Friday, November 4, 2016

Prologis plans rare two-story warehouse project in South Seattle

by Marc Stiles Staff Writer Puget Sound Business Journal

It's hard to find empty warehouse space near downtown Seattle, so a global company is going to build a lot more. The end result will be something the Puget Sound region has hardly seen before.

Prologis (NYSE: PLD) has applied for city permits to build two, two-story warehouses at 6050 East Marginal Way S., where northbound traffic on the First Avenue South Bridge spills out onto a busy crossroads. One building will have 331,200 square feet of space, and there will be 209,350 square feet in the other. The project also will have parking for 330 vehicles.

While the size of the project is impressive, the two-story configuration is more intriguing. Prologis' involvement also is noteworthy because the company is upping its game in South Seattle, where it recently paid $63.25 million for two existing warehouses.

Chris Corr, an industrial broker with commercial real estate company Kidder Mathews, said the new Amazon (Nasdaq: AMZN) building in Kent is the only large two-story distribution center in the region. In Asian and European markets, where the supply of land is constrained, two-story warehouses are more common, according to Corr.

He said Prologis has to build a two-story project in South Seattle because of the price they're paying for the property. Real estate values are climbing in South Seattle, where demand for warehouse and distribution space is high because freight and other companies that deliver to businesses in downtown Seattle want to be nearby.

Currently, only 2 percent of the warehouse space in the submarket is available for lease, according to a new Kidder Mathews report.

The $63.25 million that Prologis paid for two warehouses works out to $158 per square foot for the buildings. People in the industry believe that is the highest price paid for a South Seattle industrial property. The old mark of $120 a foot was set with a sale at the end of 2013.

Prologis has not yet bought the property where it's planning the two-story warehouses. A limited liability company controlled by the Mohseni family owns the land. A Seattle commercial real estate broker, Wilma Warshak of Washington Real Estate Advisors, represents the Mohsenis. She declined to comment Wednesday as did a spokesperson for Prologis, which has $52.8 billion in assets under management.

Consolidated Freightways operated a facility on the site until 2002, when it filed for bankruptcy. The Mohsenis paid $9.9 million for the property, and the old Consolidated facility has been demolished.
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