Panattoni Development, a prominent industrial developer and investor, is set to commence construction on Canyon 160, a cutting-edge 162,000-square-foot distribution center in the industrial hub of Frederickson. The project, located at 5223 Brookdale Road in the unincorporated area of Frederickson, is poised to bring incremental jobs to the region that will be based in the industrial and business services buildings the developer is proposing to bring to life.
After acquiring the 21-acre un-entitled and un-permitted site in December 2021, Panattoni worked with Pierce County until it updated the zoning of Canyon Road to “employment corridor.” This change allowed the company to move forward with its plans to develop Canyon 160, a state-of-the-art distribution center tailored to meet the diverse needs of modern businesses, according to a report in the Puget Sound Business Journal.
In addition to the industrial space the project is poised to deliver, Canyon 160 will also bring 5,000 square feet of office area, providing space for administrative functions and enhancing the overall operational efficiency of the site and its occupants. The distribution center will also feature 111 parking spaces, ensuring convenient accessibility for employees and visitors. With 32-foot clear heights, the facility promises ample vertical space to accommodate various storage and warehousing needs efficiently.
According to Pierce County records, the estimated construction costs for Canyon 160 stand at approximately $15 million, and Panattoni aims to complete the project by May 2024.
Canyon 160 is not Panattoni’s first venture in the Frederickson area. The company is already actively involved in developing the FRED310 industrial campus on a former Boeing property. Panattoni is partnering in this venture with Crow Holdings Capital and is planning to deliver brand-new warehouse/distribution buildings that total over 2.3 million square feet of Class A industrial space.
Despite this project’s ambition and an August 2022 announcement that the venture has already signed 1.1 million square feet of this space to a leading specialty retailer, South Sound industrial vacancy moved up slightly in the second quarter of 2023, according to a recent Q2 2023 Industrial Market Trends report by brokerage firm Kidder Mathews. Southend vacancy continues to creep up, from Q4 2022 of 5.2 percent to Q2 2023 of 5.9 percent, 60 basis points over year-end 2022, the report stated.
1.73 million square feet of signed leases with expected occupancy over the next nine months should reduce vacancy. Still, five projects are expected to deliver 1.2 million square feet in Q3, with pre-leasing at 13 percent, stated Kidder Matthew’s report.
Panattoni Development may be betting that Canyon 160 is set to deliver a relatively smaller project with an office component, for which there may be greater demand. Kidder’s research has found that shell rates on new construction are in the upper $0.95 to $1.20 per square foot for new-generation product, typically with 30’ to 36’ clear heights. With an office add-on, that rate can jump up to $1.50 per square foot.