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WESTERN SNAPSHOT, APRIL 2005
Seattle Retail Market
The Seattle/Puget Sound economy is experiencing a moderate but steady recovery from the recent national recession during which the Pacific Northwest was one of the hardest hit areas. All market indicators suggest a steady extended recovery for the state of Washington. The retail sector of commercial real estate is ratcheting up very quickly.
Average asking lease rates are running between $15 to $23 per square foot in the suburban areas with the Seattle central business district running $30 to $35 per square foot and the Bellevue downtown CBD running $25 to $30 per square foot. The present scarcity of prime retail space should prompt a continuing rise in shopping center development activity.
The Alderwood Mall in Lynnwood recently revealed the results of its renovation — an open-air lifestyle center attached to the enclosed mall. On the other side of the mall, two freestanding restaurants have opened: the first location for McGrath’s Fish in the Puget Sound market and Claim Jumper. A new 16-screen Loew’s theater complex will join the mix shortly.
Westfield Shoppingtown Southcenter in Tukwila, Washington, will soon begin an expansion that will include several restaurants and a theater complex. The Northgate Mall in Seattle, one of the nation’s oldest enclosed malls, is set to add an outdoor lifestyle component adjacent to the mall and facing Interstate 5. Construction should begin next January with a November 2006 opening.
On the east side, Kemper Development Company’s Lincoln Square, a 1.4 million-square-foot mixed-use project across from Bellevue Square, is in high gear. The 310,000-square-foot retail complex will include a McCormick & Schmick’s Seafood restaurant, a 21,000-square-foot Parlor Billiards & Spirits upscale pool hall and several other lifestyle tenants.
The Factoria Square Mall, located at the intersection of I-90 and I-405, has been sold, creating speculation about potential redevelopment plans for the underperforming asset. On the Issaquah Highlands, Port Blakely Associates plans to start construction on a 600,000-square-foot urban mixed-use development close to the I-90 Sunset Interchange, an area boasting one of the highest income demographics in the country. Kent Station, an 18-acre, $100 million mixed-use development in southeast King County, will combine a 14-screen AMC Theatre and more than 100,000 square feet of specialty lifestyle space with a 20,000-square-foot community college. Subsequent phases will contain a hotel and residential component.
The Puget Sound market has grown south of Tacoma to include the greater Olympia, Washington, trade area. Several years ago Olympia, Lacy and Tumwater held little interest for shopping center developers other than the developments surrounding the Westfield Shoppingtown Capital mall in Olympia, which is now in the process of adding a theater and restaurants. The Lacy Marketplace is under construction in the Hawk’s Prairie area and includes a new Costco and The Home Depot with plans for five junior anchor tenants.
Finally, Wal-Mart’s continuing expansion in the Seattle/Puget Sound marketplace has had a big effect on area developments. In Yelm, Tumwater, Puyallup (168th & Meridian) and Lakewood, permit activity is underway. Wal-Mart’s Covington store just opened. In Lacey, Spanaway, Bonnie Lake and the existing Puyallup store, Wal-Mart has plans to add a grocery component.
Steven Guidinger is president of Chesapeake Realty Advisors in Mercer Island, Washington.
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