Seattle Commercial Real Estate Market Third Quarter Update

Seattle has the seventh-best commercial real estate market in the country, according to a recent report from the Urban Land Institute, and recently released Third Quarter reports were positive.

Amazon’s growth continues to garner national headlines for Seattle’s office market. After already leasing a considerable amount of space in 2012 and announcing the development of a million new sf of office space in three buildings downtown, Amazon also said it will buy its 1.8 million sf South Lake Union campus from Vulcan Real Estate for $1.16 billion. While Amazon has been responsible for much growth in the office market, CoStar, a source of commercial real estate information, reports that the area’s overall office vacancy was flat during Third Quarter at 10.8%.

The apartment market remains another bright spot, but vacancy was fairly flat at just under 5% in Third Quarter, according to Dupre + Scott Apartment Advisors. Rents have been rising moderately in recent months, and Dupre + Scott reports that managers plan to raise rents during the winter. Construction has been ramping up in recent years, so we’ll start to see more apartment deliveries in 2013.

The industrial market was fairly flat during Third Quarter, CoStar reported, with vacancy at 6.2% and a little more than 100,000 sf absorbed. First and Second Quarters were both very strong quarters for the industrial market, so year-to-date absorption stands at more than 3 million sf.

The retail market showed improvement during Third Quarter, with vacancy falling three percentage points to 5.5%, according to CoStar, and nearly half a million sf of absorption. Rental rates were down slightly, but are still up from a year ago.

Seattle’s commercial real estate market is expected to continue to improve in 2013. Contact your NBS Financial Services Finance Officer to discuss your next financing transaction.

NBS Financial Arranges $9M for Grocery-Anchored Shopping Center in Small Washington Town

NBS Financial Services Principal Mike Wood and Associate Finance Officer Andrew Patterson have arranged $9 million for Pioneer Village Shopping Center in Orting, a small town about 40 miles south of Seattle.

The 82,130 sf Pioneer Village Shopping Center was built in 2000. It is anchored by Safeway and is 92 percent occupied. The borrower was seeking a long-term, fully amortizing loan.

"This was a heavily shopped transaction, but NBS Financial was able to step up and deliver a very attractive rate and terms that beat the competition," Wood said.

With a population under 7,000, Orting is considered a tertiary market, which was initially a concern for some lenders, who prefer larger primary markets. Anchor tenant Safeway doesn't report sales, and its lease is up for renewal in less than ten years, which was also a concern since the borrower sought a longer term loan.

But NBS Financial was able to overcome these challenges with a relatively conservative loan-to-value and a rate in the low 4 percent range on a 20-year loan term with a 20-year amortization.

Portland Commercial Real Estate Market Saw Improvement in Third Quarter

Some good news was present in Third Quarter reports detailing Portland's office, retail, industrial and multifamily markets. The reports are available here.

Office vacancy fell in the Central Business District, suburbs and Vancouver. TriMet’s more than 50,000 sf lease at downtown’s Harrison Square was the largest office lease of the quarter, and the $38.7 million sale of Parkside Center, also in downtown, was the largest sale.

The industrial market improved from a slow first half, with vacancy falling to 13.58%, and 161,422 sf of positive absorption. North/Northeast, the largest industrial submarket, saw significant improvement, including a number of leases over 50,000 sf.

Retail vacancy was fairly flat at 6.82%, with slight positive absorption. Leasing activity picked up in 122nd/Gresham, as ReStore and the Hannah Agency leased a total of nearly 35,000 sf there. Downtown has also seen smaller leases for a number of new restaurants from well-known Portland chefs and restaurateurs.

Portland’s apartment market remains very strong, with vacancy remaining at 2.60, its seventh consecutive quarter under 3%. We are tracking more than 6,000 units either proposed or under construction in the metro area, and though we have seen a few of these projects come online, 2013 and 2014 will see many more deliveries.

2012 Umpqua Bank Challenge

NBS Financial sponsored the 2012 Umpqua Bank Challenge, held in Aloha (just outside of Portland) Aug. 26-28. Pictured above is President Ken Griggs (second from left), Finance Officer Paddy Ryan (fourth from left) and Associate Finance Officer Andrew Patterson (far right) with one of our signs.

Second Quarter Reports Show Some Positive Signs for Portland Commercial Real Estate Market

NBS Financial has released its Second Quarter 2012 quarterly reports for office, industrial, retail and multifamily commercial real estate, as well as its economic report.

 

Office vacancy rose slightly during Second Quarter, to 13.71 percent in central city, 22.76 percent in the suburbs, and 16.62 percent in Vancouver.

Retail vacancy rose slightly to 6.91 percent, with a significant increase in vacancy in Central City as the Yamhill Marketplace former Bally Total Fitness became available. Grocery stores, including Wal-Mart, continue to expand throughout the metro area.

Industrial vacancy fell slightly to 14.19 percent during Second Quarter, with a significant drop in vacancy in Vancouver due to Canfield Transfer’s 62,798 sf lease at Columbia Business Center, and some other sizable leases.

The multifamily market continued to improve, with vacancy down to 2.6 percent during Second Quarter and rental rates rising. Though the single-family housing market is finally seeing some sustained recovery, the apartment market will remain healthy, with strong demand for the roughly 6,000 units under construction in the metro area.

Full reports are available at http://www.nbsfinancial.com/research.html.

Henderson Arranges $26.3M for Two Washington State Office Properties

NBS Financial Services Finance Officer Jeff Henderson arranged $16 million for the PPE Building, a 93,509 sf office building in Tumwater, WA, and in a separate transaction arranged a $10.3 million loan for the I-5 Technology Center, a 98,856 sf office building in Federal Way.

“Most of the lenders we represent are looking to increase their investment in the Northwest," Henderson said. "Because of this increase in competition, they are taking the extra time to understand the nuances of certain opportunities in order to structure a deal and win the business.”