1Q11_Southend_Industrial_Flex_Market

(425) 974-4000 www.pacif ic-re.com SEATTLE | BELLEVUE | TACOMA | PORTLAND

1Q’11 PUGET SOUND MARKET REPORT

SOUTHEND INDUSTRIAL/FLEX SUBMARKETS MAP

SEATTLE BELLEVUE

Southend Industrial/Flex Market

The Seattle Industrial Market gained strength in

the first quarter, bolstered by continued growth in

the Kent Valley Market. The three market areas of

Seattle Industrial, Kent Valley Industrial, and Pierce

County Industrial have all seen a significant uptick

in tenant activity, which bodes well for the rest of

2011.

The Seattle Industrial Market has been

consistently hovering near 5.8% for the last five

quarters and has seen very little market activity.

Smurfit leased 86,000 SF at AMB Portside and

Regal Aluminum Products - a Boeing supplier -

purchased a 50,000 SF facility in order to be better

situated in the region.

The Kent Valley Industrial Market proved to be the

winner in the first quarter. They saw nearly 720,000

SF of absorption and a 60 basis point vacancy

decline, which helped to greatly strengthen that

submarket. The Valley experienced an upsurge in

larger space activity in the first quarter, supported

through occupancies by companies such as ULine

and American Tire.

There was a significant amount of tenant activity

in the market and many existing tenants continue

to seek expansion space, while new companies are

looking in the region too. As occupancy levels rise

for the first time in the last eight quarters, and market stability

returns, institutional buyers and REIT’s are combing the market

looking for well stabilized assets. Unsolicited investment sales

are outpacing market sales approximately 4 to1 in the Southend

Market.

The Pierce County Industrial Market has been a consistently

stable market throughout the recession and continues to show

signs of strengthening. On the heels of last year’s 444,000 SF

occupancy of Pepsico in the Port of Tacoma, Sumner Corporate

Park’s 492,000 SF Summit building is rumored to have a tenant,

which could be a well known retailer or Trader Joe’s. If Trader

Joe’s does not take the space they will most likely look at build

to suit opportunities in the Southend market.

The Southend Industrial Market is poised to see significant

positive net absorption in the coming quarters, as there are no

buildings currently under construction and there are a multitude

of tenants looking for space. One of the main areas of interest

is the availability of large blocks of space in the Southend. With

Mega Brands vacating Pacific Coast Corporate Park Phase II,

there are currently only 5 buildings that can support a user of

over 400,000 SF.

INDUSTRIAL RESURGENCE

90405

5

Puget Sound

OTHER PIERCE COUNTY

LAKEWOOD

PUYALLUP/SUMNER

OTHER PIERCE COUNTY

OTHER PIERCE COUNTY

PARKLAND/SPANAWAY

FEDERAL WAY

AUBURN

NORTHENDTACOMA PORT OF

TACOMA/FIFE

KENTVashonIsland

RENTONTUKWILA

SEATAC/BURIEN

WEST SEATTLESODO

GEORGETOWN/ DUWAMISH N

GEORGETOWN/ DUWAMISH S

LEGEND

Pierce County Industrial/ Flex Submarket

Southend Industrial/Flex Submarket



The Seattle Industrial Market is comprised of fifteen submarkets, with

1,278 buildings and a total of 52,187,988 SF. The overall vacany rate

remains relatively even with the end of 2010, while asking rental rates

are slightly higher. Overall, year to date net absorption remains in

negative territory, with the largest loss in the Georgetown/Duawamish

submarket.

*Other Seattle Markets Includes: Seattle, CBD, Belltown/Denny,Capitol Hill/Central,Fremont,Lake Union,Magnolia/Queen Anne,Rainier/Beacon Hill,U. District, Waterfront

HISTORICAL VACANCY RATES & RENTAL RATES

2005 2007 2009 20112006 2008 2010

7.0% $0.46

5.0%

$0.43

3.0%

2.0%

1.0%

6.0% $0.45

$0.44

0.0% $0.39

$0.40

4.0%

$0.42

$0.41

Rental Rates Vacancy Rates Seattle Industrial Overview

INVENTORY ABSORPTION UNDER CONSTRUCTIONMarket Area Buildings SF Direct Vacancy Sublet Vacancy Total Vacancy 1Q YTD Projects SF

SoDo 239 11,921,392 5.5% 0.0% 5.5% (42,607) (42,607) - -

Gtown/Duwamish N 284 14,192,975 8.4% 0.2% 8.6% (64,359) (64,359) - -

Gtown/Duwamish S 141 4,428,407 3.4% 0.2% 3.6% 5,910 5,910 - -

Ballard 88 2,110,841 3.7% 0.0% 3.7% 10,049 10,049 - -

West Seattle 72 3,306,501 2.0% 0.0% 2.0% (14,679) (14,679) - -

Other Seattle Markets* 454 16,227,872 5.1% 0.1% 5.2% 46,389 46,389 - -

SEATTLE INDUSTRIAL 1,278 52,187,988 5.7% 0.1% 5.8% (59,297) (59,297) - -

Market Area 1Q 2010 2Q 2010 3Q 2010 4Q 2010 2010 1Q 2011

SoDo (23,886) (7,363) (52,834) (56,245) (140,328) (42,607)

Gtown/Duwamish N 90,405 82,441 (19,671) 49,936 203,111 (64,359)

Gtown/Duwamish S (2,990) 2,836 26,559 62,547 88,952 5,910

Ballard 30,358 (22,650) 470 - 8,178 10,049

West Seattle 7,500 (7,585) (23,726) 15,188 (8,623) (14,679)

Other Seattle Markets* (36,352) (78,013) 58,744 71,734 16,113 46,389

SEATTLE INDUSTRIAL 65,035 (30,334) (10,458) 143,160 167,403 (59,297)

Historical Total TEUs Historical Total Absorption

Market Area 2009 2010 2011-YTD

Port of Seattle 1,584,596 2,139,577 323,569

Port of Tacoma 1,545,855 1,455,467 221,193

PUGET SOUND PORTS 3,130,451 3,595,044 544,762

Gross Asking Lease Rates by Class

LEASE RATES (NNN) OPERATING EXPENSES* (PSF)Market Area Shell Office NNN Free Rent

SoDo $0.55-$0.75 $0.75 $0.08-$0.10 1-4 monthsGtown/Duwamish N $0.45-$0.65 $0.75 $0.08-$0.10 1-4 monthsGtown/Duwamish S $0.45-$0.65 $0.75 $0.08-$0.10 1-4 monthsBallard $0.45-$0.65 $0.75 $0.08-$0.10 1-4 monthsWest Seattle $0.45-$0.65 $0.75 $0.08-$0.10 1-4 monthsOther Seattle Markets* $0.45-$0.65 $0.75 $0.08-$0.10 1-4 monthsSEATTLE INDUSTRIAL $0.45-$0.75 $0.75 $0.08-$0.10 1-4 months *

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Historical Total Vacancy

Market Area 2004 2005 2006 2007 2008 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011

SoDo 4.1% 3.2% 3.0% 2.3% 3.9% 3.8% 4.0% 4.1% 4.7% 5.1% 5.5%

Gtown/Duwamish N 8.3% 7.2% 7.6% 6.8% 6.1% 9.6% 8.9% 8.3% 8.6% 8.2% 8.6%

Gtown/Duwamish S 2.0% 7.1% 2.9% 2.3% 4.2% 5.7% 5.7% 5.7% 5.1% 3.7% 3.6%

Ballard 4.2% 4.1% 4.1% 3.0% 2.2% 4.6% 3.2% 4.2% 4.2% 4.2% 3.7%

West Seattle 3.5% 4.1% 1.1% 1.9% 40.0% 1.3% 1.1% 1.3% 2.0% 1.6% 2.0%

Other Seattle Markets* 4.4% 4.2% 2.6% 2.4% 2.8% 5.6% 5.8% 6.3% 5.9% 5.5% 5.2%

SEATTLE INDUSTRIAL 5.1% 5.0% 4.0% 3.6% 3.9% 6.0% 5.8% 5.9% 5.9% 5.7% 5.8%

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Seattle Industrial Market



Kent Valley Industrial Market

The Kent Valley Industrial Market is comprised of six submarkets, with

1,573 buildings and a total of 111,721,944 SF. The overall vacany rate has

dropped slightly since the end of 2010, while shell asking rates remain

nearly the same. The Valley experienced strong positive net absorption

during the first quarter, totaling 720,795S SF, with the largest gain in the

Auburn submarket.


2005 2007 2009 20112006 2008 2010

9.0% $0.40

7.0%

3.0%

5.0%

1.0%

$0.30

0.0% $0.00

$0.10

$0.20

Rental Rates Vacancy Rates Kent Valley Industrial Overview

INVENTORY ABSORPTION UNDER CONSTRUCTIONMarket Area Buildings SF Direct Vacancy Sublet Vacancy Total Vacancy 1Q YTD Projects SF

Auburn 317 23,832,799 3.7% 1.3% 5.0% 602,850 602,850 - -

Federal Way 53 1,855,596 18.0% 0.0% 18.0% (7,852) (7,852) - -

Kent 711 49,514,780 9.0% 0.7% 9.7% 227,222 227,222 - -

Renton 152 13,171,517 2.8% 4.4% 7.2% (39,643) (39,643) - -

Seatac/Burien 88 3,824,949 9.2% 0.2% 9.4% 10,454 10,454 - -

Tukwila 252 19,522,303 4.8% 0.9% 5.7% (72,236) (72,236) - -

KENT VALLEY INDUSTRIAL 1,573 111,721,944 6.5% 1.3% 7.8% 720,795 720,795 - -


Auburn (459,711) (412,586) 38,110 26,593 (807,594) 602,850

Federal Way (17,347) 27,321 5,067 (204,912) (189,871) (7,852)

Kent (151,091) (186,275) (63,492) (278,488) (679,346) 227,222

Renton (20,599) 41,020 3,807 78,705 102,933 (39,643)

Seatac/Burien 77,332 (12,374) 51,266 2,313 118,537 10,454

Tukwila 79,398 (1,715) 15,102 (14,834) 77,951 (72,236)

KENT VALLEY (492,018) (544,609) 49,860 (390,623) (1,377,390) 720,795



Port of Seattle 1,584,596 2,139,577 323,569

Port of Tacoma 1,545,855 1,455,467 221,193


Gross Asking Lease Rates by Class

LEASE RATES (NNN) OPERATING EXPENSES* (PSF)Market Area Shell Office NNN Free Rent

Auburn $0.32-$0.38 $0.75 $0.09-$0.14 3-5 monthsFederal Way $0.32-$0.38 $0.75 $0.09-$0.14 3-5 monthsKent $0.32-$0.40 $0.75 $0.09-$0.14 3-5 monthsRenton $0.34-$0.40 $0.75 $0.09-$0.14 3-5 monthsSeatac/Burien $0.42-$0.50 $0.75 $0.09-$0.14 3-5 monthsTukwila $0.34-$0.40 $0.75 $0.09-$0.14 3-5 monthsKENT VALLEY INDUSTRIAL $0.32-$0.50 $0.75 $0.09-$0.14 3-5 months *

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Market Area 2004 2005 2006 2007 2008 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011

Auburn 5.2% 4.8% 3.9% 6.0% 3.8% 4.2% 6.2% 7.9% 7.8% 7.4% 5.0%

Federal Way 4.3% 2.4% 2.1% 2.6% 3.0% 7.6% 8.6% 7.1% 6.8% 18.2% 18.7%

Kent 9.1% 7.1% 5.5% 4.1% 3.8% 8.8% 9.1% 9.5% 9.7% 10.2% 9.7%

Renton 5.6% 2.9% 3.6% 1.1% 1.4% 7.6% 7.8% 7.5% 7.4% 6.8% 7.2%

Seatac/Burien 8.3% 8.3% 5.0% 4.3% 12.2% 13.2% 11.1% 11.4% 10.0% 10.0% 9.7%

Tukwila 5.1% 5.3% 4.9% 5.1% 3.3% 5.6% 5.2% 5.2% 5.2% 5.2% 5.7%

KENT VALLEY INDUSTRIAL 7.1% 5.8% 4.8% 4.3% 3.7% 7.2% 7.7% 8.2% 8.2% 8.4% 7.8%

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2005 2007 2009 20112006 2008 2010

10.0% $0.33

8.0%

$0.30

4.0%

6.0%

2.0%

$0.32

$0.31

0.0% $0.26

$0.27

$0.29

$0.28

Rental Rates Vacancy RatesPierce County Industrial Overview

INVENTORY ABSORPTION UNDER CONSTRUCTIONMarket Area Buildings SF Direct Vacancy Sublet Vacancy Total Vacancy 1Q YTD Rent NNN

Port of Tacoma/Fife 284 18,853,834 7.9% 0.0% 7.9% (117,842) (117,842) - -

Lakewood 108 4,770,761 7.5% 0.1% 7.6% (139,305) (139,305) - -

North End Tacoma 67 2,112,040 4.7% 0.0% 4.7% (15,600) (15,600) - -

Spanaway 56 3,432,830 6.2% 0.0% 6.2% (9,301) (9,301) - -

Puyallup/Sumner 268 20,907,468 13.6% 0.0% 13.6% (10,302) (10,302) - -

Tacoma CBD 49 1,435,574 11.2% 0.0% 11.2% 37,630 37,630 - -

Other Pierce County Markets* 304 10,480,846 3.6% 0.5% 4.1% 34,562 34,562 - -

PIERCE COUNTY INDUSTRIAL 1,136 61,993,353 9.0% 0.1% 9.1% (220,158) (220,158) - -


Port of Tacoma/Fife 33,660 (29,872) 290,444 430,998 725,230 (117,842)

Lakewood (14,500) 20,343 6,598 (23,588) (11,147) (139,305)

North End Tacoma (1,140) 4,800 600 (1,050) 3,210 (15,600)

Spanaway 2,308 5,616 (20,051) 1,752 (10,375) (9,301)

Puyallup/Sumner (133,583) 244,057 (227,487) 74,350 (42,663) (10,302)

Tacoma CBD (3,360) (23,070) (10,468) 1,932 (34,966) 37,630

Other Pierce County Markets* (177,942) 88,890 146,945 (29,623) 28,270 34,562

PIERCE COUNTY INDUSTRIAL (294,557) 310,764 186,581 454,771 657,559 (220,158)



Port of Seattle 1,584,596 2,139,577 323,569

Port of Tacoma 1,545,855 1,455,467 221,193


Gross Asking Lease Rates by ClassLEASE RATES (NNN) OPERATING EXPENSES* (PSF)

Market Area Shell Office NNN Free Rent

Port of Tacoma/Fife $0.28-$0.36 $0.75 $0.09-$0.14 3-6 monthsLakewood $0.28-$0.36 $0.75 $0.09-$0.14 3-6 monthsNorth End Tacoma $0.28-$0.36 $0.75 $0.09-$0.14 3-6 monthsSpanaway $0.28-$0.36 $0.75 $0.09-$0.14 3-6 monthsPuyallup/Sumner $0.28-$0.36 $0.75 $0.09-$0.14 3-6 monthsTacoma CBD $0.28-$0.36 $0.75 $0.09-$0.14 3-6 monthsOther Pierce County Markets* $0.26-$0.32 $0.75 $0.09-$0.14 3-6 monthsPIERCE COUNTY INDUSTRIAL $0.28-$0.36 $0.75 $0.09-$0.14 3-6 months R

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Market Area 2004 2005 2006 2007 2008 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011

Port of Tacoma/Fife 5.6% 3.2% 3.3% 4.8% 8.5% 9.0% 8.9% 9.4% 9.6% 7.3% 7.9%

Lakewood 6.3% 5.2% 13.9% 7.8% 4.0% 4.5% 4.8% 4.4% 4.3% 4.8% 7.6%

North End Tacoma 1.2% 2.6% 1.9% 2.6% 2.1% 4.1% 4.2% 3.9% 3.9% 4.0% 4.7%

Spanaway 11.3% 2.1% 0.8% 10.8% 11.9% 5.6% 5.5% 5.4% 6.0% 5.9% 6.2%

Puyallup/Sumner 4.0% 8.3% 6.2% 11.3% 14.5% 12.4% 13.4% 12.2% 13.3% 13.0% 13.6%

Tacoma CBD 5.0% 4.3% 6.8% 7.0% 5.5% 11.4% 11.6% 13.3% 14.0% 13.8% 11.2%

Other Pierce County Markets* 3.9% 4.2% 5.2% 2.3% 4.9% 4.7% 6.4% 5.6% 4.2% 4.4% 4.1%

PIERCE COUNTY INDUSTRIAL 5.0% 4.8% 5.4% 6.9% 9.4% 8.8% 9.4% 9.0% 9.2% 9.1% 9.1%

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The Pierce County Industrial Market is comprised of thirteen submarkets,

with 1,136 buildings and a total of 61,993,353 SF. The overall vacany rate

remains even with where the year ended in 2010, while asking rental

rates have edged up slightly. Overall, year to date net absorption was

negative in most areas, with the only positive gains in the Tacoma CBD

and several smaller outlying submarkets.

Pierce County Industrial Market

*Other Pierce County Markets Includes: Dupont,E Pierce,E Tacoma,Fort Lewis,Gig Harbor,University Place, E Pierce

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1Q11_Southend_Industrial_Flex_Market