This is the next in a series of in-depth analyses of submarket-level trends that we’ve observed in recent years.
By: Capital Markets Team
Renton/Tukwila is the largest submarket in the Southend. Its proximity to the Seattle and Bellevue CBDs, as well as the warehouse market in Kent, makes it the ideal location for back office operations. Some of the largest tenants in this submarket are BECU, UW Medicine (Valley Medical Center), and Wizards of the Coast.
Renton/Tukwila has traditionally been the strongest of the Southend submarkets. Unfortunately, due to a series of events, namely Boeing downsizing, the FAA relocating, and the development of Southport, the vacancy rate has gone from 8.7% to 17.4% in the last five years. It is one of only nine submarkets in the region where vacancy increased in that period, with only Mercer Island experiencing a larger jump.
There are two ways of looking at the above vacancy trend; the Renton/Tukwila submarket is either in trouble or this is an opportunity for it to rebound. We believe that the market is ripe for an improvement for three reasons. First, the reason that this submarket has traditionally been the strongest submarket in the Southend is its proximity to Seattle and the Eastside, and that is still true. Second, we think that post-Covid tenant demand in the suburbs will be stronger, as companies decide they need less space in dense urban areas. Third and most importantly, the Southend has an abundance of large and inexpensive blocks of space.
Concerning the large blocks of space, the fact that Renton/Tukwila has three times as many 50,000 SF blocks of space as the Eastside, which has only 314,000 SF of such spaces, and almost as many large blocks as the Seattle CBD, which has 2.2M SF of space, is quite surprising. Equally surprising is that nine submarkets saw their vacancy rate increase over the last five years with Renton/Tukwila being in the top three along with Mercer Island and Vashon/Maury Island.
Excellent Access and Affordability
Renton/Tukwila provides a skilled workforce, affordable real estate, available space and superior access to regional employment hubs. The area is home to global industry leaders as well as numerous home grown companies.
Author: CAPITAL MARKETS TEAM
Elizabeth Schalka, Principal
Adrienne Hunter, Principal
Alex Muir, Principal
Jena Thornton, Principal-Hospitality
Stuart Williams, Partner
Images from CoStar, Sound Transit, iStock, and M Walmsley
Data by Kinzer Partners and CoStar