Declining Port Traffic and Weak Job Market Push Industrial Vacancy Higher in Puget Sound, WA

SEATTLE, WA — Employment in the Seattle market will continue to decline this year, particularly in industrial-using segments, which will result in contracting demand for warehouse and flex properties, according to the Midyear 2009 National Industrial Report by Marcus & Millichap, the nation’s largest real estate investment services firm.

While vacancy will rise metrowide, performance will vary considerably by location.

Also included in the report is the firm’s Midyear National Industrial Index (NII), a snapshot analysis that ranks 28 industrial markets based on a series of forward-looking supply and demand indicators. Seattle remains at No. 3 this year.

“Many investors are remaining on the sidelines in response to softening industrial fundamentals,” says Gregory Wendelken, (middle left photo) regional manager of the firm’s Seattle office.

Following are some of the most significant aspects of the Seattle Industrial Research Report:

· Local employers are expected to cut 37,500 employees in 2009, a 2.2 percent decline. Substantial contraction is forecast in traditional industrial-using sectors, including construction and manufacturing, where losses will total nearly 17,000 positions.

· Construction of new space is projected to fall to 850,000 square feet this year. Deliveries have averaged more than 4 million square feet annually over the past five years.

· Negative net absorption is forecast to exceed 3 million square feet in 2009, resulting in a 150 basis point vacancy rise to 7.9 percent.

· With tenant demand easing this year, asking rents are expected to decline 6.6 percent to $5.66 per square foot; effective rents will drop 7.4 percent to $5.47 per square foot.

Orange County, CA moved up five spots to No.1 in this year’s Midyear NII, driven by a significant decline in new construction.

Last year’s leader, Los Angeles, fell to No. 2 on waning imports from Asia. Houston, ranked at No. 4, dropped two spots in the index due to the nation’s largest forecast inventory increase.

Denver rose two positions to No. 5 as expanding alternative energy companies should support fundamentals in the metro, despite the lingering recession.

For a copy of Marcus & Millichap’s Midyear National Industrial Report and the complete NII rankings, visit http://www.marcusmillichap.com/.

Press Contact: Stacey Corso, Communications Department, (925) 953-1716