Snohomish County’s commercial real estate market ended 2004 on a much-needed hopeful note.
Commercial real estate firm CB Richard Ellis reported the vacancy rate fell to 16.6 percent during the almost-ended fourth quarter, down from more than 22 percent in the third quarter. Colliers International’s statistics showed the rate fell to 14.7 percent.
The rate of vacant office space across the county had hovered closer to 20 percent during the first nine months of 2004.
The recent improvement was attributed primarily to one tenant: Mountlake Terrace-based Mortgage Investment Lending Associates, which expanded to fill four floors of the former Quadrant I-5 building in Lynnwood.
In fact, many of this year’s major leases involved local companies that were expanding within the county, said Gregg Riva of Colliers. Still, that alone probably won’t create enough demand, he said.
“As the Seattle and Bellevue markets start to fill up, it would be nice to see some tenants move up here,” he said.
It will take some time for King County office space to fill, even if the economy gains steam. In the fourth quarter, according to Colliers, Seattle’s office vacancy rate ticked upward to more than 15 percent, while Bellevue’s was more than 12 percent.
Lynnwood, where many of the county’s premium office buildings are located, remains the epicenter of empty space. Colliers reported more than 35 percent of the city’s “Class A” office space is available, compared to less than 3 percent in downtown Everett, which has only about one-third as much space to fill.
While owners of local office buildings wait for improvement, they’re joined by those who own industrial space. CB Richard Ellis and Colliers peg the county’s industrial vacancy rate at 21 to 22 percent. That’s still the highest rate in the Puget Sound region.
Despite that, new industrial space has gone up recently in Lynnwood, Everett and Monroe.
Developers of that new space are getting tenants. Rudeen Development’s new 49,000-square-foot industrial building in Monroe’s Fryelands area is 80 percent leased.
Kevin Rudeen said his firm expects to build a similar building, its third, in 2005. He has no illusions about local demand for industrial space, however.
“Decent’s a good word, but no more than that,” Rudeen said. “The demand has barely kept up with the supply.”
On the other end of the spectrum, only about 1 percent of retail space in Snohomish County stands empty, according to CB Richard Ellis. That’s better than either King or Pierce counties, the company reported.
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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