATTLE CBD
around Lake Union where Amazon.com is now anchored. Although there was nearly 500,000 square feet of negative absorption in the Seattle CBD, Pioneer Square and South Seattle
CAPITOL HILL/ CENTRAL DISTRICT
SEATTLE
PIONEER SQ/ WATERFRONT Elliott Bay
Lake Washington
90 5
submarkets combined, this figure was offset by close to 622,000 square feet of positive absorption, mostly as a result of Amazon moving to the Lake Union submarket.
S SEATTLE/SODO WEST SEATTLE
The new world headquarters of the Bill & Melinda Gates Foundation is also located in the Lake Union area. The nearly 600,000 SF campus consolidates the foundation’s regional operations, which also contributed to the negative absorption in the surrounding submarkets. In addition to these two large users, the Biotech industry continues to strengthen its presence in the Lake Union area as
“Class A+” property in Seattle with large blocks of available
well. Major firms such as UW Medicine, Fred Hutchinson and the
space, which has seen significant tenant activity as the Class A
Institute for Systems Biology continue to expand their footprint
market continues to tighten up.
in that very active submarket.
Overall, the Seattle office market is nearing equilibrium as
For the first time in the last three years tenants are starting
landlords and tenants are moving toward middle ground in rents
to vie for coveted premier locations and there has been an
and concessions. With the third quarter occupancies of Amazon.
uptick in bidding wars for desirable spaces. As a result of this
com at 1918 8th and Dendreon at Russell Investments Center
positive activity deal velocity is increasing and timelines are
the Seattle office market is expected to see as much as one
shortening; landlords are just as compelled as tenants to lease
million square feet of absorption come October.
spaces. Even the less expensive, more commodity-type spaces
Seattle is returning to its status as a “darling” for investors, with
are experiencing competition between tenants as the market
many properties reaching required occupancy and experiencing
tightens and large blocks of available space diminish.
a declining cap rate. While new speculative construction is most
There has been a shift in demand for the “Class A+” space,
likely still two years away, we may begin to see a rise in the
as premier properties like Russell Investments Center and 1918
ground breaking of new build to suit properties that can service
8th have seen their occupancy levels skyrocket over the last
the larger tenants in the market.
two years. West 8th is now the only remaining new construction 6
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2Q’11 PUGET SOUND MARKET REPORT
Seattle Office Market The Seattle office market is comprised of 693 total properties spread
HISTORICAL Vacancy RATES & Rental Rates
throughout eight submarkets and totals just under 60 million square
18.0%
feet. The overall vacancy rate declined slightly, with the largest decrease
15.0%
in the Lake Union submarket. Positive net absorption was slightly lower
12.0%
than first quarter, ending at 244,642 square feet and average rental rates in all submarkets continue to be on the rise.
$32.00 $30.00
9.0%
$28.00
6.0% $26.00
3.0% 0.0%
2005
2006
INVENTORY Buildings
Seattle CBD Ballard/U District Belltown/Denny Regrade Capitol Hill/Central District Lake Union Pioneer Square/Waterfront Queen Anne/Magnolia South Seattle DOWNTOWN SEATTLE
2008
Rental Rates (FS)
Seattle Office Overview Market Area
2007
103 82 78 84 103 99 74 70 693
SF
Direct Vacancy
Sublet Vacancy
Total Vacancy
25,122,835 3,164,052 5,474,188 4,628,331 8,018,207 6,218,623 3,912,636 2,830,388 59,369,260
13.9% 5.2% 11.8% 6.9% 17.1% 23.5% 18.4% 25.5% 15.0%
1.3% 4.4% 1.2% 0.0% 0.3% 0.6% 0.3% 0.0% 1.0%
15.2% 9.6% 13.0% 6.9% 17.4% 24.1% 18.7% 25.5% 16.0%
ABSORPTION 2Q Absorption YTD
(143,867) 37,396 67,557 22,540 622,873 (161,138) (13,642) (187,077) 244,642
2009
2010
$24.00
2011
Vacancy Rates AVERAGE RENT & EXPENSES (FS) Rent NNN
(223,315) 100,020 46,809 26,692 910,699 (63,433) 27,668 (236,827) 588,313
$30.17 $31.70 $25.84 $36.00 $34.49 $28.70 $33.38 $24.51 $30.60
$9.45 $8.00 $8.25 $8.00 $9.45 $8.50 $8.50 $8.00 $8.52
Seattle CBD Ballard/U District Belltown/Denny Regrade Capitol Hill/Central District Lake Union Pioneer Square/Waterfront Queen Anne/Magnolia South Seattle SEATTLE OFFICE
2004
2005
2006
2007
2008
2009
2Q’10
3Q’10
4Q’10
1Q’11
2Q 2011
13.4% 5.4% 14.1% 11.2% 18.3% 13.9% 17.7% 9.9% 13.3%
12.5% 4.7% 12.0% 10.6% 16.1% 11.9% 15.9% 9.7% 11.9%
10.4% 3.4% 9.7% 7.3% 11.6% 8.7% 8.5% 12.7% 9.2%
10.4% 2.7% 9.2% 4.1% 5.7% 7.2% 7.6% 9.6% 8.6%
11.0% 12.6% 8.1% 4.3% 6.4% 12.4% 5.8% 10.0% 10.1%
15.9% 11.9% 16.4% 13.5% 8.2% 15.6% 15.6% 10.9% 16.4%
16.2% 14.5% 12.4% 8.6% 22.4% 18.4% 16.6% 18.6% 16.4%
15.3% 14.6% 13.1% 7.5% 22.3% 22.2% 16.4% 16.7% 16.3%
14.0% 14.4% 13.2% 7.2% 20.9% 22.4% 16.5% 15.9% 15.6%
14.5% 10.7% 13.6% 7.4% 25.7% 20.7% 18.2% 18.6% 16.2%
15.2% 9.6% 13.0% 6.9% 17.4% 24.1% 18.7% 25.5% 16.0%
Historical Rents (FS) Market Area
Seattle CBD Ballard/U District Belltown/Denny Regrade Capitol Hill/Central District Lake Union Pioneer Square/Waterfront Queen Anne/Magnolia South Seattle SEATTLE OFFICE
Prior years as of 4Q
Historical Total Vacancy Market Area
Historical Total Absorption
2007
2008
2009
2010
$35.37 $35.59 $29.25 $35.08 $32.52 $25.92 $25.81 $22.74 $30.29
$33.37 $31.10 $30.56 $31.05 $38.31 $28.97 $35.80 $22.95 $31.51
$29.49 $28.83 $26.16 $30.00 $31.29 $26.34 $21.55 $23.61 $27.16
$29.16 $28.06 $24.80 $29.53 $32.20 $25.69 $27.66 $23.25 $27.54
Market Area
Seattle CBD Ballard/U District Belltown/Denny Regrade Capitol Hill/Central District Lake Union Pioneer Square/Waterfront Queen Anne/Magnolia South Seattle SEATTLE OFFICE
2Q’10
3Q’10
4Q’10
2010
1Q’11
2Q 2011
(140,078) (16,787) 182,460 24,976 509,498 (3,664) (18,245) (2,512) 535,648
229,388 (2,393) (40,792) 30,320 144,692 (232,194) 4,559 53,491 187,071
320,815 78,031 (7,401) 22,719 98,069 (14,602) (1,035) 22,632 519,228
475,335 (4,847) 175,473 269,416 869,821 (170,228) (31,307) 49,242 1,632,905
(79,448) 62,624 (20,748) 4,152 287,826 97,705 41,310 (49,750) 343,671
(143,867) 37,396 67,557 22,540 622,873 (161,138) (13,642) (187,077) 244,642
Asking Lease Rates by Class Class A
Seattle CBD Ballard/U District Belltown/Denny Regrade Capitol Hill/Central District Lake Union Pioneer Square/Waterfront Queen Anne/Magnolia South Seattle SEATTLE OFFICE
$30.17 $31.70 $25.84 $36.00 $34.49 $28.70 $33.38 $24.51 $30.60
LEASE RATES (FULL SERVICE) Class B Class C
$22.52 $24.50 $25.18 $28.93 $25.00 $22.36 $20.78 $21.50 $23.85
$17.38 $18.57 $19.39 $22.34 $16.56 $16.76 $19.68 $20.76 $18.93
Class A
$9.45 $8.00 $8.25 $8.00 $9.45 $8.50 $8.50 $8.00 $8.52
OPERATING EXPENSES* (PSF) Class B Class C
$8.45 $7.00 $7.25 $7.00 $8.45 $7.50 $7.50 $7.00 $7.52
$7.45 $6.00 $6.25 $6.00 $7.45 $6.50 $6.50 $6.00 $6.52
*Expenses are approximate
Market Area
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Eastside and Northend Office Market EASTSI DE S OL ID IF IE S The Eastside and Northend office markets both continued to see a significant rise in activity in the second quarter of 2011. The majority of the activity was attributable to the Eastside suburban markets, as occupancies of leases executed during previous quarters went into effect. Overall, rents are stabilizing, tenant
EASTSIDE AND NORTHEND OFFICE SUBMARKETS LEGEND Northend Office Submarkets Eastside Office Submarkets 5
concessions are decreasing and vacancy rates continue to drop.
EVERETT CBD
As we reach the mid-year point of 2011 it appears as though
S SNOHOMISH COUNTY
market tension is easing as tenant activity continues to gain
S EVERETT/ HARBOR POINTE
momentum. Transaction volume on the Eastside has gained strength with nearly 250 lease transactions, accounting for more than one million square feet already inked in 2011. Investment activity also experienced an uptick on the Eastside, with eight office building sales totaling $342M in just
EDMONDS/ LYNNWOOD
MILL CREEK/ WOODINVILLE
BOTHELL
over 900,000 SF. The highlight of the second quarter was the sale of the 488,000 SF Class A office building, Key Center, to Kilroy Realty Corporation for $217M ($444/SF). Rental rates, vacancy, absorption and concessions saw their
405 NORTHGATE/ N SEATTLE KIRKLAND
biggest transition in the second quarter. Indicators of climbing market strength were 513,000 SF of absorption, a 1.7% vacancy
520 CORRIDOR
drop, rental rates holding steady and concessions from landlords beginning to decrease. Leasing was strong throughout most of the submarkets and was highlighted by Expedia’s expansion into 54,000 SF at Bellevue CBD’s Skyline Tower. With rental rates stabilizing, absorption
REDMOND
5 520
SEATTLE
BELLEVUE
SUBURBAN BELLEVUE BELLEVUE CBD I-90 CORRIDOR
MERCER ISLAND ISSAQUAH
90
increasing and concessions shrinking, the Eastside office market is getting closer to market equilibrium. While the landscape of the market is starting to shift there are still opportunities for
amount of prospective tenant activity.
tenants; however if a move or expansion is needed, the window
As expected, the high tech, professional services and
of opportunity in this market is shrinking.
biomedical industries are growing and will continue to have the
Heading into the second half of 2011 the Eastside office market
greatest demand for this type of product. With the stabilization
will continue to have one primary challenge: the diminishing
of rental rates and vacancy inching closer to lower levels the
supply of available space for tenants that require contiguous
Eastside office market may once again begin to see office
large blocks. Prior quarter’s increased tenant activity and the lack
development sites become active.
of new development will combine to put a strain on contiguous
While any new speculative development most likely wouldn’t
blocks of space that are 75,000 SF or greater. Currently, there
hit the market until 2013 there are emerging signs that the
are only 10 buildings on the Eastside that can deliver this type
Eastside office market is solidifying and those market indicators
of commodity, many of which are already experiencing a healthy
may be the foundation that developers need to move forward.
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2Q’11 PUGET SOUND MARKET REPORT
Eastside Office Market The Eastside office market is made up of nine submarkets, with a total
HISTORICAL Vacancy RATES & Rental Rates
of 668 office buildings that total nearly 35 million square feet. Over the
18.0%
$35.00
second quarter the overall vacancy rate declined nearly 2%, positive net
15.0%
$30.00
absorption increased just over 513,000 square feet and overall average
12.0%
$25.00 $20.00
9.0%
rental rates increased close to 11.6%.
$15.00
6.0%
$10.00
3.0% 0.0%
$5.00
2005
2006
Eastside Office Overview Market Area
2008
Rental Rates (FS)
INVENTORY Buildings
Bellevue CBD Bothell 520 Corridor I-90 Corridor Issaquah Kirkland Mercer Island Redmond Suburban Bellevue EASTSIDE
2007
51 72 76 58 39 111 21 68 172 668
SF
Direct Vacancy
Sublet Vacancy
Total Vacancy
8,425,846 3,866,066 3,114,091 4,797,842 1,805,874 4,027,270 593,816 3,815,304 4,442,803 34,888,912
12.7% 17.0% 9.8% 11.1% 12.1% 13.7% 12.1% 18.7% 12.8% 13.4%
1.4% 1.6% 0.2% 1.2% 0.3% 1.4% 0.1% 1.3% 0.6% 1.1%
14.1% 18.6% 10.0% 12.3% 12.4% 15.1% 12.2% 20.0% 13.4% 14.5%
ABSORPTION 2Q Absorption YTD
57,837 64,860 29,818 179,478 11,629 115,454 (7,537) 11,651 50,467 513,657
2009
2010
$0.00
2011
Vacancy Rates AVG CLASS A RENT & EXPENSES (FS) Rent NNN
65,479 121,161 50,448 181,068 29,162 165,675 (3,873) 31,939 (54,118) 586,941
$34.20 $27.00 $27.25 $31.20 $28.96 $31.09 $30.39 $26.09 $35.00 $30.13
$9.75 $8.00 $7.00 $8.50 $7.50 $8.00 $9.00 $7.00 $8.50 $8.14
Bellevue CBD Bothell 520 Corridor I-90 Corridor Issaquah Kirkland Mercer Island Redmond Suburban Bellevue EASTSIDE OFFICE
2004
2005
2006
2007
2008
2009
2Q’10
3Q’10
4Q’10
1Q’11
2Q’11
16.3% 20.0% 12.7% 14.1% 3.3% 14.0% 3.6% 23.2% 11.1% 14.9%
9.6% 15.1% 12.3% 9.0% 2.0% 7.4% 1.2% 13.2% 7.7% 9.7%
5.5% 16.1% 8.9% 5.8% 3.0% 10.6% 1.8% 9.7% 10.1% 8.7%
6.9% 26.2% 3.5% 6.7% 5.9% 6.8% 4.9% 7.8% 8.3% 9.0%
10.5% 27.8% 6.5% 15.0% 2.3% 12.6% 10.1% 12.0% 9.7% 12.6%
13.4% 22.9% 12.0% 16.9% 6.5% 19.0% 14.8% 21.8% 11.6% 15.8%
16.3% 22.9% 12.7% 14.9% 4.9% 17.0% 20.4% 23.6% 11.1% 16.4%
15.3% 21.1% 13.0% 16.5% 13.9% 17.4% 19.3% 19.7% 12.5% 16.2%
14.9% 21.7% 11.5% 16.1% 14.1% 19.3% 15.7% 19.9% 12.1% 16.2%
14.8% 20.3% 10.9% 16.0% 13.0% 18.1% 14.9% 20.4% 14.3% 16.1%
14.1% 18.6% 10.0% 12.3% 12.4% 15.1% 12.2% 20.0% 13.4% 14.5%
Historical Rents (FS) Market Area
Bellevue CBD Bothell 520 Corridor I-90 Corridor Issaquah Kirkland Mercer Island Redmond Suburban Bellevue EASTSIDE OFFICE
*Prior years as of 4Q
Historical Total Vacancy Market Area
Historical Total Absorption
2007
2008
2009
2010
$37.87 $25.81 $28.04 $34.61 $31.42 $31.22 $29.42 $28.74 $29.20 $30.70
$39.06 $26.14 $28.59 $35.50 $31.65 $32.96 $30.40 $28.91 $29.88 $31.45
$35.02 $23.54 $26.15 $31.04 $29.95 $27.57 $26.65 $25.11 $26.02 $27.89
$32.67 $23.58 $24.51 $30.37 $29.04 $27.18 $26.63 $24.45 $24.65 $27.01
Market Area
Bellevue CBD Bothell 520 Corridor I-90 Corridor Issaquah Kirkland Mercer Island Redmond Suburban Bellevue EASTSIDE OFFICE
2Q’10
3Q’10
4Q’10
2010
1Q’11
2Q’11
(50,899) (35,567) (2,390) 11,797 (16,431) 49,563 (21,177) 54,638 9,977 (489)
81,147 70,787 (8,388) 231,887 (48,569) (16,464) 4,882 144,764 (22,694) 437,352
37,295 (25,991) 44,697 (85,126) (2,883) (78,489) 15,633 61,787 19,394 (13,683)
(123,800) 46,610 15,692 284,751 (93,219) (14,306) (4,251) 137,778 19,160 268,415
7,642 56,301 20,630 1,590 17,533 50,221 3,664 20,288 (104,585) 73,284
57,837 64,860 29,818 179,478 11,629 115,454 (7,537) 11,651 50,467 513,657
Asking Lease Rates by Class (FS) Class A
Bellevue CBD Bothell 520 Corridor I-90 Corridor Issaquah Kirkland Mercer Island Redmond Suburban Bellevue EASTSIDE OFFICE
$34.20 $27.00 $27.25 $31.20 $28.96 $31.09 $30.39 $26.09 $35.00 $30.13
LEASE RATES (FULL SERVICE) Class B Class C
$26.62 $23.74 $23.52 $27.34 $29.25 $24.94 $24.79 $22.36 $24.63 $25.24
$20.44 $22.53 $14.25 $20.00 $22.72 $24.38 $18.94 $18.35 $18.07 $19.96
Class A
$10.75 $9.00 $8.00 $9.50 $8.50 $9.00 $10.00 $8.00 $9.50 $9.14
OPERATING EXPENSES* (PSF) Class B Class C
$9.75 $8.00 $7.00 $8.50 $7.50 $8.00 $9.00 $7.00 $8.50 $8.14
$8.75 $7.00 $6.00 $7.50 $6.50 $7.00 $8.00 $6.00 $7.50 $7.14
*Expenses are approximate
Market Area
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Northend Office Market The Northend office market is comprised of 298 properties and is spread throughout seven submarkets, representing a total of just over 8.6 million square feet. Although there was no change to the overall vacancy rate during the second quarter, average rental rates saw a slight increase to $24.21 per square foot and YTD net absorption remains in positive territory at 67,833 square feet.
HISTORICAL Vacancy RATES & Rental Rates 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%
$27.50 $26.00 $24.50 $23.00 $21.50
2005
2006
2007
2008
Rental Rates (FS)
2009
2010
2011
$20.00
Vacancy Rates
Northend Office Overview INVENTORY Buildings
Market Area
SF
Direct Vacancy
Sublet Vacancy
Total Vacancy
ABSORPTION 2Q Absorption YTD
AVERAGE RENT & EXPENSES (FS) Rent NNN
Everett CBD
64
1,926,654
6.8%
0.0%
6.8%
(160)
3,775
$22.33
$4.50
Lynnwood/Edmonds
91
2,720,504
23.9%
0.2%
24.1%
(5,298)
2,649
$22.24
$5.50
Woodinville/Mill Creek
27
671,368
19.6%
0.0%
19.6%
(2,749)
39,489
$24.81
$4.50
N Snohomish County
19
361,271
6.7%
0.0%
6.7%
-
(1,950)
$21.56
$4.50
S Snohomish County
7
227,227
9.1%
0.0%
9.1%
383
383
$28.00
$4.50
S Everett/Harbor Point
42
1,218,966
10.2%
1.7%
11.9%
(12,748)
(7,405)
$28.04
$4.50
North Seattle/Northgate
48
1,555,355
10.7%
0.5%
11.2%
12,758
30,892
$22.46
$5.00
NORTHEND
298
8,681,345
14.4%
0.4%
14.8%
(7,814)
67,833
$24.21
$5.19
Historical Total Vacancy 2004
2005
2006
2007
2008
2009
2Q’10
3Q’10
4Q’10
1Q’11
Everett CBD
5.0%
6.7%
6.5%
8.9%
5.6%
4.1%
5.1%
6.2%
7.7%
7.4%
2Q’11
6.8%
Lynnwood/Edmonds
17.0%
17.0%
17.7%
18.9%
16.3%
23.0%
24.3%
24.5%
24.0%
23.7%
24.1% 19.6%
Woodinville/Mill Creek
5.2%
7.9%
10.2%
12.8%
29.3%
30.8%
30.5%
28.0%
26.9%
20.6%
N Snohomish County
5.1%
2.8%
3.4%
3.1%
4.4%
5.1%
6.5%
5.7%
6.1%
6.7%
6.7%
S Snohomish County
1.0%
11.0%
13.3%
12.6%
12.0%
8.7%
7.1%
11.5%
9.3%
9.3%
9.1%
S Everett/Harbor Point
13.8%
16.3%
10.7%
9.4%
9.5%
12.0%
10.8%
11.7%
11.5%
11.1%
11.9%
North Seattle/Northgate
9.3%
11.2%
11.5%
9.5%
11.2%
12.8%
12.8%
11.8%
12.7%
11.5%
11.2%
NORTHEND OFFICE
11.1%
12.3%
11.9%
12.4%
12.6%
15.2%
15.7%
15.8%
15.9%
14.8%
14.8%
2Q’11
Historical Rents (FS)
Historical Total Absorption
Market Area
$24.54
$23.32
$23.43
$23.29
Market Area
2Q’10
3Q’10
4Q’10
2010
1Q’11
Everett CBD
$24.23
$24.15
$22.70
$22.33
Everett CBD
(3,679)
(17,901)
(25,161)
(60,832)
3,935
(160)
Lynnwood/Edmonds
$26.80
$25.89
$23.26
$22.72
Lynnwood/Edmonds
12,372
(5,431)
13,135
(27,804)
7,947
(5,298)
Woodinville/Mill Creek
$25.83
$24.87
$21.58
$21.42
Woodinville/Mill Creek
1,465
16,830
7,190
33,069
42,238
(2,749)
N Snohomish County
$26.87
$27.60
$20.41
$28.09
N Snohomish County
(4,070)
3,144
(1,685)
(3,645)
(1,950)
-
S Snohomish County
$22.46
$22.62
$22.26
$21.92
S Snohomish County
-
(10,168)
5,099
(1,258)
-
383
S Everett/Harbor Point
$26.80
$25.61
$23.12
$22.49
S Everett/Harbor Point
22,849
(12,110)
2,549
5,515
5,343
(12,748)
North Seattle/Northgate
$25.36
$24.87
$22.39
$23.18
North Seattle/Northgate
(1,712)
16,847
(14,326)
2,674
18,134
12,758
NORTHEND OFFICE
$25.36
$24.87
$22.39
$23.18
NORTHEND OFFICE
27,225
(8,789)
(13,199)
(52,281)
75,647
(7,814)
Asking Lease Rates by Class
Everett CBD Lynnwood/Edmonds
Class A
LEASE RATES (FULL SERVICE) Class B Class C
Class A
OPERATING EXPENSES* (PSF) Class B Class C
-
$26.47
$17.80
-
$5.00
$4.00
$25.34
-
$20.09
$6.50
-
$4.50
Woodinville/Mill Creek
-
$23.02
$18.11
-
$5.00
$4.00
N Snohomish County
-
$22.00
$19.00
-
$5.00
$4.00
S Snohomish County
-
$22.00
$19.00
-
$5.00
$4.00
S Everett/Harbor Point
-
$23.29
$16.31
-
$5.00
$4.00
North Seattle/Northgate
$23.62
$22.48
$19.94
$6.00
$5.00
$4.00
NORTHEND OFFICE
$24.48
$23.21
$18.61
$6.50
$5.00
$4.07
10
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*Expenses are approximate
Market Area
*Prior years as of 4Q
Market Area
2Q’11 PUGET SOUND MARKET REPORT
Southend Industrial/Flex Market IN DU STRI AL S T RE N GT H The Seattle industrial market continued to show
SOUTHEND INDUSTRIAL/FLEX SUBMARKETS MAP
signs of strength in the second quarter, with 150,000 SF of positive absorption and a 70 basis point decrease in vacancy to 5.1%, most of which
SEATTLE
was driven by Smurfit-Stone’s 83,000 square foot
BELLEVUE
lease at AMB/Prologis Portside quarter with little or no change in vacancy. Of the
GEORGETOWN/ DUWAMISH N
total YTD net absorption of 723,000 SF, only 2,273
GEORGETOWN/ DUWAMISH S
WEST SEATTLE
TUKWILA
Sou
SF was realized in the second quarter.
nd
Tenant activity continues to be strong, as many
405
LEGEND
SEATAC/ BURIEN
Vashon Island
existing tenants seek expansion space and new
Southend Industrial/Flex Submarket
companies are continuing their searches in the
Pierce County Industrial/ Flex Submarket
90
RENTON
get
SODO
Pu
The Kent Valley was relatively flat in the second
KENT
5
region too. Occupancy levels are beginning to rise FEDERAL WAY
in the market and stability is returning, with many institutional buyers and REITs eying the market’s
NORTHEND TACOMA
future stabilized assets. The Pierce County industrial market has been
PORT OF TACOMA/ FIFE
OTHER PIERCE COUNTY
the most unwavering market in the Southend throughout the recession and once again finished
LAKEWOOD
strong. The second quarter brought nearly 185,000
PUYALLUP/ SUMNER
SF of absorption and a 30 basis point drop in vacancy, which shows the elevating strength in this
AUBURN
OTHER PIERCE COUNTY
PARKLAND/ SPANAWAY OTHER PIERCE COUNTY
market. The highlight of the quarter and possibly of the year was Amazon.com’s full building lease of Sumner Corporate Park’s 492,000 SF Summit building. In
market recovery underway, the limited amount of large blocks
addition, Trader Joe’s is rumored to be looking in the South
of space and rising rental rates, those tenants that have been
Sound area for a 500,000 SF build to suit option that could break
waiting in the wings may want to make their move on premium
ground as early as fourth quarter 2011.
spaces and low rates.
Large blocks of space continue to be watched closely in the
Early indicators point toward this active market possibly
region. With more tenants rumored to have locked up several of
beginning to see new construction in the near future.
the remaining available spaces there may be fewer than three spaces in the region that would be capable of supporting a 400,000 SF tenant by fourth quarter. Overall the Southend industrial market is strong and is showing signs of a quicker recovery than initially anticipated. With the
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11
PACIFIC REAL ESTATE PARTNERS, INC.
Seattle Industrial Market The Seattle industrial market is made up of 1,279 properties spanning
HISTORICAL Vacancy RATES & Rental Rates
six submarkets from Ballard to the North and Duwamish to the South.
7.0%
$0.46
It accounts for a total of just over 52 million square feet. The overall
6.0%
$0.45
vacancy rate remains relatively low, finishing up slightly lower than the
5.0%
$0.44
4.0%
$0.43
3.0%
$0.42
at 150,270 square feet, helping the YTD total gain reach 90,973 square
2.0%
$0.41
feet.
1.0%
$0.40
first quarter at 5.1%. Net absorption headed well into positive territory
0.0%
2005
2006
2008
Rental Rates
Seattle Industrial Overview INVENTORY Buildings
Market Area
2007
2009
Direct Vacancy
Sublet Vacancy
Total Vacancy
2Q
$0.39
2011
Vacancy Rates
ABSORPTION SF
2010
UNDER CONSTRUCTION Projects SF
YTD
SoDo
239
11,921,392
4.9%
0.0%
4.9%
54,719
12,112
-
-
Gtown/Duwamish N
285
14,205,445
7.1%
0.2%
7.3%
139,852
75,493
-
-
Gtown/Duwamish S
141
4,428,407
3.0%
0.2%
3.2%
5,667
11,577
-
-
Ballard
88
2,110,841
2.2%
0.0%
2.2%
(5,500)
4,549
-
-
West Seattle
72
3,306,501
1.7%
0.0%
1.7%
(1,380)
(16,059)
-
-
Other Seattle Markets*
454
16,146,527
4.5%
0.6%
5.1%
(43,088)
3,301
-
-
1,279
52,119,113
4.9%
0.2%
5.1%
150,270
90,973
-
-
SEATTLE INDUSTRIAL
Historical Total Vacancy 2004
2005
2006
2007
2008
2009
2Q’10
3Q’10
4Q’10
1Q’11
SoDo
4.1%
3.2%
3.0%
2.3%
3.9%
3.8%
4.1%
4.7%
5.1%
5.5%
2Q’11
4.9%
Gtown/Duwamish N
8.3%
7.2%
7.6%
6.8%
6.1%
9.6%
8.3%
8.6%
8.2%
8.6%
7.3%
Gtown/Duwamish S
2.0%
7.1%
2.9%
2.3%
4.2%
5.7%
5.7%
5.1%
3.7%
3.6%
3.2%
Ballard
4.2%
4.1%
4.1%
3.0%
2.2%
4.6%
4.2%
4.2%
4.2%
3.7%
2.2%
West Seattle
3.5%
4.1%
1.1%
1.9%
40.0%
1.3%
1.3%
2.0%
1.6%
2.0%
1.7%
Other Seattle Markets*
4.4%
4.2%
2.6%
2.4%
2.8%
5.6%
6.3%
5.9%
5.5%
5.2%
5.1%
SEATTLE INDUSTRIAL
5.1%
5.0%
4.0%
3.6%
3.9%
6.0%
5.9%
5.9%
5.7%
5.8%
5.1%
Historical Total TEUs Market Area
Historical Total Absorption
2009
2010
2011-YTD
Port of Seattle
1,584,596
2,139,577
656,045
Market Area
2Q’10
3Q’10
4Q’10
2010
1Q’11
2Q’11
SoDo
(7,363)
(52,834)
(56,245)
(140,328)
(42,607)
54,719
Port of Tacoma
1,545,855
1,455,467
Puget Sound Ports Total
3,130,451
3,595,044
465,100
Gtown/Duwamish N
82,441
(19,671)
49,936
203,111
(64,359)
139,852
1,121,145
Gtown/Duwamish S
2,836
26,559
62,547
88,952
5,910
5,667
(22,650)
470
-
8,178
10,049
(5,500)
Ballard West Seattle
(7,585)
(23,726)
15,188
(8,623)
(14,679)
(1,380)
Other Seattle Markets*
(78,013)
58,744
71,734
16,113
46,389
(43,088)
SEATTLE INDUSTRIAL
(30,334)
(10,458)
143,160
167,403
(59,297)
150,270
Market Area
SoDo Gtown/Duwamish N Gtown/Duwamish S Ballard West Seattle Other Seattle Markets* SEATTLE INDUSTRIAL
LEASE RATES (NNN) Shell Office
$0.55-$0.75 $0.45-$0.65 $0.45-$0.65 $0.45-$0.65 $0.45-$0.65 $0.45-$0.65 $0.45-$0.75
$0.75 $0.75 $0.75 $0.75 $0.75 $0.75 $0.75
EXPENSES & CONCESSIONS NNN Free Rent
$0.10-$0.15 $0.10-$0.15 $0.10-$0.15 $0.10-$0.15 $0.10-$0.15 $0.10-$0.15 $0.10-$0.15
1-4 months 1-4 months 1-4 months 1-4 months 1-4 months 1-4 months 1-4 months
*Rates/expenses are approximate
Gross Asking Lease Rates by Class
*Other Seattle Markets Includes: Seattle, CBD, Belltown/Denny, Capitol Hill/Central, Fremont, Lake Union, Magnolia/Queen Anne, Rainier/Beacon Hill, U. District, Waterfront
12
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*Prior years as of 4Q
Market Area
2Q’11 PUGET SOUND MARKET REPORT
Kent Valley Industrial Market The Kent Valley industrial market totals just over 112 million square feet
HISTORICAL Vacancy RATES & Rental Rates
in 1,579 buildings and spans six submarkets. Net absorption for the
9.0%
second quarter was down considerably from the first quarter, ending
7.0%
near 29,000 square feet, with the YTD total now just under 750,000
5.0%
square feet. The overall vacancy rate for these submarkets remained
3.0%
unchanged at 7.6%.
1.0%
$0.40 $0.30 $0.20
0.0%
$0.10
2005
2006
2008
2009
Rental Rates
Kent Valley Industrial Overview INVENTORY Buildings
Market Area
2007
SF
Direct Vacancy
Sublet Vacancy
Total Vacancy
2010
$0.00
2011
Vacancy Rates
ABSORPTION 2Q Absorption YTD
UNDER CONSTRUCTION Projects SF
Auburn
317
24,709,326
3.9%
1.3%
5.2%
2,313
605,163
-
-
Federal Way
53
1,855,596
17.9%
0.0%
17.9%
(6,363)
(14,215)
-
-
Kent
708
49,141,635
9.6%
0.1%
9.7%
(65,370)
161,852
-
-
Renton
153
13,188,823
5.7%
1.1%
6.8%
30,970
(8,673)
-
-
Seatac/Burien
89
3,834,790
9.4%
0.0%
9.4%
(1,407)
9,047
-
-
Tukwila
259
19,873,485
4.6%
0.4%
5.0%
68,797
(3,439)
-
-
1,579
112,603,655
7.2%
0.4%
7.6%
28,940
749,735
-
-
KENT VALLEY INDUSTRIAL
Historical Total Vacancy 2004
2005
2006
2007
2008
2009
2Q’10
3Q’10
4Q’10
1Q’11
Auburn
5.2%
4.8%
3.9%
6.0%
3.8%
4.2%
7.9%
7.8%
7.4%
5.0%
2Q’11
5.2%
Federal Way
4.3%
2.4%
2.1%
2.6%
3.0%
7.6%
7.1%
6.8%
18.2%
18.7%
17.9%
Kent
9.1%
7.1%
5.5%
4.1%
3.8%
8.8%
9.5%
9.7%
10.2%
9.7%
9.7%
Renton
5.6%
2.9%
3.6%
1.1%
1.4%
7.6%
7.5%
7.4%
6.8%
7.2%
6.8%
Seatac/Burien
8.3%
8.3%
5.0%
4.3%
12.2%
13.2%
11.4%
10.0%
10.0%
9.7%
9.4%
Tukwila
5.1%
5.3%
4.9%
5.1%
3.3%
5.6%
5.2%
5.2%
5.2%
5.7%
5.0%
KENT VALLEY INDUSTRIAL
7.1%
5.8%
4.8%
4.3%
3.7%
7.2%
8.2%
8.2%
8.4%
7.6%
7.6%
Historical Total TEUs Market Area
Prior years as of 4Q
Market Area
Historical Total Absorption
2009
2010
2011-YTD
Port of Seattle
1,584,596
2,139,577
656,045
Market Area
Auburn
Port of Tacoma
1,545,855
1,455,467
465,100
Federal Way
Puget Sound Ports Total
3,130,451
3,595,044
1,121,145
Kent
2Q’10
3Q’10
4Q’10
2010
1Q’11
(412,586)
38,110
26,593
(807,594)
602,850
2Q’11
2,313
27,321
5,067
(204,912)
(189,871)
(7,852)
(6,363) (65,370)
(186,275)
(63,492)
(278,488)
(679,346)
227,222
Renton
41,020
3,807
78,705
102,933
(39,643)
30,970
Seatac/Burien
(12,374)
51,266
2,313
118,537
10,454
(1,407)
Tukwila KENT VALLEY
(1,715)
15,102
(14,834)
77,951
(72,236)
68,797
(544,609)
49,860
(390,623)
(1,377,390)
720,795
28,940
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Market Area
Auburn Federal Way Kent Renton Seatac/Burien Tukwila KENT VALLEY INDUSTRIAL
LEASE RATES (NNN) Shell Office
$0.32-$0.38 $0.35-$0.40 $0.32-$0.40 $0.34-$0.40 $0.42-$0.50 $0.34-$0.42 $0.32-$0.50
$0.75 $0.75 $0.75 $0.75 $0.75 $0.75 $0.75
EXPENSES & CONCESSIONS NNN Free Rent
$0.09-$0.14 $0.09-$0.14 $0.09-$0.14 $0.09-$0.14 $0.09-$0.14 $0.09-$0.14 $0.09-$0.14
3-5 months 3-5 months 3-5 months 3-5 months 3-5 months 3-5 months 3-5 months
*Rates/expenses are approximate
Gross Asking Lease Rates by Class
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13
PACIFIC REAL ESTATE PARTNERS, INC.
Pierce County Industrial Market The Pierce County industrial market is comprised of seven submarkets,
HISTORICAL Vacancy RATES & Rental Rates
totals just over 62 million square feet and is spread across 1,150
10.0%
properties. Net absorption reached positive territory at just over 225,000
8.0%
square feet in the second quarter, which was well ahead of where the
6.0%
$0.30
first quarter ended. Overall vacancy also experienced positive gains
4.0%
$0.29
over the first quarter, settling in at 8.8%.
2.0%
$0.33 $0.32 $0.31
$0.28 $0.27
0.0%
2005
2006
2008
Rental Rates
Pierce County Industrial Overview INVENTORY Buildings
Market Area
2007
SF
Direct Vacancy
Sublet Vacancy
Total Vacancy
2009
2010
$0.26
2011
Vacancy Rates
ABSORPTION 2Q Absorption YTD
UNDER CONSTRUCTION Projects SF
Port of Tacoma/Fife
284
18,705,677
7.2%
0.0%
7.2%
103,740
(14,102)
-
-
Lakewood
108
4,770,761
7.3%
0.1%
7.4%
20,960
(118,345)
-
-
North End Tacoma
67
2,112,040
5.5%
0.0%
5.5%
2,242
(13,358)
-
-
Spanaway
56
3,432,830
6.1%
0.0%
6.1%
2,280
(7,021)
-
-
Puyallup/Sumner
268
20,907,468
13.2%
0.1%
13.3%
37,403
27,101
-
-
Tacoma CBD
49
1,435,574
9.5%
0.7%
10.2%
12,882
50,512
-
-
Other Pierce County Markets*
318
10,688,751
4.3%
0.3%
4.6%
48,180
82,742
-
-
PIERCE COUNTY INDUSTRIAL
1,150
62,053,101
8.7%
0.1%
8.8%
227,687
7,529
-
-
Historical Total Vacancy 2004
2005
2006
2007
2008
2009
2Q’10
3Q’10
4Q’10
1Q’11
Port of Tacoma/Fife
5.6%
3.2%
3.3%
4.8%
8.5%
9.0%
9.4%
9.6%
7.3%
7.9%
2Q’11
7.2%
Lakewood
6.3%
5.2%
13.9%
7.8%
4.0%
4.5%
4.4%
4.3%
4.8%
7.6%
7.4%
North End Tacoma
1.2%
2.6%
1.9%
2.6%
2.1%
4.1%
3.9%
3.9%
4.0%
4.7%
5.5%
Spanaway
11.3%
2.1%
0.8%
10.8%
11.9%
5.6%
5.4%
6.0%
5.9%
6.2%
6.1%
Puyallup/Sumner
4.0%
8.3%
6.2%
11.3%
14.5%
12.4%
12.2%
13.3%
13.0%
13.6%
13.3%
Tacoma CBD
5.0%
4.3%
6.8%
7.0%
5.5%
11.4%
13.3%
14.0%
13.8%
11.2%
10.2%
Other Pierce County Markets*
3.9%
4.2%
5.2%
2.3%
4.9%
4.7%
5.6%
4.2%
4.4%
4.1%
4.6%
PIERCE COUNTY INDUSTRIAL
5.0%
4.8%
5.4%
6.9%
9.4%
8.8%
9.0%
9.2%
9.1%
9.1%
8.8%
Historical Total TEUs Market Area
Historical Total Absorption
2009
2010
2011-YTD
Port of Seattle
1,584,596
2,139,577
656,045
Port of Tacoma
1,545,855
1,455,467
465,100
Puget Sound Ports Total
3,130,451
3,595,044
1,121,145
Market Area
2Q’10
3Q’10
4Q’10
2010
1Q’11
2Q’11
Port of Tacoma/Fife
(29,872)
290,444
430,998
725,230
(117,842)
103,740 20,960
Lakewood
20,343
6,598
(23,588)
(11,147)
(139,305)
North End Tacoma
4,800
600
(1,050)
3,210
(15,600)
2,242
Spanaway
5,616
(20,051)
1,752
(10,375)
(9,301)
2,280
Puyallup/Sumner
244,057
(227,487)
74,350
(42,663)
(10,302)
37,403
Tacoma CBD
(23,070)
(10,468)
1,932
(34,966)
37,630
12,882
Other Pierce County Markets*
88,890
146,945
(29,623)
28,270
34,562
48,180
PIERCE COUNTY INDUSTRIAL
310,764
186,581
454,771
657,559
(220,158)
227,687
Gross Asking Lease Rates by Class
Port of Tacoma/Fife Lakewood North End Tacoma Spanaway Puyallup/Sumner Tacoma CBD Other Pierce County Markets* PIERCE COUNTY INDUSTRIAL
LEASE RATES (NNN) Shell Office
$0.32-$0.38 $0.28-$0.36 $0.32-$0.38 $0.28-$0.36 $0.32-$0.38 $0.28-$0.36 $0.26-$0.32 $0.28-$0.36
$0.75 $0.75 $0.75 $0.75 $0.75 $0.75 $0.75 $0.75
OPERATING EXPENSES* (PSF) NNN Free Rent
$0.09-$0.14 $0.09-$0.14 $0.09-$0.14 $0.09-$0.14 $0.09-$0.14 $0.09-$0.14 $0.09-$0.14 $0.09-$0.14
3-6 months 3-6 months 3-6 months 3-6 months 3-6 months 3-6 months 3-6 months 3-6 months
*Other Pierce County Markets Includes: Dupont,E Pierce,E Tacoma,Fort Lewis,Gig Harbor,University Place, E Pierce
14
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Rates/expenses are approximate
Market Area
Prior years as of 4Q
Market Area
2Q’11 PUGET SOUND MARKET REPORT
Eastside and Northend Industrial/Flex Market STEADY M A RK E T The Eastside and Northend industrial markets continue to show signs of slow stabilization.
EASTSIDE AND NORTHEND INDUSTRIAL/FLEX SUBMARKETS MAP
Although Eastside vacancy rates improved slightly over first quarter they continue to remain stubbornly high compared to last year. The Northend market is following a similar path, with only slight improvements over one year ago. et S oun d
sector will begin to realize larger gains when there is significant
5
Pug
primarily to renewed Boeing production. The Eastside market
EVERETT
MUKIL TEO
The moderate increase in Northend activity can be attributed
improvement in the residential, commercial and building trade
MONROE
industries; however, technology and small manufacturing LYNNWOOD
companies are showing signs of strength. The flex markets are still weak, with both the Eastside and
BOTHELL
Northend markets experiencing only a slight improvement over the last quarter.
WOODINVILLE
5
Absorption has been moving into positive
405
territory, which is a welcomed trend in this sluggish market sector. Looking forward to the third and fourth quarters of 2011, the shoulders of last quarter’s tanker contract awarded to Boeing manufacturing across the board. The surge in production will
Wa s
hin
Northend market should see increased tenant activity. On the 520
SEATTLE
Lake
the aerospace giant has also announced a ramp up in airplane
REDMOND
gto
n
KIRKLAND
90
have a positive impact on those companies that are located
BELLEVUE
BELLEVUE
nearby and provide support services to this manufacturing powerhouse.
West Seattle
ISSAQUAH
In late June the Port of Everett celebrated its 1,000th barge carrying aerospace parts for the 747, 767 and 777 models, a sign that Boeing is on a steady course to raise its plane output. As tenant demand increases and space options decrease, the Northend should see a rise in rents and decline in concessions
LEGEND Northend Industrial Submarket Eastside Industrial Submarket
to balance the supply to demand ratio. Similarly, the Eastside is poised for improving tenant activity as the economy continues to gain momentum. Several large tenants, including Saltworks, are expanding operations in the Woodinville market, which will help contribute to positive growth in that submarket. www.pacific-re .co m
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15
PACIFIC REAL ESTATE PARTNERS, INC.
Eastside and Northend Industrial Market The Eastside industrial market is comprised of seven submarkets, 447
HISTORICAL Vacancy RATES
properties and totals just over 17 million square feet. The Northend
18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%
industrial market has a total of 295 properties spanning three submarkets and totals just over 12 million square feet. Both markets outpaced the first quarter, moving well into positive net absorption territory. Overall vacancy rates trended in the same direction, with the Eastside finishing at 9.4% and the Northend finishing just above 12%.
N O RT H
END
EA STS IDE
2005
2006
2007
2008
2009
2010
2011
Eastside and Northend Industrial Overview Direct Vacancy
Sublet Vacancy
ABSORPTION 2Q Absorption YTD
Total Vacancy
AVERAGE RENT & EXPENSES Shell Office
CONCESSIONS Free Rent
Bothell
32
1,210,694
0.2%
0.0%
0.2%
7,000
(3,000)
$0.50-$0.60
$1.00-$1.20
4-6 months
Woodinville
136
5,385,289
9.9%
0.0%
9.9%
2,492
30,009
$0.45-$0.60
$0.95-$1.20
4-6 months
Kirkland
43
1,576,880
9.1%
1.3%
10.4%
13,556
8,076
$0.45-$0.60
$0.95-$1.25
4-5 months
Monroe
48
1,591,296
20.2%
2.3%
22.5%
2,200
(2,717)
$0.40-$0.55
$0.95-$1.15
4-7 months
Redmond
105
3,856,247
9.1%
0.5%
9.6%
1,342
2,490
$0.50-$0.60
$1.00-$1.25
3-6 months
Bellevue
68
2,883,008
5.5%
0.0%
5.5%
60,696
(37,995)
$0.50-$0.65
$1.10-$1.25
3-5 months
Issaquah
15
731,980
6.4%
0.0%
6.4%
4,588
1,831
$0.50-$0.65
$1.10-$1.25
3-6 months
EASTSIDE INDUSTRIAL
447
17,235,394
9.0%
0.4%
9.4%
91,874
(1,306)
$0.45-$0.65
$0.95-$1.25
3-7 months
Everett
176
8,234,876
11.4%
0.3%
11.7%
52,709
37,356
$0.45-$0.60
$1.10-$1.25
3-6 months
Mukilteo
59
2,208,128
18.4%
0.0%
18.4%
(641)
30,010
$0.50-$0.65
$1.10-$1.25
3-6 months
Lynnwood
60
1,686,432
6.6%
0.8%
7.4%
(4,933)
(19,375)
$0.50-$0.65
$1.10-$1.25
3-6 months
NORTHEND INDUSTRIAL
295
12,129,436
12.0%
0.3%
12.3%
47,135
47,991
$0.45-$0.65
$1.10-$1.25
3-6 months
*5 year deal
INVENTORY Buildings SF
Market Area
Historical Total Vacancy 2004
2005
2006
2007
2008
2009
2Q’10
3Q’10
4Q’10
1Q’11
Bothell
18.8%
18.1%
13.6%
2.8%
0.3%
2.2%
2.1%
2.1%
0.0%
0.8%
2Q’11
0.2%
Woodinville
14.1%
11.9%
8.1%
4.9%
4.6%
10.9%
10.2%
11.3%
10.7%
10.2%
9.9%
Kirkland
32.0%
12.7%
3.1%
10.8%
3.7%
14.4%
13.7%
10.7%
10.9%
11.3%
10.4%
Monroe
3.6%
3.6%
8.1%
10.4%
8.9%
24.2%
24.8%
23.1%
23.0%
23.3%
22.5%
Redmond
10.2%
9.5%
5.0%
3.9%
4.3%
8.9%
9.0%
9.9%
9.7%
9.7%
9.6%
Bellevue
6.5%
4.1%
22.2%
12.2%
5.2%
5.4%
2.0%
2.7%
4.2%
7.5%
5.5%
Issaquah
42.2%
32.5%
22.5%
10.1%
6.4%
6.9%
7.0%
7.0%
6.7%
7.0%
6.4%
EASTSIDE INDUSTRIAL
13.9%
10.4%
10.3%
7.4%
4.7%
10.2%
9.4%
9.8%
9.8%
10.5%
9.4%
Everett
18.0%
15.9%
18.7%
9.2%
11.2%
15.7%
14.9%
14.2%
12.8%
13.0%
11.7%
Mukilteo
17.2%
16.0%
13.9%
10.8%
9.4%
11.6%
14.6%
20.2%
19.8%
18.4%
18.4%
Lynnwood
6.7%
12.0%
7.0%
7.0%
4.8%
7.5%
6.9%
7.1%
6.3%
7.1%
7.4%
NORTHEND INDUSTRIAL
16.0%
15.3%
15.8%
9.1%
9.9%
13.7%
13.6%
14.2%
13.1%
13.1%
12.3%
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
Woodinville
46
313,272
24
176,007
Market Area
Bothell Woodinville
2Q’10
3Q’10
4Q’10
2010
1Q’11
-
(17,096)
(2,998)
(20,094)
(10,000)
2Q’11
7,000
48,213
(60,658)
33,796
21,351
27,517
2,492 13,556
Kirkland
18
98,863
3
15,385
Kirkland
1,019
48,200
(3,878)
45,341
(5,480)
Monroe
13
94,970
4
23,615
Monroe
15,646
26,925
2,318
44,889
(4,917)
2,200
Redmond
20
115,136
11
201,172
Redmond
(41,961)
(34,139)
4,878
(71,222)
1,148
1,342
Bellevue
29
221,443
11
81,918
Bellevue
52,599
(17,922)
(43,489)
(8,812)
(98,691)
60,696
Issaquah
5
18,220
2
6,140
Issaquah
(2,540)
-
2,190
(350)
(2,757)
4,588
EASTSIDE INDUSTRIAL
133
886,215
57
513,237
EASTSIDE INDUSTRIAL
72,976
(54,690)
(7,183)
11,103
(93,180)
91,874
Everett
39
643,109
10
113,221
Everett
111,190
54,107
110,737
276,034
(15,353)
52,709
Mukilteo
9
31,970
3
23,137
Mukilteo
(26,092)
(124,594)
8,333
(142,353)
30,651
(641)
Lynnwood
14
60,244
3
12,932
Lynnwood
10,202
(4,977)
15,165
20,390
(14,442)
(4,933)
NORTHEND INDUSTRIAL
62
735,323
16
149,290
NORTHEND INDUSTRIAL
95,300
(75,464)
134,235
154,071
856
47,135
16
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Prior years as of 4Q
Market Area
2Q’11 PUGET SOUND MARKET REPORT
Eastside and Northend Flex Market The Eastside flex market has a total of six submarkets and the 307
HISTORICAL Vacancy RATES
properties account for just over 10 million square feet. The Northend
30.0%
industrial market totals three markets, 57 total buildings and is just
25.0%
under 2.2 million square feet. Both markets experienced positive
20.0%
net absorption, helping to keep the YTD totals in positive territory.
15.0%
Overall vacancy rates dropped slightly, with only two of the total nine
10.0%
EA
ST
SID
E
NOR
ND
5.0%
submarkets - Kirkland and Redmond - experiencing increases.
0.0%
2005
2006
2007
2008
2009
2010
2011
Vacancy Rates
INVENTORY Buildings SF
Direct Vacancy
Sublet Vacancy
Total Vacancy
ABSORPTION 2Q Absorption YTD
AVERAGE RENT & EXPENSES Shell Office
CONCESSIONS Free Rent
Bothell
63
2,934,702
19.0%
1.9%
20.9%
47,186
57,134
$0.50-$0.60
$1.10-$1.25
1-3 months
Woodinville
13
409,292
8.1%
4.4%
12.5%
2,546
23,110
$0.50-$0.60
$1.00-$1.25
3-6 months
Kirkland
43
1,264,755
22.9%
0.1%
23.0%
(9,379)
(30,894)
$0.50-$0.65
$1.10-$1.25
1-3 months
Redmond
129
4,036,694
14.1%
1.3%
15.4%
(22,974)
(50,986)
$0.50-$0.65
$1.10-$1.25
2-4 months
Bellevue
47
1,219,741
15.8%
0.0%
15.8%
4,722
(3,794)
$0.50-$0.65
$1.10-$1.25
3-5 months
Issaquah
12
267,600
3.0%
0.0%
3.0%
3,774
5,690
$0.50-$0.65
3-5 months
EASTSIDE FLEX
307
10,132,784
15.9%
1.1%
17.0%
25,875
260
$0.50-$0.65
$1.10-$1.25 $1.00-$1.25
1-5 months
Everett
19
1,204,235
7.4%
8.1%
15.5%
10,893
19,499
$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
25
400,063
12.4%
0.0%
12.4%
(580)
(8,779)
$0.50-$0.60
$1.05-$1.25
3-6 months
NORTHEND FLEX
57
2,198,594
9.9%
4.4%
14.3%
10,313
10,720
$0.50-$0.60
$1.05-$1.25
3-6 months
*5 year deal
Eastside and Northend Flex Overview Market Area
THE
Bothell
2004
2005
2006
2007
2008
2009
2Q’10
3Q’10
4Q’10
1Q’11
2Q’11
25.9%
23.3%
19.1%
14.8%
21.5%
23.1%
21.4%
20.1%
21.1%
21.7%
20.9%
Woodinville
8.4%
2.8%
8.0%
9.8%
9.6%
8.3%
9.5%
18.1%
18..1%
13.1%
12.5%
Kirkland
18.3%
17.1%
13.9%
12.7%
16.1%
22.2%
19.8%
19.9%
20.6%
22.3%
23.0%
Redmond
26.7%
24.8%
11.6%
8.4%
7.6%
11.7%
12.7%
13.9%
14.2%
14.8%
15.4%
Bellevue
10.0%
8.8%
8.7%
11.4%
10.5%
17.0%
18.4%
16.1%
15.5%
16.2%
15.8%
Issaquah
33.6%
1.9%
4.7%
13.5%
8.6%
6.0%
4.9%
4.5%
5.1%
4.4%
3.0%
EASTSIDE FLEX
22.7%
19.9%
13.3%
11.2%
12.9%
16.5%
16.3%
16.5%
16.9%
17.4%
17.0%
Everett
16.2%
10.4%
15.2%
8.9%
8.2%
8.2%
8.6%
8.6%
18.3%
16.9%
15.5%
Mukilteo
58.6%
36.6%
16.2%
15.3%
13.7%
20.5%
20.5%
13.3%
13.3%
13.3%
13.3%
Lynnwood
20.1%
17.2%
11.3%
7.2%
6.7%
12.1%
14.7%
10.8%
10.6%
12.4%
12.4%
NORTHEND FLEX
28.7%
25.2%
20.3%
9.9%
9.4%
12.3%
13.1%
15.8%
15.6%
14.8%
14.3%
Historical Leasing Activity Market Area
*Prior years as of 4Q
Historical Total Vacancy Market Area
Historical Total Absorption
2010-Leases
2010-SF
YTD 2011-Leases
YTD 2011-SF
2Q 2010
3Q 2010
4Q 2010
2010
1Q 2011
2Q 2011
Bothell
42
223,637
16
145,298
Bothell
36,050
36,087
(26,113)
52,806
9,948
47,186
Woodinville
6
8,194
7
10,906
Woodinville
(3,758)
(35,660)
515
(40,172)
23,110
2,546
Kirkland
18
58,040
9
17,429
Kirkland
10,192
(1,560)
(8,657)
21,081
(30,894)
(9,379)
Redmond
82
231,921
22
68,401
Redmond
(33,978)
(46,613)
(12,515)
(98,453)
(50,986)
(22,974)
Bellevue
35
106,785
10
25,685
Bellevue
(1,588)
27,864
7,562
18,530
(3,794)
4,722
Issaquah
4
8,797
1
1,916
Issaquah
4,533
1,000
(1,547)
2,373
5,690
3,774
11,451
(18,882)
(40,755)
(43,835)
(46,926)
25,875
-
(117,733)
4,476
(139,551)
16,106
10,893
EASTSIDE FLEX
Market Area
187
637,374
65
269,635
EASTSIDE FLEX
Everett
6
25,180
5
30,336
Everett
Mukilteo
10
232,645
-
-
Mukilteo
-
42,534
(76)
42,458
-
-
Lynnwood
24
42,109
5
8,936
Lynnwood
1,338
18,535
759
6,819
(8,779)
(580)
NORTHEND FLEX
40
299,934
10
39,272
NORTHEND FLEX
1,338
(56,664)
5,159
(90,274)
7,327
10,313
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17
PACIFIC REAL ESTATE PARTNERS, INC.
Puget Sound Retail Market Consumer C onfi d ence is 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 18
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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
2009
Rental Rates
Puget Sound Retail Overview Market Area
2008
INVENTORY Buildings
SF
Direct Vacancy
Sublet Vacancy
Total Vacancy
2010
$0.00
2011
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
2Q’11
2006
2007
2008
2009
2Q’10
3Q’10
4Q’10
1Q’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
*Prior years as of 4Q
Historical Total Vacancy Market Area
Historical Total Absorption
2007
2008
2009
2010
Market Area
Downtown Seattle
$23.42
$24.42
$22.23
$20.20
Eastside
$34.09
$31.95
$24.98
$21.88
Eastside
140,907
(59,179)
876
73,776
71,808
68,847
Northend
$20.93
$20.77
$17.94
$17.64
Northend
(31,665)
(103,473)
(73,047)
(319,258)
83,585
33,321
Southend
$22.05
$19.93
$17.11
$16.30
Southend
69,567
75,703
(64,013)
26,759
(19,699)
(32,688)
Tacoma
$18.52
$18.34
$16.77
$15.82
Tacoma
(25,405)
(36,309)
(74,142)
(63,994)
(47,996)
199,895
PUGET SOUND
$23.80
$23.08
$19.81
$18.37
PUGET SOUND
118,241
116,753
(94,342)
90,933
157,435
339,927
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
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
www.pacific-re .co m
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19
PACIFIC REAL ESTATE PARTNERS, INC.
Puget Sound Investment Market K EY I NVES T ME N T The Puget Sound investment market saw strengthening in the
also purchased the four-building, 280,000 square foot Class A
second quarter of 2011 with the sale of office buildings leading
complex, Plaza Yarrow Bay for $100M ($358/SF) in April of this
the charge.
year.
Diminishing vacancy levels and stabilizing rental rates
In the Seattle submarkets, tenants such as Amazon.com are
contributed to the uptick in sales levels and both will continue
paving the way for investment activity, stretching from Lake
to be driving forces in future investment activity as we head into
Union to the CBD. The lease-up of Seattle’s Class A towers
the third and fourth quarters.
has investors nationally looking to the Northwest for viable
The Industrial and Retail sectors continue to struggle and will
opportunities.
most likely lag behind until the more stabilized office assets have
The vast array of office product that is currently on the market
been traded. Although there has been healthy activity across the
has been closely watched by investors locally and nationally
region as a whole, the Downtown Seattle and Bellevue markets
and they are starting to make their move. Seattle Tower and
have been the key markets in Puget Sound, with a multitude of
Westlake have already selected buyers and other investment
investment opportunities currently being marketed.
opportunities such as 505 First, 83 King, 818 Stewart and 1918
The highlight of the quarter was the sale of Bellevue CBD’s
Terry are all on the market as well stabilized “core” assets.
Key Center. The 488,000 square foot Class A office building was
These varying types of assets are all going to be eyed by
purchased by Kilroy for $217M ($444/SF). Additionally, Kilroy
investors as cap rates decline and $/SF increase.
Price/sf & c a p r at e by p ro d uc t t y p e $700
10.0% 9.0%
$600 8.0% $500
6.0%
$/SF
$400
5.0% $300 4.0% 3.0%
$200 Office Cap Rate
Retail
Industrial
Office
Retail Cap Rate
$0 2005
20
|
2.0%
Industrail Cap Rate
$100
( 425) 974- 4000
2006
www.p a c i fi c -re.c om
2007
2008
2009
2010
2011
1.0% 0.0%
Cap Rate
7.0%
2Q’11 PUGET SOUND MARKET REPORT
Puget Sound Investment Market IN STI TUTI O N AL S AL E S Office Sales Over $10M Class A & B Transactions Highest Price/SF Avg Cap Rate
2005
2006
2007
2008
2009
2010
43
54
131
7
5
15
2011-YTD
7
$459/SF
$575/SF
$575/SF
$342/SF
$405/SF
$548/SF
$444/SF
6.7%
6.3%
6.3%
6.1%
9.5%
7.2%
7.2%
2005
2006
2007
2008
2009
2010
2011-YTD
22
14
35
19
9
8
9
$109/SF
$131/SF
$164/SF
$142/SF
$100/SF
$186/SF
$272/SF
6.8%
6.8%
5.8%
5.8%
9.2%
7.3%
7.0%
2005
2006
2007
2008
2009
2010
2011-YTD
22
28
19
4
8
7
8
$368/SF
$518/SF
$467/SF
$380/SF
$404/SF
$305/SF
$428/SF
6.3%
6.4%
5.9%
7.2%
8.8%
-
7.1%
2011-YTD
Industrial Sales Over $10M All Classes Transactions Highest Price/SF Avg Cap Rate
Retail Sales Over $10M All Classes Transactions Highest Price/SF Avg Cap Rate
P RI VATE C APITAL S AL E S Office Sales $1M - $10M Class A & B Transactions Volume Average Size (SF)
2007
2008
2009
2010
73
52
18
18
10
$384M
$310M
$55M
$70M
$30M 44,610 SF
27,623 SF
24,570 SF
7,798 SF
30,939 SF
Average Price
$5.3M
$6M
$3.1M
$3.9M
$3M
Average Price/SF
$191/SF
$243/SF
$168/SF
$126/SF
$214/SF
2007
2008
2009
2010
2011-YTD
133
89
36
51
17
$478M
$299M
$111M
$162M
$71M 60,951 SF
Industrial Sales $1M - $10M All Classes Transactions Volume
29,278 SF
27,052 SF
34,147 SF
38,196 SF
Average Price
Average Size (SF)
$3.6M
$3.3M
$3.1M
$3.1M
$4.2M
Average Price/SF
$123/SF
$124/SF
$90/SF
$83/SF
$92/SF
2007
2008
2009
2010
2011-YTD
182
209
77
58
25
$423M
$351M
$162M
$159M
$61M 17,179 SF
Retail Sales $1M - $10M All Classes Transactions Volume
20,026 SF
11,601 SF
9,435 SF
16,681 SF
Average Price
Average Size (SF)
$2.4M
$2.7M
$2.1M
$2.7M
$2.4M
Average Price/SF
$229/SF
$242/SF
$236/SF
$168/SF
$142/SF
www.pacific-re .co m
(425) 9 7 4 -4 0 0 0
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21
2Q’11 PUGET SOUND MARKET REPORT
Puget Sound Investment Market TO P LEASE T RA N S A C T IO N S YTD Occupancy/Type
Tenant
Building
SF
Submarket
3Q 2011
Amazon.com
1918 Eighth
465,000
Lake Union Denny Regrade
1 2
Renewal
Amazon.com
2201 Westlake
190,000
3
3Q 2011
Dendreon
Russell Investments Center
180,000
Seattle CBD
4
Blend & Extend
Wells Fargo
Wells Fargo Center
173,000
Seattle CBD
5
3Q 2011
Isilon Systems
505 First
138,000
Pioneer Square
6
PATH
PATH
2201 Westlake
112,000
Denny Regrade
7
3Q 2011
Seattle Genetics
RidgePoint at Canyon Park
81,000
Bothell
8
3Q 2011/Expansion
Zillow
Russell Investments Center
72,000
Seattle CBD
9
4Q 2011
KPMG
1918 Eighth
60,000
Lake Union
10
3Q 2011
Expedia
Skyline Tower
54,494
Bellevue CBD
To p Sales Tr a nsa c t ions YTD over $ 1 0 M Sale Date
Buyer
Building
SF
$ & $/SF
Cap
1
6/11
Kilroy
Key Center
488,470
$217.22M ($444/SF)
6.2%
2
4/11
Kilroy
Plaza Yarrow Bay
279,650
$100.21M ($358/SF)
6.5%
3
5/25
Principal Financial
705 Union Station
253,769
$38.29M ($150/SF)
-
4
1/27/2011
Simms Commercial Dev.
1000 Denny Way
285,186
$36.00M ($126/SF)
9.0%
5
3/30/2011
Stockbridge Capital
Queen Anne Square
155,766
$34.00M ($218/SF)
7.2%
6
5/05/2011
W3 Partners
Legacy Corporate Center
103,176
$14.17M ($137/SF)
-
7
3/21/2011
Equity Residential
51 University
96,582
$11.75M ($121/SF)
-
8
6/30/2011
Stockbridge Capital
1100 Olive Way
38,346
$11.12M ($289/SF)
5.9%
1 Key Center
2 Plaza Yarrow Bay
3 705 Union Station
4 1000 Denny Way
5 Queen Anne Square
6 Legacy Corporate Center
7 51 University
8 1100 Olive Way
www.pacific-re .co m
(425) 9 7 4 -4 0 0 0
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22
2Q’11 PUGET SOUND MARKET REPORT
Pacific Real Estate Partners, Inc.
David Abbott Associate
Ann Chamberlin Principal
Laura Ford Vice President
Tony Ford Vice President
Lori Hill Principal
Erwin Park Associate
Nate White Associate
Stuart Williams Principal, Co-Founder
Les Boudwin, SIOR Principal
Scott Carter Principal
Bill Cooper Associate
Mark Flippo Principal, Co-Founder
Chris Hughes Principal
Brent Jackson Vice President
Steve Schwartz Principal, Co-Founder
Daniel Seger Vice President
JJ Shephard Principal
Gabriel Smith Associate
Andrew Stark Vice President
Casey Trees Associate
Steve Crantz Vice President
Mike Horner Vice President
Andrew Miller Associate
Buzz Ellis, SIOR Principal
Mark Friel Vice President
Kristin Hammond Associate
John Lee Associate
Mark McFarland, SIOR Paige Morgan Principal Vice President
Jeff Sholian, SIOR Principal
Josh Stohr Associate
Joe Vaughan Vice President
Wyk Parker Vice President
Charlie Malley Principal
PORTLAND
TA C O M A
BELLEVUE
S E AT T L E
B RO KER S
www.pacific-re .co m
Tom Shimota Associate
(425) 9 7 4 -4 0 0 0
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23
SEATTLE BELLEVUE
TACOMA
Founded in 1993, Pacific Real Estate Partners (PREP) has over 35 brokers in four offices serving
WASHINGTON
the Seattle, Bellevue, Tacoma, Washington and Portland, Oregon markets. Providing client-centered and value-driven real estate services to clients throughout the Pacific Northwest and beyond, we represent tenants, landlords, and investors in the office, industrial, investment sales, and retail sectors.
PORTLAND OUR BROKERS: SEATTLE:
EASTSIDE:
PORTLAND:
David Abbott
Bill Cooper
Buzz Ellis, SIOR
Ann Chamberlin
Mark Flippo
Mark Friel
Tony Ford
Chris Hughes
Kristin Hammond
Laura Ford
Brent Jackson
John Lee
Lori Hill
Charlie Malley
Mark McFarland, SIOR
Erwin Park
Steve Schwartz
Paige Morgan
Wyk Parker
Daniel Seger
Tom Shimota
Nate White
JJ Shephard
Jeff Sholian, SIOR
Stuart Williams
Gabe Smith
Josh Stohr Joe Vaughan
SOUTHEND:
TACOMA:
Les Boudwin, SIOR
Steve Crantz
Scott Carter
Mike Horner
Andrew Stark
Andrew Miller
Casey Trees
www.pacific-re.com | (425) 974-4000
OREGON