By Meghan Hall
A joint venture of Panattoni and Crow Holdings has sold off one of its recently-completed Puget Sound projects as the local industrial market remains hot. In a deal that was finalized today, the developers sold Tacoma Gateway II for about $87 million, according to public records. The buyer was Annapolis, M.D.-based Realterm Logistics.
The three parcels sold are part of Tacoma Gateway II, according to Assessor records. The first and largest parcel includes a 273,816 square foot “mega warehouse” completed in 2021 on 12.03 acres of land, while the following two parcels have as well as 6.27 acres and 1.411 acres of land, respectively. The properties are located at 12005 Steel St. S and 11715 21st Ave. Ct. S., in Tacoma.
“We’re acquiring an asset that provides an excellent level of high flow-through functionality and enhances our portfolio,” said Stephen Panos, Senior Vice President, a fund manager with Realterm. “Our robust network of well-located final mile warehouses in strong markets,like the Puget Sound region, are what set us apart from the competition and enable us to deliver value and continually meet the needs of customers and suppliers alike.”
A marketing flyer for the property dubs the asset the “Gateway to the Northwest” with close proximity to the Port of Tacoma, Fredrickson, Dupont and other cities. Seattle is 40 miles north, while SEATAC is about a half an hour’s drive away. Portland sits 139 miles to the South.
Brett Hartzell with CBRE’s National Partners Group worked with Shawn Childs and Monte Decker in CBRE’s Tacoma and Seattle offices to represent the sellers in the deal.
“Tacoma Gateway II’s record pricing is well-deserved. Panattoni and Crow Holdings Capital saw where the market was headed and developed a project that anticipated the needs of future industrial users,” said Hartzell. “Demand for trailer parking has grown exponentially in the past two years, yet sites with vast yard space like this are extremely rare in the Puget Sound region.”
Founded in 1986, Panattoni Development Company operates 38 offices throughout the United States, Canada and Europe, and over the course of its history has developed more than 525 million square feet of space. The developer has been in the Puget Sound market for nearly 20 years, and has developed a variety of assets throughout the region. Its projects include the Des Moines Creek Business Park in Des Moines, Wash., Portland Portal, Glacier Peak at 607 Riverside Road, Pacific Logistics Center and more.
2021 has been a “record breaking” year for industrial product according to recent data compiled by CBRE and Newmark.
“The industrial real estate market was already booming prior to the pandemic, but the resultant disruption of the global supply chain ahs pushed demand to new heights,” states Newmark’s report. “Amid supply chain challenges and the explosion of consumer demand for ecommerce, companies have begun to assess the stability of their inventories, resulting in an increased need for warehouse and distribution centers.”
There is currently about 307 million square feet of industrial inventory in the puget sound, compared to 298 million a year ago. Despite the rapidity with which inventory is growing, vacancy sits at just 4.3 percent and asking rents reached a new record high of $10.62 per square foot triple net. Currently, 11.7 million square feet of additional space is under construction, of which 5.43 million square feet is located in Pierce County.
According to CBRE, there has been plenty of demand to keep pace with new construction. The third quarter recorded 2.2 million square feet of positive net absorption, and vacancy declined to 5.5 percent. As tenants and developers look for more space and more reasonable prices, they have continued to migrate south, a trend that is likely to continue.