Demand continued to outpace supply in the first half of 2015. With 1,410,964 square feet of total year-to-date net absorption and an additional 8 million square feet of requirements region wide, leasing activity will remain strong for the foreseeable future. Much of the new development in the region is being taken as soon as it is delivered.
Vacancy increased slightly to 4.3 percent, up from 4.1 percent quarter-over-quarter. The increase can be attributed to some of the new development in the region coming online vacant. However, a number of leases exceeding 200,000 square feet were finalized or in the works at the end of the quarter, which will drive down vacancy in the near term. Most of the leasing activity has occurred in the Southend markets, however, the Northend saw a significant Boeing lease that exceeded 100,000 square feet.
Year-to-date deliveries totaled over 1.1 million square feet at the turn of the quarter, with all of the new development in the Southend. In the early days of Q3 2015, additional Southend development was delivered along with over 65,000 square feet of new product in the Everett area.
Currently, over 3 million square feet are under construction, with many more projects expected to break ground in the next 6-12 months.
Rental rates continue to rise, particularly in the Southend. In the Kent Valley and Pierce County markets, Class A shell rates have risen to $0.40 – $0.45 per square foot. Rental rates in the Eastside and Northend markets continue to rise as well
Investment activity is steady, with the price per square foot rising to above $100 in recent months, for high-quality, well-positioned product. Strong tenant demand and limited supply has created landlord-favorable conditions in the region, which has piqued the interest of a number of investors.