By Jack Stubbs
San Francisco-based Prologis has been active in the Puget Sound region in recent months, and on Thursday, September 6th, the company acquired a 10-acre property—including five Pepsi-owned office/warehouse buildings totaling almost 207,000 square feet—in the Mount Baker neighborhood of Seattle for $65 million, or approximately $314 per square foot, according to public records filed with King County. The seller of the properties was the global real estate division of New York-based PepsiCo, one of the world’s leading food and beverage companies. The transaction was recorded on September 7th.
The buyer did not respond to requests for comment about the transaction in time for the publishing of this story.
The seller remains committed to the local market following the sale of the property. “Pepsi Beverages Company continues to be deeply committed to serving the Seattle market and, following the September 6 sale of the facility, we plan to lease back the space and continue normal business operations,” a Pepsi Beverage Company representative said. “We look forward to moving into a new, more modern facility in the future that will allow us to productively serve our customers and consumers, and we maintain a steadfast dedication to ensuring a smooth transition for our associates when that time comes.”
The sale was for a 10-acre property located at 2300 26th Ave. S. and included five separate warehouse/office buildings totaling 206,774 square feet, according to public documents. The five Class C properties, which were built between 1953 and 1980, sit on 441,445 total square feet of land. The site currently serves as a local distribution and bottling center for PepsiCo.
It is not yet entirely clear what plans Prologis has for the recently-acquired property. However, given that a little under half of the property is comprised of existing buildings, it could be that Prologis has plans to redevelop the remainder of the site. The appraised value of the property for the 2018-2019 tax year is almost $42 million, according to public documents, and indicates the value Prologis sees in the site having paid a total of $65 million for it.
The property is located adjacent to Martin Luther King Jr. Memorial Park in Seattle’s Mount Baker neighborhood and is approximately three miles southeast of downtown Seattle. The asset is also approximately one mile from access to Interstate-90.
Founded in 1991, Prologis is the largest provider of industrial warehouse and distribution facilities in the Americas, according to the company’s web site. Prologis’ scale across the Americas allows it the company to provide its customers with a broad selection of top-quality facilities in strategic logistics locations. As of June 2018, Prologis owned or had investments 435 million square feet of industrial real estate space across 2,334 buildings and 3,087 acres of land, according to the company’s web site.
Prologis operates eighteen industrial properties throughout the Puget Sound region, according to the company’s web site. Some of these include the two-story, 229,500 square foot Kent-Northwest Corporate Park 19 building in Kent; the 185,700 square foot Sumner 7 building; and the Trans-Pacific 3 project in Fife.
Closer in to Seattle, the developer has a new project on the way approximately four miles south of the recently-acquired PepsiCo building that is set to add a new dimension to the local industrial and logistics marketplace: Georgetown Crossroads, located at 6050 E. Marginal Way S., is a nearly 590,000 square foot logistics facility in Georgetown scheduled for completion in October 2018.
A second quarter 2018 Seattle Industrial Real Estate Market report written by Kidder Mathews indicates that the Puget Sound region’s industrial market could be set for more activity in the months ahead. Construction volume increase to 7,004,711 square feet (across 38 buildings) now under development compared to 6.1 million square feet across 24 buildings in first quarter 2018, according to the report. Second quarter also saw the delivery of 1.36 million square feet of new product, with the overall market supply standing at almost 333 million square feet.
The region’s overall vacancy rate held steady at 3.3 percent and there were 1.1 million square feet of leases signed in second quarter. With most of these not moving into their new spaces until the third or fourth quarters, the vacancy rate is expected to continue to approach 3 percent. As of second quarter, there were 7.1 million square feet under construction and another 14.4 million square feet in the pipeline, according to the report, which indicates that the region is poised for additional growth assuming the local economy continues to expand. Year-over-year from May 2017 to May 2018, the region’s employment grew by 3 percent, adding nearly 64,000 jobs.