Commercial Real Estate

September Market Reports for Greater Seattle Area Real Estate (post 2)

The following article was written by two real estate investment brokers at Kidder Matthews. Jason Rosauer and Rob Anderson (collectively Team Rosauer) lead an investment brokerage team that specializes in property sales of office, industrial, and retail buildings, as well as land development sites throughout the West Coast. They also publish monthly market reports that detail the commercial real estate market in the greater Seattle area. The report offers an inside look at the current real estate trends around Seattle’s neighborhoods and projections for future trends. We’ve broken up the Team Rosauer September Market Report into three posts: the first detailed East King County and Pierce County; and today’s post looks at the trends in South King County and Snohomish County.


South King County promises to be a bright and interesting area for commercial real estate in the coming decade. From the redevelopment of Pioneer Square in the north, to the developing Stadium District and the flourishing industrial scene buoyed by Boeing, real estate values in South King County are poised for growth. The industrial market has generally dominated this region, but with the excitement of a new arena and the developing creative/tech market in Pioneer Square, look for growth in the office and retail markets. First Avenue S, for example has the newly constructed Home Plate Seattle building, the Star Building, Starbucks’ corporate headquarters, and more to come. This area will undoubtedly take advantage of the multitude of transportation services and the push for new industries to the area.

Nevertheless, the industrial market still reigns king in South King County, and will likely continue as such despite being pushed further south. The 145m+ square foot market sits at almost 95% fully occupied. With economists anticipating market rental increases of 1.70% and zero buildings delivered or currently under construction in the area, it is safe to bet the industrial demand will continue to increase. Furthermore, cap rates have steadily decreased in the national warehouse market from 8.60% two years ago, to 7.49% one year ago, to its current mark at 7.33%. The national flex and R&D market shows a similar trend with cap rates at 9.38% two years ago, to 8.75% one year ago, and to today’s average rate at 8.65%.

These trends are likely to continue in South King County. Property values will continue to rise steadily as new interests look to the region and old, industrial interests continue to prosper.


Just this month, Boeing delivered its first 787 Dreamliner to United, the first domestic client to receive the new model. Demand has been high for the new long-range twin-engine jet and the result in Snohomish County is a high level of activity. Employment is again inching back toward pre-recession numbers and manufacturers are moving to the area to take advantage of the proximity to Boeing, the Port of Everett, and the lower costs of construction.

Investors view the regional warehouse market in Snohomish County in a positive light. Most investors use rent spikes ranging from 4% to 10% at least once in the next five years when valuating industrial properties in the region.  Strong industrial tenant demand in the county, which currently sits at 94.4% leased, also suggests that industrial property values will rise. Some economists predict values to increase as much as 15% in the region for warehouse properties in the next 12 months.

With growth expected to continue in the Seattle and Bellevue CBDs, the outlying suburban markets to the north and south will follow the trend. Growth, and declines, will be less severe and less likely to spike and fall like the CBDs. But they will follow in the same direction, and with positive outlooks for both Seattle and Bellevue, expect Snohomish County to follow the same line.

If you’d like to learn more about how we can assist you with your commercial real estate transaction, please feel free to contact us today.


Gavin Johnson

Gavin enjoys craft beer and is learning the art of brewing.

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