Thank you for sharing!

Your article was successfully shared with the contacts you provided.

SEATTLE, WA-A reduction in development “should sustain the health” of the retail sector of Puget Sound’s commercial real estate market—so says a newly released research report of Marcus & Millichap Real Estate Investment Brokerage Co.

Despite expecting an economic slowdown here because of the area’s ties to the aerospace industry, Gregory Wendelken, regional manager for Marcus & Millichap, says the Puget Sound retail market has survived massive Boeing layoffs in the past and “will weather the storm.”

Wendelken cites a “steady reduction in retail construction activity over the past few years” as keeping supply for properties below demand levels. According to the report, new construction activity is expected to drop for the third year in a row, with starts falling below two million square feet. Over the next 12-month period, Marcus & Millichap believes new starts will be down 18% over the previous one-year period, dipping to 1.6 million sf.

The report also estimates 1.8 million sf of new product will come online. Of that, about 40% is built-to-suit space for single tenants.

Marcus & Millichap is forecasting retail vacancies in the Seattle market to rise approximately 1.5% over the course of the next 12 months. However, the report says that with current vacancies at only 5.5%, the “market is expected to remain relatively healthy.”

As to rents, Marcus & Millichap says as a result of increases in vacancy and what it calls “cautious owners,” growth in rent rates has been slowing. For the next year, the company expects any rent growth to be “negligible.” In the midst of an economic crawl, the report says it expects landlords to focus more on tenant retention than in bumping up their rents. Nonetheless, increases in the 1% to 2% range are expected.

On the investment side, Marcus & Millichap says retail investment activity has “remained brisk” and is expected to continue at a similar pace through 2002. The report anticipates sales prices remaining “steady through year-end,” with low interest rates expecting to impart some stability to the velocity of transactions.

Based on its own research, Marcus & Millichap says the average price/sf for multi-tenant retail is currently just above $120/sf—reflecting a 6% increase over the average a year ago—but a 4% decrease from year-end 2000.

With 34 offices across the U.S. reporting total sales in excess of $6 billion last year, 30-year-old Marcus & Millichap is reportedly the largest, commercial real estate brokerage in the nation focusing exclusively on real estate investments.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper


GlobeSt. NET LEASE Fall 2021Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.