2Q11_Southend_Industrial_Flex_Market_PDF

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Pierce County Industrial Market

HISTORICAL VACANCY RATES & RENTAL RATES

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 2Q Absorption YTD Projects SF

Port of Tacoma/Fife 284 18,705,677 7.2% 0.0% 7.2% 103,740 (14,102) - -

Lakewood 108 4,770,761 7.3% 0.1% 7.4% 20,960 (118,345) - -

North End Tacoma 67 2,112,040 5.5% 0.0% 5.5% 2,242 (13,358) - -

Spanaway 56 3,432,830 6.1% 0.0% 6.1% 2,280 (7,021) - -

Puyallup/Sumner 268 20,907,468 13.2% 0.1% 13.3% 37,403 27,101 - -

Tacoma CBD 49 1,435,574 9.5% 0.7% 10.2% 12,882 50,512 - -

Other Pierce County Markets* 318 10,688,751 4.3% 0.3% 4.6% 48,180 82,742 - -

PIERCE COUNTY INDUSTRIAL 1,150 62,053,101 8.7% 0.1% 8.8% 227,687 7,529 - -

Market Area 2Q’10 3Q’10 4Q’10 2010 1Q’11 2Q’11

Port of Tacoma/Fife (29,872) 290,444 430,998 725,230 (117,842) 103,740

Lakewood 20,343 6,598 (23,588) (11,147) (139,305) 20,960

North End Tacoma 4,800 600 (1,050) 3,210 (15,600) 2,242

Spanaway 5,616 (20,051) 1,752 (10,375) (9,301) 2,280

Puyallup/Sumner 244,057 (227,487) 74,350 (42,663) (10,302) 37,403

Tacoma CBD (23,070) (10,468) 1,932 (34,966) 37,630 12,882

Other Pierce County Markets* 88,890 146,945 (29,623) 28,270 34,562 48,180

PIERCE COUNTY INDUSTRIAL 310,764 186,581 454,771 657,559 (220,158) 227,687

Historical Total TEUs Historical Total Absorption

Market Area 2009 2010 2011-YTD

Port of Seattle 1,584,596 2,139,577 656,045

Port of Tacoma 1,545,855 1,455,467 465,100

Puget Sound Ports Total 3,130,451 3,595,044 1,121,145

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

Market Area Shell Office NNN Free Rent

Port of Tacoma/Fife $0.32-$0.38 $0.75 $0.09-$0.14 3-6 monthsLakewood $0.28-$0.36 $0.75 $0.09-$0.14 3-6 monthsNorth End Tacoma $0.32-$0.38 $0.75 $0.09-$0.14 3-6 monthsSpanaway $0.28-$0.36 $0.75 $0.09-$0.14 3-6 monthsPuyallup/Sumner $0.32-$0.38 $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 Ra

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Historical Total Vacancy

Market Area 2004 2005 2006 2007 2008 2009 2Q’10 3Q’10 4Q’10 1Q’11 2Q’11

Port of Tacoma/Fife 5.6% 3.2% 3.3% 4.8% 8.5% 9.0% 9.4% 9.6% 7.3% 7.9% 7.2%

Lakewood 6.3% 5.2% 13.9% 7.8% 4.0% 4.5% 4.4% 4.3% 4.8% 7.6% 7.4%

North End Tacoma 1.2% 2.6% 1.9% 2.6% 2.1% 4.1% 3.9% 3.9% 4.0% 4.7% 5.5%

Spanaway 11.3% 2.1% 0.8% 10.8% 11.9% 5.6% 5.4% 6.0% 5.9% 6.2% 6.1%

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

Tacoma CBD 5.0% 4.3% 6.8% 7.0% 5.5% 11.4% 13.3% 14.0% 13.8% 11.2% 10.2%

Other Pierce County Markets* 3.9% 4.2% 5.2% 2.3% 4.9% 4.7% 5.6% 4.2% 4.4% 4.1% 4.6%

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

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The Pierce County industrial market is comprised of seven submarkets,

totals just over 62 million square feet and is spread across 1,150

properties. Net absorption reached positive territory at just over 225,000

square feet in the second quarter, which was well ahead of where the

first quarter ended. Overall vacancy also experienced positive gains

over the first quarter, settling in at 8.8%.

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


Southend Industrial/Flex Market

SOUTHEND INDUSTRIAL/FLEX SUBMARKETS MAP

SEATTLE BELLEVUE

The Seattle industrial market continued to show

signs of strength in the second quarter, with

150,000 SF of positive absorption and a 70 basis

point decrease in vacancy to 5.1%, most of which

was driven by Smurfit-Stone’s 83,000 square foot

lease at AMB/Prologis Portside

The Kent Valley was relatively flat in the second

quarter with little or no change in vacancy. Of the

total YTD net absorption of 723,000 SF, only 2,273

SF was realized in the second quarter.

Tenant activity continues to be strong, as many

existing tenants seek expansion space and new

companies are continuing their searches in the

region too. Occupancy levels are beginning to rise

in the market and stability is returning, with many

institutional buyers and REITs eying the market’s

future stabilized assets.

The Pierce County industrial market has been

the most unwavering market in the Southend

throughout the recession and once again finished

strong. The second quarter brought nearly 185,000

SF of absorption and a 30 basis point drop in

vacancy, which shows the elevating strength in this

market. The highlight of the quarter and possibly

of the year was Amazon.com’s full building lease

of Sumner Corporate Park’s 492,000 SF Summit

building. In addition, Trader Joe’s is rumored to be looking in

the South Sound area for a 500,000 SF build to suit option that

could break ground as early as fourth quarter 2011.

Large blocks of space continue to be watched closely in the

region. With more tenants rumored to have locked up several of

the remaining available spaces there may be fewer than three

spaces in the region that would be capable of supporting a

400,000 SF tenant by fourth quarter.

Overall the Southend industrial market is strong and is showing

signs of a quicker recovery than initially anticipated. With the

market recovery underway, the limited amount of large blocks

of space and rising rental rates, those tenants that have been

waiting in the wings may want to make their move on premium

spaces and low rates.

Early indicators point toward this active market possibly

beginning to see new construction in the near future.

I N D U S T R I A L S T R E N G T H

90405

5

Puget Sou

nd

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

2Q’11 PUGET SOUND MARKET REPORT2Q’11 PUGET SOUND MARKET REPORT


Seattle Industrial Market


Kent Valley Industrial Market

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


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 2Q YTD Projects SF

SoDo 239 11,921,392 4.9% 0.0% 4.9% 54,719 12,112 - -

Gtown/Duwamish N 285 14,205,445 7.1% 0.2% 7.3% 139,852 75,493 - -

Gtown/Duwamish S 141 4,428,407 3.0% 0.2% 3.2% 5,667 11,577 - -

Ballard 88 2,110,841 2.2% 0.0% 2.2% (5,500) 4,549 - -

West Seattle 72 3,306,501 1.7% 0.0% 1.7% (1,380) (16,059) - -

Other Seattle Markets* 454 16,146,527 4.5% 0.6% 5.1% (43,088) 3,301 - -

SEATTLE INDUSTRIAL 1,279 52,119,113 4.9% 0.2% 5.1% 150,270 90,973 - -


SoDo (7,363) (52,834) (56,245) (140,328) (42,607) 54,719

Gtown/Duwamish N 82,441 (19,671) 49,936 203,111 (64,359) 139,852

Gtown/Duwamish S 2,836 26,559 62,547 88,952 5,910 5,667

Ballard (22,650) 470 - 8,178 10,049 (5,500)

West Seattle (7,585) (23,726) 15,188 (8,623) (14,679) (1,380)

Other Seattle Markets* (78,013) 58,744 71,734 16,113 46,389 (43,088)

SEATTLE INDUSTRIAL (30,334) (10,458) 143,160 167,403 (59,297) 150,270



Port of Seattle 1,584,596 2,139,577 656,045

Port of Tacoma 1,545,855 1,455,467 465,100


Gross Asking Lease Rates by Class

LEASE RATES (NNN) EXPENSES & CONCESSIONSMarket Area Shell Office NNN Free Rent

SoDo $0.55-$0.75 $0.75 $0.10-$0.15 1-4 monthsGtown/Duwamish N $0.45-$0.65 $0.75 $0.10-$0.15 1-4 monthsGtown/Duwamish S $0.45-$0.65 $0.75 $0.10-$0.15 1-4 monthsBallard $0.45-$0.65 $0.75 $0.10-$0.15 1-4 monthsWest Seattle $0.45-$0.65 $0.75 $0.10-$0.15 1-4 monthsOther Seattle Markets* $0.45-$0.65 $0.75 $0.10-$0.15 1-4 monthsSEATTLE INDUSTRIAL $0.45-$0.75 $0.75 $0.10-$0.15 1-4 months *R

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SoDo 4.1% 3.2% 3.0% 2.3% 3.9% 3.8% 4.1% 4.7% 5.1% 5.5% 4.9%

Gtown/Duwamish N 8.3% 7.2% 7.6% 6.8% 6.1% 9.6% 8.3% 8.6% 8.2% 8.6% 7.3%

Gtown/Duwamish S 2.0% 7.1% 2.9% 2.3% 4.2% 5.7% 5.7% 5.1% 3.7% 3.6% 3.2%

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

West Seattle 3.5% 4.1% 1.1% 1.9% 40.0% 1.3% 1.3% 2.0% 1.6% 2.0% 1.7%

Other Seattle Markets* 4.4% 4.2% 2.6% 2.4% 2.8% 5.6% 6.3% 5.9% 5.5% 5.2% 5.1%

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

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The Seattle industrial market is made up of 1,279 properties spanning

six submarkets from Ballard to the North and Duwamish to the South.

It accounts for a total of just over 52 million square feet. The overall

vacancy rate remains relatively low, finishing up slightly lower than the

first quarter at 5.1%. Net absorption headed well into positive territory

at 150,270 square feet, helping the YTD total gain reach 90,973 square

feet.

The Kent Valley industrial market totals just over 112 million square feet

in 1,579 buildings and spans six submarkets. Net absorption for the

second quarter was down considerably from the first quarter, ending

near 29,000 square feet, with the YTD total now just under 750,000

square feet. The overall vacancy rate for these submarkets remained

unchanged at 7.6%.


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 2Q Absorption YTD Projects SF

Auburn 317 24,709,326 3.9% 1.3% 5.2% 2,313 605,163 - -

Federal Way 53 1,855,596 17.9% 0.0% 17.9% (6,363) (14,215) - -

Kent 708 49,141,635 9.6% 0.1% 9.7% (65,370) 161,852 - -

Renton 153 13,188,823 5.7% 1.1% 6.8% 30,970 (8,673) - -

Seatac/Burien 89 3,834,790 9.4% 0.0% 9.4% (1,407) 9,047 - -

Tukwila 259 19,873,485 4.6% 0.4% 5.0% 68,797 (3,439) - -

KENT VALLEY INDUSTRIAL 1,579 112,603,655 7.2% 0.4% 7.6% 28,940 749,735 - -


Auburn (412,586) 38,110 26,593 (807,594) 602,850 2,313

Federal Way 27,321 5,067 (204,912) (189,871) (7,852) (6,363)

Kent (186,275) (63,492) (278,488) (679,346) 227,222 (65,370)

Renton 41,020 3,807 78,705 102,933 (39,643) 30,970

Seatac/Burien (12,374) 51,266 2,313 118,537 10,454 (1,407)

Tukwila (1,715) 15,102 (14,834) 77,951 (72,236) 68,797

KENT VALLEY (544,609) 49,860 (390,623) (1,377,390) 720,795 28,940



Port of Seattle 1,584,596 2,139,577 656,045

Port of Tacoma 1,545,855 1,455,467 465,100


Gross Asking Lease Rates by Class

LEASE RATES (NNN) EXPENSES & CONCESSIONSMarket Area Shell Office NNN Free Rent

Auburn $0.32-$0.38 $0.75 $0.09-$0.14 3-5 monthsFederal Way $0.35-$0.40 $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-$0.42 $0.75 $0.09-$0.14 3-5 monthsKENT VALLEY INDUSTRIAL $0.32-$0.50 $0.75 $0.09-$0.14 3-5 months *R

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

Federal Way 4.3% 2.4% 2.1% 2.6% 3.0% 7.6% 7.1% 6.8% 18.2% 18.7% 17.9%

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

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

Seatac/Burien 8.3% 8.3% 5.0% 4.3% 12.2% 13.2% 11.4% 10.0% 10.0% 9.7% 9.4%

Tukwila 5.1% 5.3% 4.9% 5.1% 3.3% 5.6% 5.2% 5.2% 5.2% 5.7% 5.0%

KENT VALLEY INDUSTRIAL 7.1% 5.8% 4.8% 4.3% 3.7% 7.2% 8.2% 8.2% 8.4% 7.6% 7.6%

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2Q’11 PUGET SOUND MARKET REPORT2Q’11 PUGET SOUND MARKET REPORT

Documents

2Q11_Southend_Industrial_Flex_Market_PDF