Northend Office Market May Be Ripe for Upturn

"When business gets back to normal, whatever that is now, the Lynwood area is going to get some significant play because rental rates vs. quality there is about as good as it gets anywhere in the market," Bullington says.

Apparently some developers agree with him -- with enough projects now under construction and in planning to increase current inventory here by over 50%. Presently, the Northend submarket of Lynwood and Everett has 3.03 million sf of office space -- 1.8 million sf of that lies in Lynwood. Opus has 130,000 sf in two phases of its Northpointe campus under construction in Lynwood, with 590,000 sf more in various phases of planning. When any new construction will break ground is, of course, contingent on market conditions.

For now, the area is struggling with the same economic obstacles facing the rest of Puget Sound. A Cushman & Wakefield third quarter market report calculates Lynwood's overall vacancy rate at 19.7% -- a full 11.3 percentage-point hike in just 12 months. Everett's lower rate of 10% in its 1.23 million sf combines for weighted Northend vacancies of 15.8%. For the same period, the Eastside suburban market came in at 10.7%.

And, Bellevue's CBD hit a dramatic 20.7% -- compared to only 4% the same time last year. A Seattle figure was not immediately available.

There are a few spots of good news. For one, average rents are up in both Northend cities. Lynwood's number has risen to $23.19 per sf compared to $21.42 per sf for the third quarter of 2000. Everett has seen a 9.2% increase over the last 12 months, bringing its average rent to $19.30 per sf. And, Bullington, who brokers for Opus Northpointe Corporate Campus, tells GlobeSt.com that Cypress Semiconductor, headquartered in San Jose, CA, has contracted for the build-to-suit construction of a 70,000-sf facility there -- and another Northpointe deal is about to be inked.

Bullington speculates when the first of the year comes, companies in Puget Sound's CBDs looking to renew leases will be highly motivated to lower overhead in these tougher times. The Northend's comparatively lower rents may draw some of those companies' back-office operations here, providing a much-needed boost to the local market.