Bridge Development Partners, LLC, a Chicago-based developer, broke ground Wednesday on the construction of its Northeast Redevelopment Area (NERA), in cooperation with the Port of Seattle, the City of Burien and Mayor Lucy Krakowiak, who was in attendance. The fully leased 241,000-square-foot cold storage warehouse is scheduled to be delivered into Burien’s industrial market by March 2017.
According to Dan Mathews, a vice president for Kidder Mathews in Seattle, in 1997 a decision was made to build a third runway at Seattle-Tacoma International Airport. However, housing was impacted due to the expansion. The City of Burien agreed to this affect on its housing market and asked that it be compensation in some way, says Mathews. “So what came out today, the Northeast Redevelopment Area, was established to create an area where they could redevelop and work together with the Port to take the affected area from the third runway and make it positive,” said Mathews.
There’s a definite need here, and it’s going to service Seattle for the next 50 plus years
“They (City of Burien) don’t really want big dry warehouses, they want more food-oriented or processing-oriented so they get the job counts,” added Mathews. “So the cold storage provides a catalyst for the processors because they can hold raw product and finished product and act as a catalyst to bring in a high number of jobs in food processing to the economy. That process is also contingent on the Port of Seattle and picking developers for their land use, which won’t cooperate right without that vision.”
Brian Niven, a principal in cold storage for Bridge Development Partners out of Itasca, IL, says that the new facility is the developer’s foothold into Seattle. “From a cold standpoint, this is our first development that we’ve done from the ground up, so it’s a big deal for Bridge,” said Niven. “We currently own about 1.3 million square feet of cold in Chicago and we’re looking to expand nationally. So this is our test-case for cold, as far as development.”
Niven believes the location for NERA was ideal, due to its proximity to Seattle, the seaport and the airport. “This real estate is great,” said Niven. “You’re right next to SEA-TAC, your location to the ports is 15 to 20 minutes depending on the time of day. It’s all about location, regardless if it’s real estate or industrial development.” Niven says the new facility is Bridge’s first in the Seattle area and that it plans to continue to look for additional opportunities in the area.
For new tenant Western Distribution Services, based in Renton, the building will be the largest in its portfolio. President John Naylor says the company has been looking at the area for about five years due to its location near the ports, freeway system and airport. “There’s just a plethora of business to be had for air freight, and we’re not taking advantage of it like we should,” said Naylor. “Now that we have a central location, we have cool docks for food control, and everything that goes along with refrigerated space. We have customers that do a fair amount of importing and exporting. This will be a really good site for that, location is everything.”
New cold storage facilities are needed to meet stringent code regulations for food safety, storage, and transportation. “Not many individuals are developing cold storage around the U.S. right now,” said Niven. “There’s a definite need here, and it’s going to service Seattle for the next 50 plus years.”
According to Cushman & Wakefield’s Industrial Research MarketNote dated in June of 2015, cold storage buildings constructed in the U.S. since 2000 typically sell by roughly double the price per square foot compared to standard warehouse and distribution buildings. Since 2010, in the top 10 major markets for cold storage warehousing capacity, buildings constructed after 2000 of 50,000 square feet or more traded at an average value of $100.57 per square foot, while standard warehousing and distribution buildings the same size averaged $59.29 per square foot, says the report. Recent integration of emerging technologies in newer buildings has pushed values even higher. The report also states that in the top 10 markets, which includes the state of Washington, the average purchase price for buildings constructed since 2010 is $150.95 per square foot.
Bridge partnered with Hunt Realty out of Texas, an equity partner with Teachers Retirement System of Texas, in order to finance the project.
