By Jon Peterson
As the industrial sector looks as perhaps one of the most robust ones to come out of the current economic and medical crisis, institutional investors have been looking at opportunities across the country to deploy investment funds in order to grown their portfolios. One of them, Chicago-based First Industrial Realty Trust, has done so earlier this month when it acquired a 6.6-acre site in Lakewood located at 10920 Steele Street South for a new development project planned to expand the company’s presence in the Pierce County industrial market. The purchase price was $6.1 million, as stated by the public REIT in its second quarter 2020 earnings report.
First Industrial did not respond to several calls seeking comment for this story.
The seller of the property, according to public records filed with Pierce County, is Boral Stone Products based in Roswell, Ga. The buyer stated in a public document that this property would have the ability to be developed into 129,000 square feet of new industrial space. It’s not clear at this time when this development might be started.
The Seattle market is a region where First Industrial has had a minor presence to date. Prior to the deal in Lakewood, the public REIT held a total portfolio in the region of 410,713 square feet. This is the second smallest market for the company, and it only trails Northern California where the company owns 68,500 square feet. The largest market for the company is Southern California with 9.2 million square feet. The portfolio in Seattle has a current occupancy 84.9 percent, according to the company.
The transaction completed by First Industrial joins a recent $33.5 million purchase by San Francisco-based Prologis in Pierce County at the end of June as the two most recent deals in the region. The Prologis buy is the 43-acre McFarland Cascade site located at 1640 East Marc Street in Tacoma. The expectation is that this site will at some point in the future be redeveloped, as well.
The Pierce County industrial market has seen an increase in vacancy during the second quarter of this year, according to data provided by commercial real estate brokerage firm Kidder Mathews. The vacancy increased from 5.9 percent to 6.9 percent, and the main reason for this was negative absorption of 537,585 square feet. The new deliveries in the market totaled 527,342 square feet, which included 263,168 square feet for the Park Sumner development constructed by Prologis. Three notable leases during the second quarter included Alaska Airlines’ 115,273 square foot lease at IAC Commerce Center SeaTac, the 97,522 square foot lease by Spicers Paper at BridgePoint Kent 100 and the 86,000 square foot lease by Regalo International at DuPont Corporate Center I.
Blended average rents in Pierce Country decreased slightly by $0.03 to $0.69 per square foot, according to Kidder Mathews’ report. The market, however, is seeing a strong amount of new development according to the report. Projects that are underway total 2.5 million square feet.