LYNNWOOD – This was supposed to be the year that Snohomish County’s empty office and warehouse space filled up, spurred by the improving economy and the Boeing Co.’s 7E7 development work.
Yet when commercial real estate brokers and developers gathered a few weeks ago to talk about the local market, they found things not much improved from a year ago.
“Deals are still taking time. But at least we have deals to talk about,” said John Bauer, a broker with CB Richard Ellis.
According to Colliers International, the 17 percent of office space in the county was vacant at the end of October. CB Richard Ellis reported a vacancy rate above 20 percent.
Those rates are nearly identical to what the same two firms reported at the end of 2003.
One reason space isn’t filling up is that suppliers for the 7E7 haven’t rushed to lease space near the Boeing Co. plant in Everett, said John Monroe, aerospace industry coordinator for the Snohomish County Economic Development Council.
“We continue to get inquiries from suppliers who are waiting to be selected,” he said at the development council’s second annual open house on commercial real estate.
Also, business owners have been cautious about signing leases while the economy’s pace is uncertain.
On the positive side, two of Lynnwood’s largest vacant office buildings have new owners and tenants.
CRS Financial Services, managed by Layne Sapp, bought the former Quadrant I-5 building at 20700 44th Ave. W. for $13 million in April. Starting this month, Sapp’s other business, Mortgage Investment Lending Associates, began moving in after several months of renovation work. MILA, which also will keep its Mountlake Terrace headquarters, will occupy four floors. The rest is being offered for lease.
In July, Lynnwood’s Nova-Tech Engineering Inc bought a neighboring two-story building.
The sale and partial occupancy of those two buildings ends nearly four years of struggles for one of the county’s largest office complexes. In late 2000, the buildings were left vacant when Boeing moved out.
Also in Lynnwood, Berlex has started building a new drug manufacturing plant at the Opus Northpointe Corporate Campus. The $60 million facility could begin open in late 2007.
There were only a few notable office and industrial lease deals elsewhere around the county. For example, Everett-based Zumiez Inc. leased a 87,000-square-foot building in the Seaway Center business park to expand its headquarters. Diligenz Inc. also decided to nearly double its space in the Harbour Pointe Tech Center, though the majority of that building remains unused.
While the office and industrial markets have seen little improvement, that hasn’t been the case for developers of retail buildings. The vacancy rate for retail space ranged from under 2 percent in Lynnwood to about 6 percent in Everett and surrounding areas this fall.
At the economic development council’s open house, several developers showed off plans for new business parks and huge industrial buildings they hope to build in Snohomish County. But most won’t be built until they sign up big tenants.
Despite the stagnant market over the past year, the brokers still seem ever optimistic. Derek Heed of Colliers International said his office is getting more calls, even if getting big lease deals is still difficult.
“There’s some life, Heed said. “I see it slowly getting better next year.”
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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