WEST INDUSTRIAL MARKET
LAS VEGAS
Industrial vacancy in the fourth quarter continued its downward trend, falling 0.3% to 10.9%.
Several large deals served to chip away at Las Vegas’ inventory. Big transactions included 141,750 square feet leased to Total Warehousing Inc., 51,022 square feet leased to Distinctive Marble Inc. and 60,000 square feet leased to RC Willey.
Net absorption in the fourth quarter, while not as robust as the two prior quarters, was a healthy 479,261 square feet. There was more than 2.2 million square feet absorbed in 2003.
Industrial sales is strong and consisted primarily of activity in the 5,000- to 20,000-square-foot range.
Las Vegas remains one of the fastest growing in the nation. With more than 2 million square feet of industrial space under construction, indications are that developers still are bullish on the Las Vegas market.
Business owners are learning that with the right land, price and low interest rates, they can buy a building for less money than leasing. Thus, the leasing market remains soft and landlords offer aggressive rates and incentives to attract tenants. This won’t change until interest rates creep higher.
Available land is becoming scarcer and more expensive. It’s another indicator that Las Vegas’ existing inventory will see better net absorption in the coming years.
PORTLAND
The economy gave the industrial sector some good news this quarter.
Unemployment rates in Portland and other parts of Oregon have dropped slightly, and there were encouraging signs from the manufacturing and semiconductor industries.
Pent-up demand, depleted inventories and low interest rates are working together to propel the manufacturing sector into 2004 with expectations of renewed hiring.
The good news was reflected in the industrial market, which posted strong net absorption and a solid drop in vacancy in the fourth quarter. Market activity again was dominated by the owner-user and build-to-suit, with a spate of large deals hitting the books this quarter.
Top performers were Clark County, Rivergate and the NE/Columbia corridor submarkets. Rental rates have stabilized for state-of-the-art manufacturing-warehouse-distribution space, but there continues to be some downward pressure on rates for flex buildings.
The worst is definitely behind the Portland industrial market.
SEATTLE
Boeing Co.’s decision to assemble the 7E7 “Dreamliner” in Everett is a major economic boost for the Northend market.
The decision is expected to bring 800 to 1,200 new jobs to the region. Panattoni and Intracorp both have projects planned in the Northend to accommodate future growth.
Teacher’s Insurance and Annuity Association of America bought Rainier Corporate Park and Rainier Corporate Park East in Fife. Teacher’s Insurance paid $53.8 million for the 1.1 million-square-foot industrial park, or $49 per square foot.
AMB Property Corp. purchased eight industrial buildings near SeaTac from International Airport Centers. The buildings were part of a $481 million deal that totaled more than 500,000 square feet.
Concessions have remained fairly steady but effective rents have bottomed out and are starting to rise. Credit tenants can strike good deals with landlords and they can protect themselves by signing longer term deals.
The market is less favorable to tenants than previous quarters. Landlords will begin to regain their strength as the economy improves.
