*image courtesy of Google Earth
All indicators point to Des Moines and the greater SeaTac area for record-breaking rent growth for industrial product.
The Seattle industrial market is one of the hottest markets in the country. Within the Puget Sound, the Des Moines/Seattle-Tacoma Airport market, located just a short distance south of the Seattle city limits, is the area’s most sizzling locale. Why? While local demand is the primary driver for the growth of the Des Moines market, a massive increase in rental rates in neighboring South Seattle, combined with an extreme shortage of new construction in the north part of the industrial market, is contributing to the overall success of the area. In addition, Des Moines has seen record pre-leasing from tenants vacating surrounding markets. Companies including Amerisource, The Bartell Drug Company, Clutter, Inc., The FAA, K-2 Corporation, Outdoor Research, LLC and Pods of Seattle have abandoned the traditional industrial areas of South Seattle and the Kent Valley to take advantage of a strong labor market, building quality, pricing, proximity to mass transit including light rail, logistic costs versus competing locations, strong demographics for ecommerce and exclusion from the complicated flood plains of the primary industrial valley.
The greater Seattle-Tacoma industrial market currently has 5.4 million square feet of new construction underway, most of which is south of Auburn. Looking into the construction pipeline over the next 5 to 10 years, a high percentage of future industrial construction will continue to take place in the greater south end, some 30 plus miles out of the Seattle marketplace. Of the 5.4 million square feet under construction, the Des Moines area has seen the most pre-leasing success: 93% of new space is pre-leased. Experts predict this submarket will see the largest rent growth in Seattle over the next 5 to 10 years as its long list of positive factors grows and the Des Moines submarket continues to out-lease competing markets.
Matt McGregor is Executive Vice President at Colliers International in Seattle, handling leasing and transactional management for logistic and manufacturing companies.