Demand for office and industrial space in Snohomish County treaded water for yet another quarter, remaining largely unchanged despite the locally booming economy.
During the just-ended third quarter, nearly 20 percent of the county’s office space was vacant, according to statistics from Cushman &Wakefield. Colliers International, another commercial property firm, estimated the vacancy rate at 17 percent.
In the previous quarter, those vacancy rates were 18 and 19 percent, respectively.
For industrial space used for distribution and manufacturing uses, the vacancy rate stood at just under 9 percent, according to Cushman and Wakefield. Colliers estimated the rate at 8 percent. Both numbers are close to the second quarter estimates.
“Office (space) stayed status quo, and the industrial improved a little,” said Derek Heed, a senior vice president with Colliers’ local office.
“Leasing in general has slowed down throughout the whole Puget Sound. The brisk activity we’ve seen has slowed,” he added.
Indeed, even in red-hot downtown Bellevue, office demand flattened out during the third quarter.
Heed said companies seem to have taken pause at indications this summer that the national economy might have some weaknesses. The decreased availability of credit hasn’t helped the commercial property sector either.
The average annual leasing price for first-class office space in the county also remained flat, at just more than $25 per square foot. That compares to more than $35 a square foot in downtown Seattle or Bellevue.
Gary Bullington of Cushman &Wakefield said he thinks that price difference will ultimately help fill up Snohomish County’s office space with so-called back-office operations. Typically, those include customer service call centers and other operations that can be done in offices outside of Seattle or Bellevue.
He also sounded a note of optimism, despite the lingering office vacancy rate. He said several companies are looking seriously as building new space in the Opus Northpointe Corporate Center in Lynnwood, and new office space on the rise in Canyon Park already is largely leased.
The market for industrial space continues to be much better, Bullington added, noting that a large amount of the not-yet-filled space is in former aerospace buildings that aren’t well-suited to a variety of tenants. He also noted that new industrial buildings are going up next to Seaway Center in southwest Everett.
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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