Published December 2000

Lynnwood in midst of retail, business expansion

Have you taken a look at Lynnwood lately? We drive by every day, or nearly so, as we head to Seattle along I-5 or zip by Alderwood Mall exits on I-405 to the Eastside for entertainment, business or shopping — right? But if you’re like most of us, you’ve begun to notice some significant changes in the real estate landscape.

It all started with the interchange modifications at 196th and the new Eagle Hardware — now Lowe’s Hardware. Then the extended-stay hotels, the new Marriott, a Barnes & Noble, Nordstrom’s Rack, Babys R Us (who would have thought?) and a host of other really great retail stores — including one of my favorites, Starbucks. Alderwood Mall gets a face-lift, as do other area retail centers and presto — another retail mecca!

Lynnwood’s retail face is changing rapidly, and judging by the weekend crowds, is well received by consumers. Lynnwood is no longer being viewed by retailers as an “intercept” market anymore. It’s becoming a true destination for business, entertainment and shopping. I don’t know about you, but it’s a welcome change for me as I think about shopping for the holiday season.

Along with the expanding retail market, the area’s business and industrial markets are expanding as well.

Olympic Capital’s Lynnwood Corporate Center II adds 70,000 square feet of Class “A” space, and the South Snohomish County Chamber of Commerce is working on the creation of an urban technology core area and a CBD with the Alderwood Mall at its epicenter.

The demand for new space “at the right price” could be a regional phenomenon that helps drive this new construction. The extended building boom in Seattle and the Eastside is producing a lot of new office and “flex” office/warehouse space, and some say this new construction will increase and over-saturate these markets similar to the building boom in the mid-1980s.

Although the market for new office and high-tech space has improved dramatically in the past several years, supply (at least in our neighboring submarkets) has caught up with demand, making new speculative office development an “E ticket” ride for owners, developers and lenders.

So, what is going to ultimately throttle this kind of development? It boils down to the availability of reasonably priced land that is developable without exorbitant cost or political permit delay. The Northend land markets have increased, yes, but not to the degree that Eastside and Seattle Metro areas have — and thank goodness for that.

The real estate balance is critical; all elements must be present to ensure sustained market expansion without going over the edge. These elements are: availability of developer-ready land sources at reasonable prices, rent rates at levels to support the development of “new” building growth — and at a level to attract the strong local and national retailers and business consumers, a local political advocacy that favors “controlled and positive growth” in our communities, and availability of source capital at attractive lending rates.

Let’s take a closer look at the numbers for the Northend office market. Existing rentable building area is 10.7 million square feet with direct vacant space at 897,762. That’s a vacancy rate of 8.37 percent, a slight increase over last quarter’s reporting of 8.01 percent. Sublet space available is 105,963 square feet, and added to the direct space availability, you have a 9.36 percent vacancy, which indicates a slightly rising trend since the first quarter’s results for direct vacancy of 7.21 percent and direct with sublet vacancy of only 7.62 percent. These numbers are indicative of a continued healthy market but also show the effect of new construction and local growth. Yearly absorption continues to be about 1 million square feet.

We’ll continue our focus on specific market types and submarkets in upcoming articles, so drop me a line — let me know what your interests are and remember: “Invest for the long term, stay current with market information and trust the advice of a knowledgeable commercial real estate broker.”

Keith McKinney is the Manager and Broker of Coldwell Banker Commercial’s Northend office in Everett. Call 425-347-6620 for more information on Coldwell Banker Commercial or to add your e-mail address to the company’s newsletter subscriber list.

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