2Q’11 PUGET SOUND MARKET REPORT
Eastside & 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 West Seattle
powerhouse.
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. (4 2 5 ) 9 7 4- 4000
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S EAT T L E | BEL L EVU E | TA COM A | PORTLA N D
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
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
1-5 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
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
187
637,374
65
269,635
EASTSIDE FLEX
11,451
(18,882)
(40,755)
(43,835)
(46,926)
25,875 10,893
EASTSIDE FLEX
Market Area
Everett
6
25,180
5
30,336
Everett
-
(117,733)
4,476
(139,551)
16,106
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
(4 2 5 ) 9 7 4- 4000
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S EAT T L E | BEL L EVU E | TA COM A | PORTLA N D
*Prior years as of 4Q
Historical Total Vacancy Market Area