2Q’11 PUGET SOUND MARKET REPORT
Puget Sound Retail Market CO NSUM E R C ON F ID E N C E I S 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 (4 2 5 ) 9 7 4- 4000
w w w. pa c i fi c -re.c om
S EAT T L E | BEL L EVU E | TA COM A | PORTLA N D
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
Rental Rates
Puget Sound Retail Overview Market Area
2008
INVENTORY Buildings
SF
Direct Vacancy
Sublet Vacancy
Total Vacancy
2009
2010
2011
$0.00
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
2006
2007
2008
2009
2Q’10
3Q’10
4Q’10
1Q’11
2Q’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
Historical Total Absorption
2007
2008
2009
2010
Market Area
Downtown Seattle
$23.42
$24.42
$22.23
$20.20
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
Eastside
$34.09
$31.95
$24.98
$21.88
Eastside
140,907
(59,179)
Northend
$20.93
$20.77
$17.94
$17.64
Northend
(31,665)
(103,473)
876
73,776
71,808
68,847
(73,047)
(319,258)
83,585
Southend
$22.05
$19.93
$17.11
$16.30
Southend
69,567
75,703
33,321
(64,013)
26,759
(19,699)
(32,688)
Tacoma
$18.52
$18.34
$16.77
$15.82
Tacoma
(25,405)
PUGET SOUND
$23.80
$23.08
$19.81
$18.37
PUGET SOUND
118,241
(36,309)
(74,142)
(63,994)
(47,996)
199,895
116,753
(94,342)
90,933
157,435
339,927
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
(4 2 5 ) 9 7 4- 4000
w w w. pa c i fi c -re.c om
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