Introduction
Recently rated the eighth fastest growing city of the decade in the country, Kent has always been a significant industrial hub just south of Seattle. It is known for being the 4th largest manufacturing and distribution center in the nation, a long-standing rank. Now home to the Boeing Space Center and Blue Origin (one of NASA’s recently chosen companies to work on a lunar lander), Kent has become a center for propulsion engineers and more. Blue Origin alone plans to add another 1,000 workers next year to it’s currently under-construction facility there. Kent “is one such area that continues to be regarded as a focal point for present and future activity in the industrial real estate market,” commented a recent article from The Registry.
With nearly 127,000 residents, Kent is also ranked as one of the top ten culturally diverse cities in the nation. There are over 130 languages spoken in the city across businesses and residences.
Development Pipeline Round-up & Market Movement
Blue Origin recently acquired an additional 95,763 square feet of industrial space in Kent just one mile north of its existing headquarters. The $17 million acquisition closed on December 24th.
In the new year on January 7, 2020, the City will vote on whether to approve the purchase agreement for 2.2 acres of land north of Willis Street and just east of Highway 167, where there are plans to build a Hilton Garden Inn by 2021. The hotel brand recently developed sites in Lynnwood and SeaTac.
Kent has a long-range development master plan with a vision through 2035, and focuses on preparing for population and employment growth that is predicted to continue rising in the area for the next two decades.
Transit Development & Changes
In the spring of this year, Sound Transit selected Kiewit Infrastructure West Co. to design and build the $31.6 billion Federal Way Link Extension, which will extend from SeaTac to Federal Way. The 7.8 mile track will see three new stations in Kent/Des Moines, near Highline College, at South 272nd Street and at the Federal Way Transit Center. The completed line is scheduled for completion in 2024. The project will also receive $1.4 billion in federal funding. The route is anticipated to add 40,700 daily trips, according to Sound Transit.
A ribbon cutting ceremony for the new South 224th Street Extension Bridge was held on December 11, 2019, at the site. The bridge connects East Valley Highway with 88th Avenue S, crossing State Route 167. The approximately $15 million dollar project began in October of 2017 and was originally scheduled for completion this past summer.
The intersection at Avenue S and Willis Street (State Route 167) will be replaced with a roundabout, new sidewalks and landscaping. The project is slated for completion at the end of next year.
The Steer Group will deliver a report to the Washington State Department of Transportation (WSDOT) outlining a proposal for an east-bound high-speed train. The route would connect Auburn, just south of Kent, with Spokane east of the mountains. It may also tie in to a Portland to Vancouver, B.C., bound high-speed train, increasing ridership on that route from 15-25 percent, according to the Steer Group. WSDOT is paying the consultant $250,000 to prepare the report, which is anticipated in June of 2020. Currently, Alaska Airlines reports over 1,000 passengers on daily flights between Seattle and Spokane.
A full list of Kent’s shorter term transportation projects can be found on the City of Kent website, and includes all projects planned for 2020-2025. In 2020, the City has plans to complete a major update the Transportation Master Plan adopted by the City in 2015.
Economic Drivers (Employment, Housing)
Beyond the space players taking up (ahem) space in the area, Amazon operates a distribution facility in Kent which is home to about 4,000 employees.
Oberto sausage company has been headquartered in the city for over one hundred years, and still operates there although it was sold to Premium Brand Holdings in 2018. Another major employer headquartered in Kent is Recreational Equipment, Inc. (REI), which owns a 170,00 square foot facility and over 12,000 employees regionally. REI announced in 2017 that it will be relocated its headquarters to the upcoming Spring District in Bellevue, Washington. However, low supply and strong demand in recent years in the office sector has resulted in vacancy compression and an office vacancy rate that’s lower than the metro area average. Office trade volume has been high in 2019, according to CoStar data.
The industrial sector of Kent saw several move-outs this year, also reported by CoStar. This has led to an increased vacancy rate, and rents in the area remain lower than the metro’s average. Sales this year are lighter than a record 2018.
Involvement
An open house regarding the 4th Ave S & Willis Street roundabout will be held on January 9. 2020, at the Kent City Council Chambers.
Summary
Kent will continue to see steady growth in the industrial sector, as the market remains strong as retail spaces continue to change, and industrial properties may continue to be seen as comparatively sound asset classes for investing. The industrial sector is also predicted to see growth at least around the second half of next year, meaning promising economics for an industrial and manufacturing hub like Kent. “The Kent Valley is one of the strongest industrial markets in the country due primarily to its location near the Ports of Seattle and Tacoma, Sea-Tac International Airport and rail connections,” notes Bill Condon, and industrial sector specialist at Colliers International. “Available existing product is limited, however, as are developable land sites, so these properties drew a lot of interest from investors looking to place funds in an environment of robust tenant demand and rising rents.” All told, the Kent valley is home to 120 million square feet of industrial space—that’s over one third of the total industrial real estate in the Pacific Northwest.
