By Jack Stubbs
As e-commerce grows and manufacturers, consumers and retailers seek warehouse/industrial space in urban areas closer to cities’ downtown cores, developers are increasingly having to think outside the box when it comes to delivering new product to the market.
The nation’s first multistory industrial building is on the way to South Seattle and will look to enact a shift in local supply-chain dynamics.
Prologis’ Georgetown Crossroads project—a three-story, 589,615 square foot fulfillment center in South Seattle scheduled for delivery in October 2018—is set to add a new dimension to the industrial marketplace in the Puget Sound region.
The Class A project, located at 6050 East Marginal Way South, is the first of its kind and the nation’s first multi-level industrial facility, according to Richard Kolpa, senior vice president and market officer in Prologis’ Seattle office. “It’s the nation’s first modern multistory industrial facility; it is in a very tight infill location close to downtown Seattle. We accomplished that on a site that was tighter and more confined due to its urban location,” Kolpa said.
With Georgetown Crossroads, Prologis looked to to maximize the available space on the constrained 14-acre site along Marginal Way South in order to allow for the best vehicular circulation, according to Kolpa. “The attributes that you would find in a Prologis property where land is not constrained…focuses on the circulation of trailers. For instance, the ramps to the second floor are designed for the circulation of 53-foot trailers…we have high cube space, which, if you look at other properties in infill markets, would tend to be lower clear heights,” he said.
The development, on which construction begun in April 2017, will also look to capitalize on its location along the Duwamish Waterway in Georgetown approximately one mile south of the Industrial District. The asset is approximately four miles south of downtown Seattle and is also minutes from access to Interstate-5.
The hope is that the Craft Architects-designed Georgetown Crossroads—which will feature truck ramps leading to loading docks on the second level and a third floor for lighter-scale warehouse operations—will allow potential users to take advantage of the property’s location from a logistics perspective, according to Kolpa. “For users that are coming from the Port or users delivering last-mile to the downtown core that need to have same-day or next-day delivery to the dense urban neighborhoods around the downtown core, this facility provides the location and distribution attributes for them to get their product to their customers efficiently.” he said.
One of the primary features of the property is its flexibility to allow for a wide array of uses. Comprising just over 239,000 square feet, the first level is divisible to 75,000 square feet or more in various configurations and features up to 62 dock-high doors and 130-foot truck courts. Totaling 170,331 square feet, the second level is divisible to 45,000 square feet with build-to-suit offices and multiple common area entrances accessible via passenger elevators. The third level, which Prologis calls “The Maker’s Space,” is divisible to 10,000 square feet and is suitable for light manufacturing uses, creative offices and laboratory and production space.
In terms of potential tenants for the development, Prologis is working with a number of customers and hopes to make an announcement soon.
And even though the property’s site represented some challenges when it came to fully maximizing its potential, it was one of the last available sites in the South Seattle submarket and thus represented a unique opportunity for Prologis to pursue, according to Kolpa. “[Over] the past couple of years, we’ve purchased a number of properties in the Seattle close-in market, basically getting as close as possible to the downtown core and the urban Seattle neighborhoods where most of the e-commerce traffic takes place,” he said. “The problem we had previously was getting scale, as there are no large land sites available in the South Seattle submarket. It’s very difficult to assemble smaller sites in this submarket to build something of scale.”
The industrial market in the wider region is set for more activity in 2018—net absorption totaled nearly 1.2 million square feet in second quarter and is expected to keep close pace with deliveries, according to a second quarter 2018 Seattle Industrial Real Estate Market report written by Kidder Mathews—but the Seattle close-in submarkets around the city’s downtown core (including Georgetown) continue to be plagued by a shortage of available space. The Seattle close-in market vacancy rose to 2.1 percent in second quarter and the “the biggest challenge in this market is for tenants to find space and ultimately many end up looking south for opportunities,” the report states.
Absorption was negative 322,746 for the Seattle close-in submarkets in second quarter 2018, but the outlook nevertheless remains positive in part due to the scheduled delivery of Georgetown Crossroads and the West Woodland Business Center planned for Seattle’s Ballard neighborhood. The four-story project, which is being developed by Avenue 55 and broke ground in February 2018, is a new 71,460 square foot light industrial/flex space project. The West Woodland Business Center is due for completion at the end of 2018.
More broadly, the Puget Sound region’s industrial market looks set for more activity throughout the rest of 2018. According to the report, construction volume increased to 7,004,711 square feet under development (38 buildings) in the second quarter compared to 6.1 million square feet (24 buildings) in first quarter 2018. The region’s overall vacancy rate held steady at 3.3 percent, and second quarter 2018 saw the delivery of 1.36 million square feet of new product delivered to the market.
More immediately around South Seattle, the hope is that the soon-to-be-complete Georgetown Crossroads adds a unique dimension to the local industrial marketplace, according to Kolpa. “I think one of the ways the project will add something different [to the local marketplace] is that there’s been no new industrial product developed in South Seattle in the last 40 years,” he said. “It will be one of the first recent modern industrial development product of any type in this submarket.”