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September 2004 Greetings: Welcome to September 2004. The kids are back to school, vacations are largely over and most of us are back to work trying to get space leased or properties sold before the year is over. FYI, we moved last month to 1109 ‘A’ Street, Suite 6 Tacoma, WA 98402. Everything else stays the same including our mailing address [which is PO Box 2015, Tacoma, WA 98401-2015]. In our market report for July, we stated that vacancy in the nine million square feet of Pierce County Industrial Space we track was 5.1%, down from 9% six months earlier and 16% one year earlier. Colliers International later released its report for Pierce County, stating vacancy at slightly over 8%. We have rechecked our numbers and stand by them. We also stated our opinion that OPUS Northwest would “spec” a building at its Fife Pacific Coast Commerce Center before Northwest Building would spec anything at its Fife Commerce Center. We were incorrect. Northwest Building Corporation has broken ground on its first phase 346,000 square feet, while OPUS is preserving its property for a build-to-suit. We appreciate Northwest Building Corporation adding product to a tight market. OPUS has instead broken ground at Sumner Landing North with a 400,000 +/- square foot building for lease or for sale. Within one half-mile north and south, 380,000 square foot buildings are being constructed by Knapp/Washington Capital at the Summit and Tarragon Development at Valley South. We are hopeful they are not all building for the same Tenant. Moving into the Port of Tacoma, the 80-acre Atofina property is under Letter of Intent while both the 11-acre Sound Mill property on Lincoln and the 4-acre Bowman Oil property on East J Street are in contract, evidencing renewed demand in the Port area. The Port of Tacoma’s recently announced intent to buy the 20-acre Wattles property on Thea Foss and Wheeler Osgood waterways is causing Tenants there to begin planning moves. We understand the property is to be delivered to the Port free of Tenants (and buildings) within three years. The Simpson Landing Industrial Park is rumored sold to Teachers as part of their purchase of the much larger RREEF portfolio, while Fred Tebb & Sons are under construction of a 40,000 square foot warehouse to replace their 110,000 square foot Frederickson “Annex” property, which is being sold to a recycler. In the North Puyallup Industrial Area (Park in Puyallup), Comcast is rumored to be taking over the long vacant 38,000 square foot Fujitsu space, Graybar Electric has put its recently completed 140,000 square foot distribution center on the market (lease or sale) and BPCI is developing yet another 380,000 square foot building, two thirds of which is to be occupied by the Dollar Store’s distribution arm. To sum up, there is good activity in the market. However, the 5% vacancy rate may change to as much as 15% if the new construction comes on line before Tenants are signed. Meanwhile, we’ll be out trying to lease some of that space.
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