Published August 2001

Commercial space market ‘healthy,’ report says

Herald Business Journal Staff

Snohomish County’s commercial real estate market continued to hum along during the first half of this year thanks to attractive lease rates and location, real estate services firm Cushman & Wakefield said.

In its mid-year 2001 report, the company said office-space tenants saved as much as 27 percent by locating within Puget Sound’s Northend, “despite a dramatic increase of vacant space and the leveling off of rental rates in the Seattle Central Business District and Eastside.”

Office-space rental rates ended the six-month period at $22.91 per square foot in the Northend, compared to $31.02 on the Eastside and $31.69 for the Seattle area.

Although leasing activity was “healthy” for the period — with Sparling’s lease of 37,000 square feet in Lynnwood Corporate Center II, Inquest’s 15,340-square-foot lease in Everett Mall Office Park II and Tetra Tech EM’s 8,000-square-foot lease in Mountlake Terrace Corporate Center, among others — the vacancy rate increased by 3.6 percent, the report said.

Cushman & Wakefield attributed the rise, from 11.6 percent to 15.2 percent, to Boeing vacating space in the Quadrant I-5 Center in Lynnwood late last year to relocate into Everett facilities.

New office space delivered in the first half of the year included Taylor’s Landing (25,000 square feet) and the Ash Way Business Center (18,140 square feet) in Lynnwood and the Rancetti Business Center in Everett (11,000 square feet), the report said, adding that the demand for office space will remain strong “as the Northend continues to increase in attractiveness as a place to both live and work.”

As for industrial space, Cushman & Wakefield said warehouse/distribution and manufacturing companies “being priced out of the Eastside market” have been looking to Snohomish County to meet their needs.

During the first six months of the year, net absorption topped 62,000 square feet — off mid-year 2000’s pace but projected to exceed 250,000 square feet by year’s end as new construction projects continue to be leased and additional space under construction is preleased, the report said.

Construction for the first half of the year added 301,526 square feet to the market and included Intracorp Seaway Center-Tract IIA in Everett (110,400 square feet) and three Mukilteo complexes: North Campus Business Center (104,094 square feet), Industrial Park Condos (67,200 square feet) and Corbett Business Park (19,832 square feet).

The vacancy rate increased from 7.5 percent to 9.7 percent, Cushman & Wakefield said, adding that “despite this increase, supply and demand stayed relatively in check.”

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