Published February 2001

Economy may slow, but county is poised for activity

We’ve all managed to slip by the holiday season of 2000 with time off for friends and family and, WOW, we have to get back to work again! Those full workweeks really hurt for a while: our slumber broken, our bank accounts empty — you know the feeling.

The one thing customers have asked more about in the past few weeks is this: What is the market going to do? It’s the kind of thing each of us asks after we awaken from the holidays and begin to look ahead. I’m going to dedicate this column to answering some of those questions, particularly with Snohomish County in mind.

Third-quarter and fourth-quarter indicators give us these basic insights:

Vacancy rates in primary CBD markets decreased to 4.9 percent in the third quarter, while vacancy rates in the suburban markets tended to increase to 9 percent. This follows our trending for Everett CBD and Snohomish County as well, with vacancy rates increasing slightly in the third and fourth quarters to 9.4 percent.

It also is interesting to note that overall, 68 percent of the total buildings surveyed were located in Puget Sound submarkets, with the remaining 32 percent in the larger urban CBD primary markets such as Seattle and Bellevue.

Another interesting statistic is that most of that available space is in contiguous blocks of less than 10,000 square feet, or primarily for small to medium-size users. Planning departments in Snohomish County are reporting accelerated numbers of building permit applications for 2001 — but also note that the number of applications for 2002 are sharply declining.

Now, you ask, “Why is that, Keith?” and I might answer by saying this may be an indication of the market’s “uncertainty” and a “cooling off” so to speak. We’ve all heard those buzzwords in the past several weeks concerning general and local economic trends. But the fact remains that as we suspected in earlier columns, the market is slowing down — but that’s not necessarily a bad thing.

My own belief is that we will see smaller businesses and some medium-size firms moving out of the Eastside market areas to submarkets north such as Mill Creek, Bothell and, yes, Everett.

The main reason for this exodus will be, of course, money, and the price of that accelerated market to the south and east. Snohomish County marketplaces are, in comparison, a real estate bargain.

Another reason for the migration will be lack of space in the Eastside and downtown markets. The third-quarter vacancy rate for Eastside industrial markets ended at a tight 2.4 percent, nearly 4 percentage points below the same time period in 1999.

I’m still not at liberty to tell everything I know about what’s going on in downtown Everett, but suffice to say that there are several projects that can impact local trends dramatically in 2001.

The downtown Everett CBD will host a completely remodeled Club Broadway with a gaming and gambling lounge downstairs and cocktail, dinner and dancing upstairs. The Everett Marina is poised for a massive face lift and expansion as the Maritime Trust develops a new master development plan, and the Riverside Industrial Park will house 14 industrial buildings.

These projects will bring new visitors, business traffic, commerce and, most importantly, jobs to Everett. For 2001, I’m going on record as being optimistically bullish for Snohomish County’s commercial real estate market.

Until next time, 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 Principal and Broker for Northend Commercial Brokers LLC in Everett. Call 206-920-4100 for more information on NCB or to add your e-mail address to the newsletter subscriber list.

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