While the pandemic has been a disruptive force across so many aspects of our economy, the commercial real estate industry has witnessed a number of its sectors do quite well since the start of 2020. One of those areas of robust growth has been the industrial industry, which across the greater Puget Sound region continues to expand. As evidenced in one recent example, 150,000 square feet was recently leased in Sumner by Bellmont Cabinet Co., which is expanding into a space located at 13605 52nd St. E with landlord American Realty Advisors. This company already occupies the property next door at 13610 52nd St. E, so its growth into a sizable lease like this one is an indication of the strength of the market.
Bellmont Cabinet Co. is a builder of European-style built-to-order frameless kitchen & bathroom cabinets. It leased the additional space in Sumner thanks in part to a team led by Kidder Mathews’ Todd Clarke, Ty Clarke and Matt McLennan. This team worked on behalf of the landlord. The company’s expansion speaks to the overall housing industry’s explosive growth over the last 18 months, which, according to a newly released S&P CoreLogic Case-Shiller 20-city home price index, saw US home prices grow at their fastest pace in more than 15 years. The Seattle market was one of five markets that have seen this increase hit new heights not seen in the last 30 years.
The industrial market, according to a recent Kidder Mathews Seattle Industrial 2nd Quarter 2021 report, also was impacted by similar drivers that affected the broader real estate industry. Employment, the barometer for so many areas of the industry, is projected to grow at 2.5 percent for the full year of 2021. In 2022, it is expected to reach growth of 5.8 percent. The Northwest Seaport Alliance reported that Seattle and Tacoma handled record-breaking volumes in May of 2021, growing 38.4 percent compared to May 2020, according to the Kidder Mathews report. Full imports also set a record for the month, increasing by 54.1 percent, while full exports increased 4.9 percent. Year-to-date volumes improved 18.7 percent with full imports growing 31.7 percent and full exports declining 9.6 percent.
The result has been strong leasing in the industrial sector, which is recording 7.2 million square feet of leasing and scheduling to move in over the next 9 months. Perhaps the only challenges have been the increase in COVID positivity cases, which despite one of the highest vaccination rates in the country continues to crate a pressure on reopening, and a reduction of jobs in the aerospace and transportation sectors.
Along with the recent Bellmont lease in Sumner, other notable large leases in the region included Home Depot taking over 1.2 million square feet in Lacey’s Hawks Prairie Logistics Industrial Park, Snow Joe taking just over 575,000 square feet and Amazon signing up for 510,000 square feet in Lacey, while Costco committed to 451,000 square feet in DuPont and the General Services Administration to 438,000 square feet in Puyallup.
Vacancy decreased from 5.42 percent to 5.36 percent across the region with a positive net absorption of 4.4 million square feet led by Thurston County (3.2 million square feet) and Pierce County (982,000 square feet). At the same time, average asking rents increased $0.04/square foot/month to $0.91/square foot/month, according to the report.