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Tukwila Commerce Center, 117

Tukwila, WA

476,765 sq ft

Summary: BKM acquired Tukwila Commerce Center, its first acquisition in Washington state, in the dynamic South Seattle-Kent Valley industrial submarket. Tukwila Commerce Center is a 27-building 476,765 square foot multi-tenant industrial business park strategically located directly off the intersection of the I-5 Freeway and the 405-Freeway and 13.5 miles from downtown Seattle. Built between 1975-1978, the property is highly-functional, but lacks the necessary cosmetic improvements to increase rental rates to market. The asset has changed ownership 6 times over the last 14 years and has never received the necessary capital improvements required to meet tenant demands or perform at occupancy levels and rental rates that are consistent with the submarket.


The City of Tukwila is located 13.5 miles south of downtown Seattle, directly across the I-5 and 405 Freeway from the Sea-Tac Airport in the South Kent Valley. Tukwila is bisected by the I-5 Freeway, the most significant coastal interstate thoroughfare connecting to the Mexican border to the south and the Canadian border to the north. As Seattle has grown and continued to increase density, many industrial users have been forced to relocate to the surrounding southern communities, causing significant and steady demand increases focused on the South Kent Valley, along the I-5 corridor.

The City of Tukwila provides affordable housing alternatives, while remaining in very close proximity to the allure of the downtown Seattle amenities and lifestyle. As a result, the region has seen an influx of quality retail and restaurant options, supporting the growing population.

Seattle’s diversified economy is bolstered by a strong corporate presence from some of the nation’s leading technology, logistical and aerospace companies such as Microsoft, Amazon, and Boeing, collectively employing over 140,000 people at various locations in the Seattle metro area. The unique combination of a lucrative transportation infrastructure, business-friendly environment and a well-educated and growing labor force has caused Seattle to become the economic force within the Pacific Northwest and continues to attract a strong corporate presence.

Business parks in Tukwila have directly benefited from a 2014 law passed by the City of Seattle, increasing the minimum wage to $15 per hour. Since the law passed, low wage businesses have been migrating south of the Seattle city limits to Tukwila where the minimum wage is $9.47 per hour.  For example, DHL recently announce it is moving its daily airplane delivery service from Boeing Field Airport to SEA-TAC due to the minimum wage increase (the seventh carrier this year).  Now 10 miles closer to the subject property, DHL and the numerous small businesses that service its operation will began to occupy vacancy in Tukwila.  This directly translates to increased net absorption in the submarket.

The Seattle industrial market is composed of 265MM sf, with current vacancy of 3.2% down from the peak of 9% in 2010. Tukwila is located in the Kent Valley submarket, the largest industrial submarket in the Seattle region, which is made up of just over 100MM sf of warehouse, manufacturing and flex product. Tukwila is currently 2.6% vacant and continues to tighten rapidly, absorbing 495,557 sf in Q2 2016 constituting 21% of the positive net absorption across the entire market.