October 11, 2022 - Thanks to the region’s Seattle and Tacoma ports, the Puget Sound industrial market is one of the hottest in the country with lease rates that regularly rank among the most expensive.

For example, in August lease rates at regional industrial properties were $9.14 per square foot, which is up 5.8% year-over-year and is the fourth highest in the country.

The rates are even in higher in Seattle proper, where prices range from $1.30 to $1.50 per square foot per month, according to Vanessa Herzog, principal for Lee & Associates. That works out to about $15 to $18 per square foot per year.

Kent Valley, also rich in industrial real estate, isn’t much cheaper. Lease prices there range from $1 to $1.30 per square foot.

But as the close-in industrial markets fill up, the question is: Where will the next industrial hub be? Many developers and brokers say look to the south.

“South of Tacoma offers proximity to the California and inland markets that the Port of Tacoma predominantly serves,” said Travis Hale, principal at Panattoni. “Right now the 50-year line is Tacoma/Fife. For Class A development, this market will move farther south as tenants chase the labor force that supports them to Frederickson and Tumwater.”

The land in Frederickson, however, is already almost gone and rent has surged.

“Over the last year and a half, lease rates in Frederickson have grown from 50 cents per square foot to the mid-70s and 80 cents per square foot on the shell,” Herzog said. “That’s a huge amount of growth...”