Mixed-use commercial real estate fares better

Majestic Glove’s new building includes space for tenants. Some of it already is leased.

Gregg Riva, a senior vice president with Colliers International who represented Majestic Glove in real-estate transactions for a new headquarters, said most landlords with local industrial space weathered the past few years much better than property owners with office-only space to lease.

For example, in the third quarter of this year, more than 13 percent of office space in the area that includes the south half of Snohomish County was empty. For industrial and so-called flex space, which can accommodate both offices and industrial uses in one building, that vacancy rate was 7.4 percent, according to Colliers.

Riva added that average lease prices for industrial space in the south Everett area also has stayed higher than in other Puget Sound markets during the recession. Some of that has been due to the demand for space from Boeing suppliers who want to be close to the Everett airplane factory.

“Boeing has an effect, of course, but there are plenty of other businesses up there that are not Boeing-related that take advantage of the space up there,” Riva said.

Also, unlike office and retail spaces that can be relatively easy to move in or out of depending on economic conditions, warehouse and manufacturing space doesn’t tend to be affected quite as quickly, said Tom Hoban, chief executive officer of the Coast Group of Companies, an Everett-based commercial real estate firm.

“Both the industrial and apartment sectors have held up reasonably well because they’re tied to core functions,” said Hoban, whose firm manages more than $1 billion in properties. “People still need a place to live and things break and need to be replaced through manufacturing.”

Hoban said there is a ray of hope for the office space market, where demand waned dramatically during the recession. Vacancy rates for office space in the Snohomish County area are estimated at 13 percent or more, depending on the specific area.

“There’s finally some firming up in that sector, especially in the south end of Snohomish County,” Hoban said, adding that it will take longer for real improvement to reach Everett’s office market.