By Tom Pierson, Federal Way Chamber CEO
I get asked a lot of questions.
Often I am able to predict the timing, nature and volume of certain questions.
For instance: During election season, it’s a sure bet I’ll be asked “Who do you think has a shot?”
When construction gates go up, I make it my business to know who is building what because my phone starts ringing the moment bulldozers show up.
Year-round traffic/construction-related questions ramp up in volume just about the same time turkeys start basting and sleigh bells start jingling.
I like questions, even the ones I am repeatedly asked. They are an important and meaningful part of my job as Federal Way Chamber CEO.
Probably the most common question I have heard this year: Why are there so many “for lease-commercial/office space” signs up in the city?
Maybe you have already asked this question. If you haven’t, now that I’ve mentioned it, you will probably notice that signs seem to be on every downtown property and corner.
I’m not a commercial real estate expert, so I turned to one for answers.
Mark Clirehugh of GVA Kidder Mathews, who has been in the industry for a few decades, assured me Federal Way is doing fine. He explained that from 1993 to 2006, the total commercial office space available in Federal Way increased by 1 million square feet in direct response to our job growth (from 25,372 in 1997 to 38,889 in 2006).
Great! So why all the advertised space?
Because a large office building with a 100 percent occupancy rate basically doesn’t exist. Building owners actually expect vacancies at all times.
Typically an example of this could look as follows: A 10,000-square-foot office building that has one 900-square-foot office space available only has a 9 percent vacancy rate.
So, even at 91 percent full, that sign goes out to attract more clients.
For those wanting more meat to chew, Clirehugh offered up some weightier industry insights.
Federal Way typically does 100,000 square feet of gross absorption (sales/occupancies) a year, and from January through June 30, 2007, the Class A market Federal Way saw 56,000 square feet gross absorption.
Definition of Class A: Generally large concrete and steel construction, strong identifiable location/access built after 1979, which often features business/support amenities.
This number of 56,000 square feet gross absorption was offset by market expansion (both corporate relocations and new office construction) of 577,000 commercial square feet; the lion’s share of 358,000 square feet is housed in a mere five buildings.
These numbers can seem alarming, until you consider the ripple effect Bellevue and Seattle market trends of sky-high rent increases are having on our area. As things become too expensive, Federal Way is becoming more and more attractive as an option to those businesses being priced out.
Just one large-lease corporate relocation could alter our market significantly.
The bottom line is the “for lease” signs are not a sign to panic.
Federal Way is continuing to grow both in terms of office space as well as job growth.
This means our city will shed its misnomer title of “bedroom community” and there will be no question throughout the South Sound, and the state, that Federal Way is a thriving place to live, work, learn and play.
Oh, and speaking of questions — I would like to hear some from you. Please e-mail me your questions/suggestions for topics. You know I love answering them!
Tom Pierson is CEO of the Federal Way Chamber of Commerce and can be reached at (253) 838-2605 or tomp@federalwaychamber.com.
