SEATTLE—The big sigh of relief heard in the Seattle region occurred when the Boeing Machinists approved their new contract which secured the decision to build the 777X in Everett. “If that had not happened, there would have been a great deal of anxiety regarding reductions in jobs, as Boeing most certainly would have selected an out of state location to build the new jet,” explained Randy Gilliam, SVP of valuation services at Kidder Matthews in a recent report.
The other significant news on the industrial front is Amazon.com in March revealed they will open a 1-million-square-foot distribution center in the Stryker Business Center in Kent. The first quarter results of the region’s industrial market are best summed up as “consistent and steady,” says Gilliam.
Employment growth in 2013 totaled 2.8%, well above the US overall, which saw only a 1.6% gain in employment. The projected growth in 2014 is slightly lower at 2.6% (region).
Locally, port business continues to be mixed, explains Gilliam. The Port of Tacoma surpassed the Port of Seattle in container volumes in 2013. Overall, the Port of Tacoma’s volumes were up 10.5%, while Seattle’s were down 15.5%. Combined, both ports handled 2.8% fewer containers in 2013. Through February 2014, volumes are down at both ports, Seattle being down 16.4% and Tacoma down 5.3%. The result of this continued erosion in container volume has led both ports to agree to collaborate to lift business by sharing information about their respective operations.
Actual investor sales in 2013 totaled 152 sales ($680.4 million) compared to 177 transactions and $907.1 million in 2012. Cap rates were lower in 2013, averaging 6.16% compared to 6.77% in 2012. Through the latter part of March, sales activity has slowed down with 28 transactions totaling $69.2 million and an average cap rate of 6.84%. “There have been no sales of properties exceeding $10 million,” says Gilliam. The most notable sale is Kirkland 118 Commerce Center selling for $9.9 million.