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Market Report

Seattle-Tacoma Industrial Market Report

Midyear 2023

Port Snags Direct Tenant Demand to Northend;
Last-Mile Warehouses Shore up Deal Flow

Manufacturing gains offset freight slump. Local demand for industrial space is falling closer in line with historical norms, following last year’s record-level net absorption. Lower freight volumes at the Ports of Seattle and Tacoma during the first half of 2023 contributed to a drop in leasing activity, particularly in the industrial-heavy Duwamish area. As overall construction remains well-above normal levels this year, vacancy will rise near-term. Offsetting shipping-related challenges, however, is a rebounding manufacturing sector. Employers in the segment added nearly 9,000 roles over the year ended in May, the highest total recorded by any major U.S. market during that span. Tenant competition for available manufacturing space may heat up as a result, with the segment’s subdued construction pipeline further steering companies to existing properties. 
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