South Puget Sound Industrial Sales

A look at the Industrial
Real Estate Market
South Puget Sound
Industrial Sales Report
Second Quarter 2016
Your Commercial Real
Estate Specialists
Industrial Market Review
For more information on
market conditions, please
feel free to contact us.
Here we are through the second quarter of 2016 and the South Puget Sound market
trends we have been seeing over the past six to eight quarters continue to hold true.
Vacancy rates continue to fall, lease rates continue to rise, and owner/user and
investment sale activity is hotter than a Trump/Clinton debate. There is much uncertainty
in what the next year will bring but for now the market continues to hold strong.
Make sure to take a look at the Q&A section we have in this month’s newsletter where
we ask Robert Aigner, Senior Vice President and Regional Manager for Harsch
Investment Properties, his perspective on the current market and what we have in store
for the future.
JIM HONAN
The Market at a Glance
(206) 787-1464 Direct
(206) 399-7649 Cell
jhonan@neilwalter.com
Sales Activity
From a sales standpoint, the second quarter of
LBA Realty acquired the 114,000 SF
2016 saw a total of 26 industrial sales from
Red Dot building for $108/SF
South Seattle to Lakewood. With sale prices
varying significantly due to geographic
submarkets, the median per square foot pricing continues to trend up and up and was at
$116 per square foot. Recently there has been a surge in transactions of small to
medium-sized industrial properties, often times selling for over $125 per square foot.
Please call or email for median pricing per specific submarket.
Land Sales
Infill sites of 1 to 5 acres continue to be in high demand, often with multiple groups in
the bidding. There were 6 land sales reported in the second quarter with sale prices
continuing to rise, ranging from $8 to $16 per square foot depending on location.
GRIFFIN DAY
(206) 787-1474 Direct
(206) 261-4012 Cell
gday@neilwalter.com
Lease Activity
NEIL WALTER COMPANY
550 S Michigan St
Seattle, WA 98108
(206) 787-1800, Main
(206) 787-1479, Fax
www.neilwalter.com
QUICK FACTS
According to CoStar, the industrial vacancy rate in the Seattle/Puget Sound dropped to
4.3% at the end of the second quarter in 2016. The vacancy rate was 4.4% at the end of
2015 showing continued steady leasing activity, in all size ranges. Lease rates continue
to climb to record figures, as it is not uncommon to see shell rates on institutional quality
product at or above $0.50/SF on midsize spaces. There were 5 buildings brought to
completion in the second quarter totaling 724,043 SF
Square Feet
Rate/SF, NNN*
of new product. North Pierce County continues to be
4,000 to 12,000
$.65 to $.45
where most, if not all, new construction is taking place.
13,000 to 30,000 $.60 to $.45
31,000 to 100,000 $.55 to $.40
*Rates quoted by landlord
Sale Prices 
Lease Rates 
Vacancy Rates 
Sales Activity 
Land Prices 
Page 2
with
Rob Aigner
Rob Aigner is the Senior Vice President and Regional
Manager for Harsch Investment Properties which owns
and manages over two million square feet of industrial and
retail space throughout the Puget Sound. Rob has practiced
in the commercial real estate field for over thirty years. He
has served on numerous industry boards and currently
serves on the Board of Trustees at The University of
Washington’s Runstad Center for Real Estate Studies.
Many feel we are in the height of the industrial real estate
market. How does this market compare to the previous
peak period in 2007?
Peaks and records are funny things. Just when you think you
have seen it all there is a new peak and a new record just
waiting to be broken. We are on a trajectory that is
unparalleled over the last 30 years. I am not smart enough to
call the peaks or troughs in any market but this market cycle,
like 2007, does feel a bit frothy at the moment. This froth may
have some sustainability this time around.
How do you think the Puget Sound region will fare
compared to other major markets upon the next
downturn?
Never say never but the diversity of the Puget Sound
economy with its ties to international trade, manufacturing,
technology and service industries, make it one of the best
'resilient' bets for the future.
We have seen a significant increase in lease rates over
the last 3 years. What trend do you foresee in the next
two years?
I foresee a slow and steady continuation of the same. Possibly
not at such an accelerated rate as we have seen recently, but
an increase nonetheless.
Since Harsch owns and manages over two million square
feet of industrial space, from Kent through Fife, your
portfolio is a good barometer of market activity. What do
you project for the balance of 2016 and into 2017?
We’re a good barometer of small business activity. With over
600 tenants in the portfolio we are seeing an optimism in small
business that gives us confidence for the future. Small
businesses are taking more risks, hiring more people, and are
less concerned about the future as they once were. With this
enthusiasm comes a willingness to take on more risk. This is
good for the entire region as we are predicting a rising tide for
the next two years.
Which geographic areas in our industrial market are you
seeing the fastest growth?
Anywhere there is new construction. Look to Sumner,
Puyallup, Fife and the Close-In Seattle market.
Selected Building Sales
Sorted by Sale Price
Skarbos Building
345 Andover Park E | Tukwila, WA
Lund Industrial Park
902 4th St SW, Auburn, WA
Sale Price:
Bldg Size:
Price/SF:
Sale Date:
$7,350,000
67,000 SF
$109.70
4/21/16
$2,700,000
16,828 SF
$160.45
5/11/16
Sale Price:
Bldg Size:
Price/SF:
Sale Date:
$1,900,000
9,950 SF
$190.95
6/24/16
Sale Price:
Bldg Size:
Price/SF:
Sale Date:
$600,400
8,125 SF
$73.90
6/2/16
Scholle Building
808 Washington Ave N | Kent, WA
Valley District Center Building D
14901 Puyallup St E | Sumner, WA
Sale Price:
Bldg Size:
Price/SF:
Sale Date:
Sale Price:
Bldg Size:
Price/SF:
Sale Date:
$4,500,000
39,988 SF
$112.53
6/1/16
Polychrome Space
3941 B St NW | Auburn, WA
Mountain Coin Building
3902 B St NW | Auburn, WA
Sale Price:
Bldg Size:
Price/SF:
Sale Date:
$4,248,245
50,000 SF
$84.96
4/26/16
South Puget Sound Industrial Sales Report
Page 3
Available Buildings For Sale
Property Photo
Sorted by Bldg SF
Address
Bldg
SF
Asking
Price
Price
Per SF
North American
Composites
22239 76th Ave S
Kent, WA
43,429
$5,500,000
$126.64
Porteous
8307 192nd St
Kent, WA
43,080
$6,462,000
$150.00
Crown Building
104 49th St NW
Auburn, WA
21,000
$2,475,000
$117.86
CONVENTIONAL COMMERCIAL
REAL ESTATE LOAN
Fit-Tech Industries
2101 R St NW
Auburn, WA
19,920
United Rentals Bldgs
1351 S 351st &
35100 Pacific Hwy S
Federal Way, WA
19,400
$2,429,000
$3,800,000
$121.94
$195.88
Purchase Price:
$3,300,000
Down Payment:
$495,000 (15%)
Interest Rate:
4.25%
Monthly Payment:
$17,369
4310 B St NW
Auburn, WA
18,400
$2,500,000
$135.87
10-Year Fixed with 20-Year Amortization
221 H St NW
Auburn, WA
15,000
$1,350,000
$90.00
LOAN TO VALUE: 85% / 15%
1240 W Main St
Auburn, WA
10,300
Interest Rates as low as 4.25%
$2,100,000
$203.88
Contact us if you would like more information on any of the properties listed
above, or a customized list of properties to fit your specific need.
10-Year Fixed with 10-Year Amortization
15-Year Fixed with 15-Year Amortization
10-Year Fixed with 20-Year Amortization
Considering Selling Your Property?
We have several client requirements, both in investment
and owner/user need. If you have a building that would be
an opportunity, information would be strictly confidential.
Purchase Requirements
■ 10-20,000 SF; Dock-high loading; Owner/User
■ 25,000 SF; Grade-level loading; 18’ clear height (min); Owner/User
■ 50-70,000 SF; Dock-high and grade loading; Yard area preferred
Matt D Green
Senior Vice President &
Manager of Business Banking
425.301.1896 Mobile
matt.green@firstcitizens.com
1031 Exchange Requirement
■ $1M - $3M; Industrial/warehouse properties
Neil Walter Commercial Real Estate Services
550 South Michigan Street
Seattle, Washington 98108
Office Locations
Our Kent Office has
relocated to Seattle!
SEATTLE OFFICE
550 S Michigan St
Seattle, WA 98108
P (206) 787-1800 | F (206) 787-1479
TACOMA OFFICE
1940 East D Street, Suite 100
Tacoma, WA 98421
P (253) 779-8400 | F (253) 779-8401
Second Quarter 2016
A look at the Industrial Real Estate Market
South Puget Sound Industrial Sales Report
The South Puget Sound Industrial Sales Report is intended to
provide up to date market information to the local investment and
owner/user community.
Neil Walter Company is a full service commercial real estate company offering
leasing, sales, property management, and development of commercial real estate
throughout the Northwest. Our company manages over 3,500,000 square feet of
industrial, office and retail properties. We specialize in warehouse and distribution
facilities, office buildings, retail properties and land opportunities.
BROKERAGE SERVICES WE OFFER
Consulting and Selling
Strategies to Maximize
Value
Data within this newsletter provided by:
Valuation
of Land
Market Analysis/
Detailed Market
Information
Investment
Analysis
Broker
Opinion
of Value
Determine your building's value
based on recent market information along
with replacement cost, income approach
and recent sales comparables.
This is a free consulting service. Contact
me to maximize your building’s value.
The information contained herein is from sources deemed reliable. It is provided without representation, warranty or guarantee, expressed or implied
as to its accuracy. Prospective Buyer or Tenant should conduct an independent investigation and verification of all matters deemed to be material.