Seattle Commercial Real Estate’s professionals have well over 100 years of commercial real estate experience. We have historically been optimistic about Seattle’s industrial real estate base. Today’s market is an anomaly. For the first time in recent history, there are reasons to think about the message that is presented every day on the streets of Seattle’s industrial core.
The first, most obvious factor is the lingering effects of the COVID-19 downturn. The level of activity is clearly down. Next is the cost of money, labor, and materials. The activity in new construction is focused on major projects, which are few and far between. For the first time in the last decade, one can drive through the area and find vacancies and for lease signs. The traditional turnaround for a vacancy now can be years. The small spaces for incubator leases are doing fine, but the traditional transition for small users to owner/user spaces has slowed.
A prime industrial site in South Seattle is a typical story. Pre Covid, the 15,000 square feet of land was valued at about $100 per square foot. It is located across the street from a future water treatment site and a future park on the Duwamish Waterway. Under current zoning, the site could be developed with up to 60,000 square feet of industrial building, including as much as 20,000 square feet of office. It has been on the market for several years, which is indicative of demand.
The site attracts homeless living in RVs, drug users, and those dumping abandoned vehicles. The regulations of the City of Seattle and the enforcement provisions and constraints make it difficult to work collaboratively with the government to mitigate these damages.
Seattle Commercial Real Estate professionals and anyone driving can see the impacts of the economy on Seattle’s smaller industrial base. The logical reaction is negativity. We see, however, the opportunity to look selectively at these industrial properties and find the gems that will hold future profit. Common sense and patience with these industrial opportunities will reap rewards for the prudent investor.
