The region’s industrial market has continued to be very robust with record high construction volume and absorption keeping up with the new deliveries.
– Here are the numbers for the region for the past three months.
– About 4.4 million s.f. was added to the total supply. The region now totals almost 355 million s.f.
– Projects under construction is nearly 11.5 million s.f. led by Pierce County (5.2 million s.f.) and the Northend (3.7 million s.f.). 42% of this space is pre-leased.
– Positive net absorption of 4.4 million s.f., led by Thurston County (3.2 million s.f.) and Pierce County (982,000 s.f.)
– Vacancy rate for the region modestly went down from 5.42% to 5.36%.
– Average asking rental rate increased $0.04/s.f./month to $0.91/s.f./month.
– Sales volume at mid-year is at $654 million, on pace to surpass the record $1.2 billion in 2019
The continued growth in the industrial market continues from strong on-line shopping which has resulted in a higher demand for fulfillment/distribution facilities. Employment growth has been good. In May 2020 when our region bottomed out at 1,976,300 employed due to the pandemic, we have since seen an increase or 142,700 new jobs added (7.2% increase). Total employment now stands at 2,119,000 as of May 2021, still about 97,000 jobs below the pre-Covid level. The employment sectors impacting the industrial market include manufacturing, construction, wholesale trade and transportation & warehousing. Construction has gained 14,500 jobs over the past 12 months, followed by Wholesale Trade at 4,100 jobs. On the negative side, the aerospace and transportation equipment portion of the manufacturing sector has lost nearly 24,000 jobs over the past year, due to Boeing’s decision to close down the Dreamliner production in Everett. The positive side is other components of the manufacturing sector have added over 12,000 jobs, offsetting some of the hit from the aerospace side.
Looking ahead for the remainder of 2021, there is cautious optimism.
– The Puget Sound Economic Forecaster’s June 2021 report forecast employment growth in 2021 at 2.5%, an increase of 80 basis points from their prior estimate. They also expect 2022 to be much higher at 5.8%. They expect the growth to be strongest in construction, wholesale and retail trade, and professional and business services
– The Northwest Seaport Alliance reports that Seattle and Tacoma handled record-breaking volumes in May, growing 38.4% compared to May 2020. Full imports also set a record for the month, increasing by 54.1%, while full exports increased 4.9%. Year-to-date volumes improved 18.7% with full imports growing 31.7% and full exports declining 9.6%
– Leasing continues to be strong with 7.2 million s.f. leased and scheduled to move in over the next 9 months.
There are some concerns that we continue to monitor. These include
– During the second quarter of 2021, our region is approaching the 70% mark of people who are fully vaccinated. More businesses have opened to greater capacity with 100% capacity expected by July 1, although we are seeing a rise in positive cases of COVID-19. As a result, there has been some pressure to delay the 100% capacity.
– The continued reduction of aerospace/transportation jobs.