By Meghan Hall
As small scale, local retailers struggle, e-commerce giants are carrying on. A number of large industrial leases signed during the first quarter of the year have been tied to Amazon, who accounted for several of the region’s largest industrial transactions at the beginning of the year. In total, the internet retailer took more than 1.67 million square feet of space, according to the Puget Sound Business Journal, who first reported the transactions and cited those with industry knowledge as the sources for the deals.
The leases are outlined in several industrial reports circulated by local brokerage firms, including CBRE and Kidder Mathews. According to CBRE, several of the largest leasing transactions of the quarter went to an undisclosed internet retailer, whom sources have confirmed to be Amazon. The leases were large in scale and across a variety of submarkets in the region.
The largest transaction was for Prologis Park Kent 26, where Amazon has taken 654,000 square feet of space. In a second agreement coordinated with Prologis, Amazon has signed up for just over 370,000 square feet in Sumner, at the Cowlitz building.
Kidder Mathews also lists Amazon as the newest tenant of the IAC Commerce Center in the SeaTac submarket. There, the e-commerce giant took 341,938 square feet of space.
Amazon also took 142,000 square feet at 18340 NE 76th Street in Redmond, as well as 167,000 square feet at Everett Commerce Center B. The leases were the largest in both East King and Snohomish counties, respectively.
Combined, the leases bring Amazon’s first quarter leasing activity to more than 1.67 million square feet. In coming months, Amazon is also anticipated to take 628,000 square feet at the DuPont Logistics Center on International Place, sources say.
Prior to the emergence of COVID-19, the regional industrial market was continuing to move forward, full steam ahead. Other major leases closed during the first quarter include Ace Hardware’s 540,540 square foot agreement at Frederickson One. Schneider Resources Inc. also signed a new lease for 168,000 square feet at the IPT Tacoma Logistics Center. During the first quarter—which largely occurred prior to COVID-19 taking full effect—industrial absorption totaled more than 957,000 square feet, according to CBRE, and direct asking rental rates increased 4.3 percent year-over-year to an average of $0.79 per square foot. And, even though 1.5 million square feet of product was delivered to market at the beginning of the year, vacancy only inched up about 19 basis points, signifying confidence in the industrial sector.
How the market will fare moving forward, emphasizes CBRE, largely remains to be seen, although the strong fundamentals of the first quarter could provide some cushion. While many businesses were halted and are now only just resuming, e-commerce and logistics companies—who form the basis for the local industrial market—are continuing to thrive.