Kidder Mathews has released its fourth-quarter report on the state of the industrial commercial real estate market in the Puget Sound region, and despite economic headwinds which caused a slowdown in sales activity, the sector remains solid. Nearly 3 million square feet of industrial space was absorbed in Q4, with regional vacancy at 3.85% and average lease rates up 2.5% to $1.11-per-square-foot per month.

On the investment side, 47 properties changed hands in the final three months of 2022, averaging $258-per-square-foot with a cap rate of 5.44%. Two of the larger transactions included Panattoni and Link Logistics sale of six Pacific Gateway Buildings to the Church of the Latter-day Saints and MCA’s disposition of Lakewood Business Park to Edward Urlik.

Kidder reports that while the sector performed well in Q4, there are concerns. Inflation, potential layoffs, high construction costs and developer pullbacks in tertiary markets could start to have more of an impact.