7b Real Estate Strategic Plan Presentation

Item No.                7b supp
Date of Meeting          March 10, 2020

2020 Real Estate Strategic Plan

Overview
1.  Review 2016 plan and resulting
Port real estate development
initiatives completed or
underway
2.  Highlight goals and outcomes for
new updated R/E Development
Strategic Plan
3.  Orient Commissioners about key
dates and project milestones

2

Why Port Real Estate Development?
Leverage Real Estate to:
1. Support Century Agenda and top Port goals
Grow as an international logistics hub
Sustain fishing, cruise and other maritime industries
Drive regional economic development opportunities
Enhance and protect industrial lands
Advance sustainability and energy efficiency
2. Generate revenue and jobs
3. Support Divisional Initiatives

Real Estate Development is the Means to Several Ends                                                          3

2016 Real Estate Strategic Plan Recap
1. Completed research on Port properties to identify zoning,
assessed value, environmental history, previous uses, revenue
generated, etc.
2. Identified highest and best uses for Port properties
Developed specific plans for Port based on preferred development
scenarios.
3. Evaluated non-Port property acquisition options
Also prioritized sites adjacent to Port properties

Created a Roadmap for Real Estate Investment and Development                                              4

Real Estate Development Plan Implementation
Developed Des Moines Creek Business Park
Panattoni ground leases property from Port and develops
1.3 MM square feet of light industrial and office space.
2016 economic impact study showed 3500 jobs
supported at site.
Developed North East RedevelopmentArea
(NERA) property in Burien
Panattoni ground leases property from Port and develops
459,000 square feet of light industrial warehouse space
Developed Des Moines Creek North property in
Seatac
Trammell Crow/IAC Development ground leases property
and develops 460,000 square foot light industrial
building


2.3+ million square feet of facilities developed plus thousands of jobs                                         5

Port Development Projects Completed Near Sea-Tac
NERA 1                NERA 2&3
International Airport                                DONE
200th Street                                                                FUTURE
NEXT  FUTURE

Des Moines    Des Moines                                                                                                         55 Acre
Creek Business   Creek North                                                                                                              SAMP
Park DONE   DONE
SASA
SAMP                      L Shape
SAMP

Port Development Projects Completed Near Sea-Tac International Airport                                 6

Real Estate Development Plan Implementation cont.
Pending developments at
Terminal 106 and Pier 2 based on
ground lease RFPs
Completed infrastructure
assessment for Terminal 91
Uplands and now designing
100,000 square feet of light
industrial flex facilities
Purchased Salmon Bay Marina

Maritime Real Estate Development                                                                      7

2020 Real Estate Strategic Plan
1. Identify current market trends for
industrial property within the Puget
Sound region and key Seattle
submarkets (Ballard/Interbay and
SODO).
2. Determine highest and best uses for
select Port properties
Identify development objectives
and outcomes for each property
Determine whether any Port
properties should be
surplused/traded                                Pier 2 and Jack Block Park

Updating Strategy and Focus for Port Real Estate Development                                           8

2020 Real Estate Strategic Plan
3.  Identify strategic land acquisition
opportunities and develop evaluation
methodology and standards for
prioritizing purchase opportunities
4.  Evaluate funding options and
opportunities to support priority
Real Estate Development
projects/initiatives
5.  Provide implementation
recommendations that support the
Port's ongoing Real Estate                  New Light Industrial Building at Des Moines Creek North Property
development initiatives

9

Strong Puget Sound Industrial Market
Strengths
4.7% Vacancy Rate (End of 2019)
Trends
6.71%average annual increase in rent over the last 5 years
Growth
8,000,000sf of industrial leasing demand
64% of that industrial demand is for distribution/ecommerce*

*based on responses willing to disclose use

Average Monthly Rental Rates Per County
($/sf/mo as of Feb 2020)
$1.40
$1.26
$1.20
$1.02
$1.00                     $0.93
$0.80                                   $0.76
$0.71
$0.60
$0.40
$0.20
$0.00
King          Kitsap         Pierce       Snohomish     Thurston
King and Pierce County are the primary industrial real estate centers of the Puget
Sound region. The County average rates are based on new and existing product.
11

Ballard Interbay Submarket Summary
$1.83/sf/mo + NNN for new flex product
CoStar Q2 2017 Flex Submarket quoted rates of $22.14/sf/year.
~328,500sf to 547,500sf of industrial and flex real estate demand
There is approximately 225,063sf of vacant space in the BINMIC
No new industrial/flex product delivering in the next 12 months
Majority of the BINMIC requirements are less than 10,000sf requirements
Truck Access: Despite the prime location, truck access limits growth for
larger tenants, but drives growth for users requiring space in the 10,000 SF
range.

12

BINMIC Vacancy and Rental Rates
(2010 to Feb 2020)
3.5%                                                                   $1.60
3.0%                                                                   $1.40
2.5%                                                                   $1.20
2.0%                                                                   $1.00
$0.80
1.5%
$0.60
1.0%
$0.40
0.5%                                                                   $0.20
0.0%                                                                   $0.00

Vacancy Rate     Monthly Rental Rate

13

BINMIC vs Puget Sound Region
(Percent Change in Total Available SF)
8%
7%
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
2010  2011  2012  2013  2014  2015  2016  2017  2018  2019
BINMIC    Regional
14

Port of Seattle Properties Being Evaluated
200th Street
NERA 1
Salmon Bay Marina
Fishermen's Terminal
Terminal 91
Terminal 91 Uplands
Pier 69
Harbor Marina Corporate Center
World Trade Center West
Real Estate Development Supports the Century Agenda and Top Port Goals                                  15

Port-Owned Properties Are NOT Being Evaluated
SAMP Impacted       Fully Developed      NWSA Properties
55 acre                                         Des Moines Creek Business Park               Terminal 5
L-shape                                     Des Moines Creek North                     Terminal 10
13 acre                                         NERA 2 and 3                                 Terminal 18
SASA                                Maritime Industrial Center               Terminal 25
Terminal 30
Terminal 46
Terminal 103
Current /Pending RFPs
Terminal 104
Des Moines Creek W (releasing RFP in May)
Terminal 105
CEM (releasing RFP in May)
Terminal 107
Pier 2 (negotiating ground lease)
Terminal 108
Terminal 106 (negotiating ground lease)
Terminal 115
Terminal 117
16

Planning Calendar
Feb      Mar      April       May       June       July        August     September   October
Port RE
Team
External
Advisory
Committee
Port
Commission

The Real Estate Strategic Plan will be completed by October:
An internal Port Real Estate team will meet monthly to guide the consulting team's work
An external advisory group will meet three times during the planning project to review
progress and provide input
Staff will also brief the Commission three times to highlight plan progress and key findings
Additional community engagement is anticipated as specific RE Development projects are
authorized and implemented
17

APPENDIX


18

Development at Terminal 91
Designing two 50,000
square foot planned light
industrial flex buildings at
northeast end of Terminal
91 Uplands
$39 Million earmarked --
Part of 2020-2024 Capital
Improvement Plan
Master planning will start
in Q4
Will seek additional design
funding in early 2021
Will start construction in
2022 and deliver new
buildings by Q3 2023

19

Terminal 91 Uplands Infrastructure Study
Square Footage of Building Development         Infrastructure Costs
Phase 1                      100,000                               $700k
Phase 2                      300,000                                $5M
Phase 3                 300,000 to 600,000                         $28.3M
TOTAL              700,000 to 1,000,000                     $34M
Off-site connection to City sanitary sewer to north
P1   New Port electrical transformer & communications pedestals
Minor natural gas relocation

New sanitary sewer main sized for full 1 million sf development
P2  New regional storm drain water quality treatment facility
New Port electrical transformer

Construction of central arterial access road & associated utility corridor
Replacement of existing 42" storm drain main within western
P3  development footprint with new pipe in utility corridor
Add cooling fans to 2 existing site electrical substations to increase site
power capacity (by Seattle City Light)

Defining Utilities and Infrastructure Needed to Support Future Development

Pier 2
Basic Info
Total Acreage: +/-5.5
Usable Acreage: +/-4.8
Zoning: IG-1 & IG-2
Current Use
Boat and vehicle storage
Jack Block Park

Image Credit: Heartland                     Current Status:  Negotiating long
term ground lease with King
County to support development
of water taxi terminal

Aerial of Pier 2. The Terminal. Photo: 2007                                                         21

CEM Property
Basic Info
Total Acreage: 25
Usable Acreage: ~12
Zoning: IG-2/U-85'
Current Use: Vacant
Constraints
Presence of the landfill cap.
Existing truck access to site is
limited.
Site configuration is irregular.

Current Status: Planning to
issue RFP to redevelop CEM
property in Q2 2020

Image Credit: Heartland
22

T106
Basic Info
Total Acreage: 31.2
Usable Acreage: 17.4
Current Bldg Sqft: 598,030
Zoning: IG-1 85'
Heavy industrial, 85' height
limit.

Current Status: Negotiating long
term ground lease with preferred
respondent to RFP issued in 2019
Image Credit: Heartland




Image Credit: Port of Seattle. Marine Properties. 2014.                                                                                                                                         23

55-Acre (Under SAMP Review)
Basic Info
Total Acreage: 55.7
Usable Acreage: 31
Zoning: Aviation Commercial (AVC)
Current Use
City Park Ground Lease on a
portion of the site.
Constraints
Wetlands and associated
buffers.
Steep slopes are present on
the site.
Image Credit: Heartland


24

L-Shaped (Under SAMP Review)
Basic Info
Total Acreage: 26.2
Zoning: Aviation Commercial
(AVC)
Current Use
Raw Land
Potential Alternatives
Ground lease for port supportive
uses.
POS development of 375,000SF
Air Cargo Facility.
Image Credit: Heartland


25

200th Street
Basic Info
Total Acreage: 47.2
Usable Acreage: 27.7
Constraints
Wetlands
Steep slopes
Potential access
issues
Potential Alternatives
Support SAMP impacted airport
facilities.
Ground lease for Port supportive
uses when SR509 extension is
under construction or complete.
Actions
Study existing infrastructure and
land grading feasibility.
Wait for completion of SR 509.
26
Image Credit: Heartland

SeaTac Properties Strategy Summary (2016)
Development Alternative
375,000 SF new air cargo facility
Relocate employee parking lots
350KSF on remaining usable land of
the 55-Acre Site
Site Specific Strategies
55-acre Site
Ground lease for port supportive use.
Develop 20,000 SF Food Innovation Center on
the SW corner of the 55-acre site.
13-acre Site
Relocation site for employee parking.
16th Ave South Site
Relocation site for employee parking.
L-Shaped Site
Develop 375,000 SF class-A air cargo facility
on the L-shaped site.
Current Employee Parking Lot (12-acre)
Develop as future expansion of air cargo
facility.
Image Credit: Heartland                                                                                                                                                                  27

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