Commercial real estate's roof on tight
June 13, 2008 · Updated 10:48 AM
By PAT JENKINS
Federal Way isnt experiencing a commercial real estate boom or a bust. Its more like a holding pattern as the city moves through uncertain economic times.
Empty buildings and office space are not a good sign, but developers and brokers voice guarded optimism about the commercial construction and leasing market as an economic indicator. They point out favorable leasing rates and other factors, including relatively affordable housing, that make the city attractive to employers.
Through the first half of 2002, building-permit activity for new commercial projects has a total valuation of about $34.6 million, according to the citys Department of Community Development. That nearly equals the approximately $35.7 million for all of last year.
Buildings will get built if the right tenant comes along, said Jeff Roberts, senior development manager for Quadrant Corp., which this week announced a $9.5 million deal for the Washington Education Associations new headquarters in Federal Way. But he added, You wont see many new buildings going up in these times.
A 10-year run in the Puget Sound region, driven by the dot-com and telecommunications industries, has slammed into reverse. By the fourth quarter of 1999, it had begun to slow. And after the Sept. 11 terrorist attacks chilled the economy nationally, the market got scary slow, said Mark Clirehugh, vice president of Kidder, Matthews & Segner Inc.
The vacancy rate for commercial office space in Federal Way was at 28 percent at the start of this year, said Clirehugh, whose company tracks about 1.5 million square feet.
Any current slump isnt necessarily permanent, though. The market can bounce right back, he said.
A rebound wont happen overnight, said Wally Costello, senior vice president of Quadrant. Regionally, including Federal Way, theres a lot of affordable office space. It will take a few years to absorb that space. If you want to lease, theres a lot available. At the same time, we believe there will be companies and organizations that want to own buildings.
With little industrial development in Federal Way, the commercial development market is in retail and offices. And the city is an attractive place to developers of both.
Land costs less here than in other parts of the county. So do homes and residential rent. Proximity to freeways, ports and Seattle-Tacoma International Airports are other major pluses.
Steady rental rates for commercial space in and around Federal Way help, too. The rates in the south end of the county havent taken a hit like the east side, including the Interstate 90 corridor, where theyve dropped more than 50 percent since early last year, developers and brokers report.
Federal Way building officials noted that the pace of commercial projects fluctuates, but they said there have been no significant dropoff the past two years.
Commercial construction projects that are completed, under construction or in various planning stages include a Hawthorne Suites hotel, a new building for a Best Buy store at Pavilion Centre, St. Francis Hospitals 70,000-plus-square-feet addition, a combined 55,000 square feet of two new buildings for Federal Way Corporate South, and remodeling of Ross Plaza, including the demolition of one building and the addition of four new ones.
After land-use approval for projects is granted by the city, building permits must still be issued. Some developers delay getting their permits until financing and construction schedules are finalized.
The following commercial retail, office and housing projects in Federal Way are in one stage or another of construction or review processes.
Costco gas station. Addition to Costco store; 35030 Enchanted Parkway S.
Dash Point Townhomes. New 40-unit senior housing community (32 single-story, eight two-story townhomes); 34025 19th Ave. SW.
Garden Terrace. New two-story skilled-nursing and assisted-living center for 120 Alzheiimers patients; parking for 129 vehicles; 300 S. 338th St.
Glenwood Place Apartments. Fifty units of low-income and senior housing; 1001 S 336th St.
Hawthorne Suites. New 65-unit inn and suites hotel; 34610 Pacific Hwy. S.
Lloyd Enterprises. Office building and maintenance building (each approximately 6,000 square feet); 34667 Pacific Hwy. S.
Northlake Building. Two-story building for Washington Education Association; East Campus Corporate Park.
Northwest Church. Two-story, 43,450-square-feet addition; 34800 21st Ave. SW.
Palisades Retreat. Alterations to existing building and construction
of eight dwelling units; 4700 SW. Dash Point Road.
Pavillion Centre, Phase II. Addition of retail building (Best Buy).
St. Francis Hospital. Expansion via 70,733-square-feet medical office building; 1916 S. 341st St.
Samolux. Warehouse of approximately 14,000 square feet; 34100 Ninth Ave. S.
Autozone. Construction of 6,128-square-feet retail auto parts store with 28 parking stallsg.
Calvary Church. Demolition of existing modular units and rebuilding for 21,000-square-feet auditorium; 700 SW 320th St.
Clare Bridge/Waller Road IV Associates. New 32,000 square-feet, one-story building for treatment of Alzheimers patients; 34904 First Ave. S.
Courtyard Village. New 300-room senior citizen housing project, in 2 phases; 34025 19th Ave. SW.
Delta Society. Single story office building with a basement; 32150 Weyerhaeuser Way.
Dr Espresso. Drive-through and walk-up espresso stand at a gas station; 1511 S. 348th St
Enchanted Park. New amusement rides within the Enchanted Parks/ Wildwaves complex.
Federal Way Corporate South. Two warehouse/office buildings one-story (26,556 square feet) and two stories (29,010 square feet); 34210 Ninth Ave. S.
Federal Way Self-Storage/Business Center. Development of 17-acre self-storage facility (approximately 790 units) and ta 90,000-square-feet multi-tenant industrial office/warehouse/manufacturing building.
Federal Way Windermere office. New two-story, 10,077-square-feet building with 35 parking spaces; 33405 Sixth Ave S
Golden Wok. A 5,000-square-feet restaurant with approximately 50 parking spaces. 35620 20th Ave. SW.
Harris Business Park. New office building.
Lamb's Gate Presbyterian Church. New 4,500-square-feet church building. 29850 18th Ave. S.
Northshore Village Center. Remodel existing facade, construction of new 11,800-square-feet building.
Ross Plaza. Remodel existing shopping center; demolisn one building, add four buildings (approximately 48,000 square feet).
Sacajawea Healthcare for Pets. New facility west of Dash Point Road, near Lakota Park.
Sav-On Drugs. Demolition of existing building and construction of 16,784-square-feet drug store; Dash Point Road and Pacific Highway South.
South Campus Business Park. New 14,425-square-feet concrete tilt-up warehouse/office building; 1505 S. 356th St.
Belle Meadows. New 35-lot subdivision.
Cottages at Hoyt Road. Fifty-nine lot subdivision; 35300 Hoyt Rd.
Keller Subdivision. Forty-eight lot; 34444 21ST Ave SW.
Star Lake Vista. New 21-lot subdivision; 2450 S. Star Lake Road.
Tresden Subdivision. Fifty-one lots; 2920 S 298th St.
Tuscany. New 22-lot subdivision.
Ventana. New subdivision with 28 lots; 26th Avenue Southwest and Southwest 304th Street.
Colella Estates. New 108-lot subdivision, plus open space. Dash Point Road, north of Southwest 312th Street.
Crestview West Apartments. Conversion of existing laundry room areas to 18 540-square-foot apartments.
Devonshire. New 29-lot subdivision.
Lakota Crest. New 52-lot subdivision; 31000 FirST Ave. S.
Orchid Lane. New 50-lot subdivision.
Residential South (Quadrant). New 91-lot subdivision; S. 344th and 38th Ave. S.