In the clearest sign yet that the Puget Sound region’s long-suffering industrial market is on the mend, the Benaroya Cos. is starting construction of a large speculative warehouse project in Sumner.
Two other developers will soon follow with spec distribution centers of their own. Ted Knapp of Knapp Development said he plans to start building a project in Sumner in the next week or two, and global company ProLogis intends to start construction of another in Fife, said Scott Price, a broker with Neil Walter Co., which is marketing the project for lease.
Together, the three projects total more than 1 million square feet, and mean work for designers, builders and brokers.
Brokers say it’s the first time since before the recession reached the Puget Sound region in 2008 that anyone here has built an industrial project on a speculative basis.
In a first for his Bellevue-based company, Larry Benaroya said he has an agreement to sell the building when it’s done in February to Industrial Income Trust of Denver. IIT is a non-traded real estate investment trust that entered the Seattle market two years ago. The Sumner development will be IIT’s fourth property here, according to its website.
“It’s fun to be in real estate again,” said Arie Salomon, the NAI Puget Sound Properties broker who helped put the Benaroya-IIT deal together with Price. “I was not able to say that for four years.”
As the downturn grinds to a slow close, tenants have begun leasing large blocks of space in newer buildings. These properties have high ceilings, ample truck maneuverability and other amenities that tenants want.
The vacancy rate in the 104.4 million-square-foot South Sound industrial market is almost 8 percent, including sublease space, according to NAI Puget Sound Properties.
“These numbers are significantly lower than the 10 percent overall vacancy rate we have been saddled with over the past three years,” states a report from the company.
Benaroya said there’s “not a single 400,000-square-foot Class A, new generation buildling available in the market. This is where the demand has been.”
He said he is not authorized to say how much IIT will pay for the finished project, and an IIT representative said it’s company policy not to comment on deals.
Salomon and his NAI colleague, Jeff Forsberg, are looking for tenants for the 441,250-square-foot Benaroya Business Park. Craft Architects designed the project at 4703 142nd Ave. E, and Poe Construction is the general contractor.
Salomon said the asking lease rate for the industrial portion of the building is 42 cents per square foot per month. There’s an 85 cents-a-foot add-on to build office space. It would be up to a tenant to decide how much office to build.
Knapp said he’s starting construction of the 350,000-square-foot Wenatchee Building in the Sumner Corporate Park. Lance Mueller & Associates is the architect and Delaney Construction is the general contractor. Knapp is handling the leasing of the project in-house, but will hire outside brokers, Ted Knapp said.
Knapp is teaming up with St. Louis-based Michelson Commercial Realty & Development on the project. Funding partners are Prudential and Washington Capital Management, of Seattle.
The 2-million-square-foot Sumner Corporate Park which is fully leased, is just off of state Route 167 at 24th Street East and 142nd Avenue East.
Price, the Neil Walter Co. broker, said ProLogis hired Sierra Construction last week to build the nearly 240,900-square-foot project on 70th Avenue East in Fife. The goal is to have the distribution center done in March or April of next year.
“I do know they are aggressively heading down the road to accomplish that,” said Price, who’s marketing the building for lease with Neil Walter colleagues Bruce Valentine and Kermit Jorgensen.