Empty space needs a fill-up

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.

Talk to us

More in Herald Business Journal

Members of Gravitics' team and U.S. Rep. Rick Larsen stand in front of a mockup of a space module interior on Thursday, August 17, 2023 at Gravitics' Marysville facility. Left to right: Mark Tiner, government affairs representative; Jiral Shah, business development; U.S. Rep. Rick Larsen; Mike DeRosa, marketing; Scott Macklin, lead engineer. (Gravitics.)
Marysville startup prepares for space — the financial frontier

Gravitics is building space station module prototypes to one day house space travelers and researchers.

Orca Mobility designer Mike Lowell, left, and CEO Bill Messing at their office on Wednesday, Aug. 16, 2023 in Granite Falls, Washington. (Olivia Vanni / The Herald)
Could a Granite Falls startup’s three-wheeler revolutionize delivery?

Orca Mobility’s battery-powered, three-wheel truck is built on a motorcycle frame. Now, they aim to make it self-driving.

Catherine Robinweiler leads the class during a lab session at Edmonds College on April 29, 2021. (Kevin Clark / The Herald)
Grant aids apprenticeship program in Mukilteo and elsewhere

A $5.6 million U.S. Department of Labor grant will boost apprenticeships for special education teachers and nurses.

Peoples Bank is placing piggy banks with $30 around Washington starting Aug. 1.
(Peoples Bank)
Peoples Bank grant program seeks proposals from nonprofits

Peoples Bank offers up to $35,000 in Impact Grants aimed at helping communities. Applications due Sept. 15.

Workers build the first all-electric commuter plane, the Eviation Alice, at Eviation's plant on Wednesday, Sept. 8, 2021 in Arlington, Washington.  (Andy Bronson / The Herald)
Arlington’s Eviation selects Seattle firm to configure production plane

TLG Aerospace chosen to configure Eviation Aircraft’s all-electric commuter plane for mass production.

Jim Simpson leans on Blue Ray III, one of his designs, in his shop on Friday, August 25, 2023, in Clinton, Washington. (Ryan Berry / The Herald)
Whidbey Island master mechanic building dream car from “Speed Racer”

Jim Simpson, 68, of Clinton, is using his knowledge of sports cars to assemble his own Mach Five.

Inside the new Boeing 737 simulator at Simulation Flight in Mukilteo, Washington on Wednesday, Sept. 20, 2023. (Annie Barker / The Herald)
New Boeing 737 simulator takes ‘flight’ in Mukilteo

Pilots can test their flying skills or up their game at Simulation Flight in Mukilteo.

An Amazon worker transfers and organizes items at the new PAE2 Amazon Fulfillment Center on Thursday, Sept. 14, 2023, in Arlington, Washington. (Ryan Berry / The Herald)
Amazon cuts ribbon on colossal $355M fulfillment center in Arlington

At 2.8 million square feet, the facility is the largest of its kind in Washington. It can hold 40 million “units” of inventory.

A computer rendering of the North Creek Commerce Center industrial park in development at 18712 Bothell-Everett Highway. (Kidder Mathews)
Developer breaks ground on new Bothell industrial park

The North Creek Commerce Center on Bothell Everett Highway will provide warehouse and office space in three buildings.

Dan Bates / The Herald
Funko president, Brian Mariotti is excited about the growth that has led his company to need a 62,000 square foot facility in Lynnwood.
Photo Taken: 102312
Former Funko CEO resigns from the Everett company

Brian Mariotti resigned Sept. 1, six weeks after announcing he was taking a six-month sabbatical from the company.

Cash is used for a purchase at Molly Moon's Ice Cream in Edmonds, Washington on Wednesday, Aug. 30, 2023. (Annie Barker / The Herald)
Paper or plastic? Snohomish County may require businesses to take cash

County Council member Nate Nehring proposed an ordinance to ban cashless sales under $200. He hopes cities will follow suit.

A crowd begins to form before a large reception for the opening of Fisherman Jack’s at the Port of Everett on Wednesday, August 30, 2023, in Everett, Washington. (Ryan Berry / The Herald)
Seafood with a view: Fisherman Jack’s opens at Port of Everett

“The port is booming!” The new restaurant is the first to open on “restaurant row” at the port’s Waterfront Place.