Western Industrial Market
SEATTLE
The vacancy rate for the Puget Sound industrial market was 8.8% in the second quarter, down from 9.8% in the previous quarter.
There was 1.47 million square feet of positive net absorption, with most in the Kent and Pierce County submarkets. Norvanco signed for 492,000 square feet in the Summit Building at Sumner Corporate Park. Johnson International took 100,000 square feet at the Continental Hardwoods Building, a built-to-suit project in Kent that finished construction in April.
Starbucks expanded into 70,800 square feet at Kingsport Industrial Park Building 2. Lagasse, a janitorial and food services supply company, occupied 59,000 square feet at Auburn Park 167. The company relocated from 37,000 square feet at Northwest Distribution Center in Kent.
There has been a lot of activity in the industrial market and developers are starting to build in order to accommodate new demand. Segale and Knapp Development both have speculative construction projects under way in the Southend market. Panattoni Development Co., Opus NW and Davis Properties & Investments have projects planned and are waiting for tenants.
Depending on the quality of the buildings, asking rates are starting to move up due to demand. Rents and concessions are still in the tenants’ favor but as market conditions improve in the next year or two, landlords will regain their strength. Expect vacancy to tighten as job growth increases.
OTHER MARKETS
Albuquerque,Local companies expanded by more than 100,000 square feet in the second quarter, helping to stabilize the vacancy rate despite new completions totaling 247,000 square feet.
Austin,Second-quarter absorption totaled 471,000 square feet, spurred by warehouse-distribution demand in the Southeast submarket. R & D-flex; product comprises half of the city’s empty space.
Dallas-Fort Worth,Absorption surpassed 3 million square feet in the quarter, the highest quarterly gain in three years. Demand was strong for warehouse-distribution product but weak for R & D-flex.;
Denver,Moderately positive absorption was not enough to keep vacancy from rising in the second quarter. Rents have stabilized.
Fresno,Leasing is active for spaces of 10,000 square feet or less and slow for spaces of 50,000-plus square feet. The sales market has more buyers than sellers with demand strong for owner-user properties in all sizes.
Houston,Impressive absorption drove vacancy lower by 52 basis points, with Montgomery County posting the sharpest decline. R & D-flex; vacancy fell significantly.
Las Vegas,Vacancy took another dip in the quarter, forcing tenants in search of deals to look a little harder.
Oakland-East Bay,Modern high-cube space is in demand. R & D-flex; tenants who migrated from the Peninsula to Hayward are considering whether to return now that the Peninsula offers ample space at affordable rates. (See vacancy, rent numbers, page 36.)
Phoenix,Fueled by the strong economy and the demolition of a 1 million-square-foot Motorola building, vacancy fell by a full percentage point from last quarter. First-half absorption was the highest since 2000.
Portland,Both the manufacturing-warehouse-distribution sector and the R & D-flex; sector racked up solid absorption and respectable drops in vacancy this quarter. It was the first quarter in three years that R & D-flex; has shown any real improvement.
Reno,Growth has been moderate year-to-date. There is very little speculative construction, but build-to-suit activity is growing with 1.4 million square feet under way or planned.
Sacramento,Vacancy crept higher in the second quarter, fueled by spec warehouse construction. Asking rates are holding. (See vacancy, rent numbers, page 36.)
San Antonio,Absorption in the second quarter was low but positive, led by the Kelly USA submarket. The average asking rent fell for R & D-flex; space, particularly in the Northwest and North Central submarkets where R & D-flex; must compete with a surplus of vacant office space.
San Jose-Silicon Valley,The market performed well for the third consecutive quarter, absorbing nearly half a million square feet. Asking rents have stabilized. The R & D; condo niche is active. (See vacancy, rent numbers, page 36.)
