As Weyerhaeuser vacates its leased office space in Federal Way, the city is joining forces with commercial real-estate brokers and building owners in a campaign to find tenants and drive down the high vacancy rate.
Office-building owners and brokers in Federal Way have a problem: one of the highest vacancy rates in the Puget Sound region.
They also have a new ally: City Hall.
Federal Way city officials have joined the local chamber of commerce and commercial real-estate professionals in launching a campaign to lure tenants to the city’s many empty offices.
Municipal economic-development campaigns aren’t unusual. One that focuses exclusively on filling office space, however, is.
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“We’re saying, ‘Come to our city and turn on the lights,’ ” says Patrick Doherty, the city’s economic development director.
Federal Way’s vacancy rate now tops 20 percent, about double the regional average. Much of the increase can be traced to rapidly downsizing Weyerhaeuser, which owns its headquarters complex in the city but has leased more office space nearby.
Weyerhaeuser spokesman Bruce Amundson says the company has moved out of 300,000 square feet of leased space west of Interstate 5 over the past few years. By the end of 2009, he says, it will vacate 450,000 square feet more east of the freeway.
That’s a big hit for Federal Way, where real-estate brokerages estimate the total leasable office inventory at 2.1 million to 2.4 million square feet.
For city government, empty offices mean fewer workers generating fewer tax dollars.
City officials have committed about $5,500 and many hours of city-employee time to the new outreach effort, “Federal Way: For Businesses on the Move,” Doherty says, and private-sector partners have donated a similar amount.
The campaign officially begins Monday. To start, Doherty says, the partnership plans to mail packets including a video about Federal Way to several hundred companies that have been identified as potential move-in candidates:
“Federal Way may not be on everyone’s radar screen when they think about relocating or expanding or opening a satellite office,” Doherty said.
Doherty ticks off a long list of the city’s attractions: Office parks with trails and trees. Location between Seattle and Tacoma, near the airport. Relatively inexpensive housing and relatively inexpensive office rents — about half what landlords charge on average in downtown Seattle or Bellevue.
More working-age people live in Federal Way than work there, Doherty says. That suggests a population itching for employment opportunities closer to home. The 1,000 Weyerhaeuser headquarters employees scheduled to be laid off over the coming year will only increase the pool of available local talent, he says.
Kip Spencer, co-founder of the database Officespace.com, says Federal Way traditionally has been off the radar of larger office tenants in the region.
“It’s been trying to establish its own identity,” Spencer says.
But Federal Way’s affordability is an advantage.
Michael George, a Colliers International broker who specializes in Federal Way, says some companies whose leases are expiring in Seattle or Bellevue are looking at South King County because they can’t stomach downtown rents.
If they negotiated their old leases four to seven years ago when rates were low, George says, they may face increases of 50 to 100 percent now.
But even with Federal Way’s price advantage, George says, big tenants will need to commit to the city to make a significant dent in the vacancy rate.
“There’s just a lot of space on the market right now,” he said.
Eric Pryne: 206-464-2231 or firstname.lastname@example.org