The center of the Puget Sound region’s warehouse market shifted south this month when a 1.2 million square foot facility opened at the Port of Centralia.
“Puget Sound Industrial Market Expands” via Puget Sound Business Journal
Rising rents, lack of available large distribution facilities, land use and entitlement restrictions within the infill metro markets, are forcing users into secondary and tertiary locations throughout the western region to better meet the needs of major population centers.
With the lack of available large land parcels for industrial development and increasing land costs, developers and institutional investors are moving outward from the core markets of Seattle, Portland, and Tacoma for lower-cost alternatives in well-located submarkets. Many of the national distribution tenants such as Amazon, Whirlpool, Home Depot Best Buy, Trader Joes and Target have invested in significant distribution centers outside the core markets, but along the I-5 “logistics corridor” connecting the Pacific Northwest’s largest metropolitan regions.
Land Restrictions/Projected Trends
As close-in locations become increasingly too expensive for users, secondary markets along the I-5 corridor have benefited with multiple tenants migrating outside of the primary major markets. The fast-growing Pacific Northwest economy, combined with the shortage of industrial land sites and the lack of new developments will continue driving demand for large-scale warehouse and distribution product for the foreseeable future. The primary beneficiaries of this demand are the well-located secondary markets with good access to transportation.
The Lewis County submarket is a prime example of the growing demand for new, well-located large warehouse and distribution facilities. Examples of large users in the submarket include major distribution centers for UNFI, Michael’s, Kroger/Fred Meyer, Lowe’s, National Frozen Foods Corp and Hardel Mutual Plywood. Combined, these six tenants alone occupy 3.5 million square feet.
