 |
|
|
YOUR
COUNTY.
|
YOUR
BUSINESS JOURNAL.
|
Published May 2001
Office
vacancy has risen,
but rate steady over time
Some
first-quarter stats are in for 2001. How are we doing so far?
With the latest drops in the stock market, many investors are once again turning to a tried-and-true method of investing: stabilizing “virtual profits” with long-term predictable earnings — in commercial real estate.
These cycles have been evident to many investors over time, and commercial real estate always has been the “Steady Eddy” performer of the investor’s portfolio. So, let’s take a look at what’s happening in our own marketplace.
Bothell/Kenmore
office market
This group includes Class A, B and C office buildings and represents a
small market with only 40 buildings and existing rentable building area,
or RBA, of 1.64 million square feet. This also includes new building inventory.
Notice that this market is showing a high vacancy rate at the moment,
but a fairly stabilized rate of 6.28 percent vacancy over the last two
quarters of 2000.
|
Bothell/Kenmore
office market
|
||||||
|
Qtr.
|
Direct
vacant space |
Vacancy
|
Direct/
subl vacancy |
Vacancy
w/sublet |
Existing
RBA |
Existing
buildings |
|
mid-1st
2001 |
412,586
|
25.14%
|
460,241
|
28.05%
|
1,640,968
|
40
|
|
end
4th 2000 |
101,166
|
6.17%
|
133,382
|
8.13%
|
1,640,968
|
40
|
|
end
3rd 2000 |
100,488
|
6.40%
|
102,763
|
6.54%
|
1,570,572
|
39
|
|
end
2nd 2000 |
17,850
|
1.14%
|
17,850
|
1.14%
|
1,570,572
|
39
|
Edmonds/Lynnwood
office market
This similar office group is more than 2.5 times the size of the Bothell/Kenmore
market but still shows a relatively stable vacancy rate, currently 11.3
percent, down slightly over last quarter, with average rents at $19.80/rsf/yr.
There is a rental-rate separation between Class A and B, however. Class B RBA is more than 3.5 times the size of the Class A market, but average rents are nearly $2 less per rentable square foot per year at only $17.84. Renovation and upgrade of existing Class B buildings could yield substantial returns with increased rents and good management.
|
Edmonds/Lynnwood
office market
|
||||||
|
Qtr.
|
Direct
vacant space |
Vacancy
|
Direct/
subl vacancy |
Vacancy
w/sublet |
Existing
RBA |
Existing
buildings |
|
mid-1st
2001 |
306,246
|
11.30%
|
320,808
|
11.83%
|
2,711,148
|
109
|
|
end
4th 2000 |
330,811
|
12.20%
|
345,373
|
12.74%
|
2,711,148
|
109
|
|
end
3rd 2000 |
313,403
|
11.66%
|
334,449
|
12.45%
|
2,687,148
|
108
|
|
end
2nd 2000 |
226,292
|
8.42%
|
229,452
|
8.54%
|
2,687,148
|
108
|
Mill Creek/Woodinville
office market
Now take a look at this market. The existing RBA is only moderately larger
than the Edmonds/Lynnwood market, but with substantially fewer buildings.
Each of the three markets also is pretty evenly spread, and remarkably,
the rates also are very similar.
In fact, the Class C building market is earning greater rents than the Class B market buildings by more than 7.56 percent. This market is substantially less volatile as well, with overall vacancy averaging 11.09 percent over the past four quarters.
|
Mill
Creek/Woodinville office market
|
||||||
|
Qtr.
|
Direct
vacant space |
Vacancy
|
Direct/
subl vacancy |
Vacancy
w/sublet |
Existing
RBA |
Existing
buildings |
|
mid-1st
2001 |
220,340
|
7.68%
|
318,244
|
11.09%
|
2,869,846
|
69
|
|
end
4th 2000 |
197,503
|
6.88%
|
262,956
|
9.16%
|
2,869,846
|
69
|
|
end
3rd 2000 |
205,937
|
8.13%
|
205,937
|
8.13%
|
2,532,839
|
64
|
|
end
2nd 2000 |
310,863
|
13.02%
|
311,596
|
13.05%
|
2,387,839
|
63
|
Well, there you have it, 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 Principal and Broker for Northend Commercial Brokers LLC in Everett. He can be reached by calling 206-920-4100 or by sending e-mail to keith@ncbllc.com.
© The Daily Herald Co., Everett, WA
