Published January 2001

Report: Seattle's space crunch to benefit county

Herald Business Journal Staff

Last year, Snohomish County’s commercial real estate market benefited from the increasing costs and decreasing space in the Seattle/Eastside area. According to a report by real estate company CB Richard Ellis, the county can expect more of the same in 2001.

“The Eastside’s 0.77 percent vacancy (rate) and Seattle’s 1.42 percent vacancy (rate) for office space will continue to drive expansion north,” the report states. “Economically priced space, convenient commutes, affordable housing, abundant parking and existing large pockets of available space are additional reasons to move north.”

Although the county remains “a lower-cost alternative” to the Eastside and Seattle commercial space markets, CB Richard Ellis noted an increase in rental rates for new construction in the Seattle Northend market that includes Snohomish County.

“While existing-product rental rates have remained fairly stable, new projects are pushing the envelope with triple-net monthly rates ranging between $0.50 to $0.55 per square foot for warehouse and $1.15 to $1.25 per square foot for office,” the report states, adding that increasing costs and land prices are largely responsible.

During fourth quarter 2000, the Snohomish County and Bothell submarkets had more than 5.2 million square feet of Class “A” and “B” office space, with a vacancy rate of 11.3 percent, a decline of 0.7 percent over fourth quarter 1999, according to the report.

“At first glance, the reduction in the vacancy rate appears nonsignificant,” the report states. “However, it’s important to note that this drop in vacancy occurred in spite of the addition of 712,000 square feet (of office space) to the Bothell submarket and 105,000 square feet (of office space) to the Lynnwood/Edmonds submarket over the course of the year.”

For 2001, CB Richard Ellis projected, the county will need more “traditional office space” as insurance, engineering and financial-services firms drive the market with space requirements of 30,000 square feet or more.

To accommodate this need, the report states, these projects are “well positioned” to offer space early this year:

• Quadrant I-5 Center in Lynnwood: about 295,000 square feet in three buildings. Available this month.
• Harbour Pointe Tech Center in Mukilteo: about 350,000 square feet in one four-story building. Already available.
• Lynnwood Corporate Center II: about 68,000 square feet in one four-story building. Already available.
• Canyon Park 228 in Bothell: about 109,000 square feet in two buildings. Available in February or March.

In the county industrial/high-tech space market, CB Richard Ellis noted a slowing of construction activity last year, though a number of new projects were completed, including the Canyon Creek Center in Bothell, the Helen B. Nelsen Industrial Park in Lynnwood, the Harbour Pointe Business Park in Lynnwood, and the Seaway Corporate Park and Intracorp Industrial Center III in south Everett.

“The completion of these projects brought a significant amount of new space to the market, and despite the relatively high market vacancy, absorption has been steady throughout the year,” the report states.

For 2001, CB Richard Ellis projected activity will include “continued absorption of the recently completed projects, the gradual development of additional speculative and build-to-suit activity and an increasingly diversified tenant mix,” including telecommunications companies, which will be expanding their presence in the county “as access to fiber improves and the close-in (Seattle) market becomes increasingly expensive.”

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