2Q11_Eastside_Northend_Industrial_Market_PDF

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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 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 INVENTORY Buildings SF

Direct Vacancy

Sublet Vacancy

Total Vacancy

ABSORPTION 2Q Absorption YTD

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

Market Area

2004

2005

2006

2007

2008

2009

2Q’10

3Q’10

4Q’10

1Q’11

2Q’11

Bothell

18.8%

18.1%

13.6%

2.8%

0.3%

2.2%

2.1%

2.1%

0.0%

0.8%

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

Kirkland

18

98,863

3

Monroe

13

94,970

Redmond

20

115,136

Bellevue

29

221,443

11

Issaquah

Market Area

2Q’10

3Q’10

4Q’10

2010

1Q’11

2Q’11

-

(17,096)

(2,998)

(20,094)

(10,000)

7,000

Woodinville

48,213

(60,658)

33,796

21,351

27,517

2,492

15,385

Kirkland

1,019

48,200

(3,878)

45,341

(5,480)

13,556

4

23,615

Monroe

15,646

26,925

2,318

44,889

(4,917)

2,200

11

201,172

Redmond

(41,961)

(34,139)

4,878

(71,222)

1,148

1,342

81,918

Bellevue

52,599

(17,922)

(43,489)

(8,812)

(98,691)

60,696

Bothell

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

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Prior years as of 4Q

Historical Total Vacancy Market Area


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