This is the seventh in a series of in-depth analyses of submarket-level trends that we’ve observed in recent years.
By: Capital Markets Team
City Core Revival
Located at the intersection of I-405 and I-5, Lynnwood has become a highly desirable location for tenants, families and businesses with a favorable tax structure and an educated workforce. It has one of the largest concentrations of retailers in the region and a major transit center located in the developing city center.
The Lynnwood market has proven to be quite resilient since the last downturn in 2008. Office rents returned to their prerecession highs quicker than both Seattle and the Eastside. The Class A vacancy rate now stands at 9.7% as of Q1. Market rents have increased by approximately 25% over the last five years, which is the strongest growth outside of downtown Seattle and the core Eastside markets.
The Lynnwood City Center continues to provide attractive incentives to interested developers. In addition to being the current home to Alderwood Mall and the future home to one of the most significant transit hubs in the north suburban market, it is also a designated Opportunity Zone (OZ). In 2010, the City Council decided to offer Transportation Impact Fee (TrIF) exemptions up to $600,000 for each of the first three developments that qualified in the City Center zone. Based on updated projections, the City has decided to extend these exemptions to include a fourth development.
The City of Lynnwood has recently approved two of those four projects. In early-December 2019, the City Council approved the development agreement for Merlone Geier’s Northline Village. This 18-acre site spans from 196th Ave SW south to 200th Ave SW, and from 44th Ave W west to 46th Ave W. The mixed-use project will include 1,370 apartments, nearly 50,000 SF of retail and entertainment, over 500,000 SF of office, and 4,400 parking stalls.
Then on February 10th, 2020, the City approved another significant development only blocks away from Northline Village. Kinect @ Lynnwood, to be developed by American Property Development, will provide an additional 239 units. Obviously, the opening of the light rail station is a major driver but the proximity to all of the in-place amenities located at Alderwood Mall is also an added benefit.
Transit and commuter options include Community Transit, King County Metro and Sound Transit. There are more than 1,370 parking stalls available to commuters at the Lynnwood Transit Center.
The map here is indicative of development trends along the Lynnwood Link Extension. The 2022 – 2024 completion of these major development projects and the light rail station will redefine and rejuvenate this commercial pocket in Lynnwood. Given the impact light rail has had in submarkets like Roosevelt and Northgate we are confident that it will drive market fundamentals, particularly rent.
Images from CoStar, Sound Transit, Callison, and M Walmsley
Data by Kinzer Partners and CoStar