Terreno pays $8M for vacant Redmond industrial building and the land under it

Connect CRE reports Terreno Realty has paid approximately $8 million for a vacant 21,000-square-foot industrial building in Redmond, Washington, a deal that puts a concrete number on scarcity in Seattle's Eastside industrial market and is best understood as a land trade with a warehouse attached. The property at 9680 153rd Avenue NE sits on 1.5 acres with five grade-level loading positions and parking for 56 cars, and it carries an estimated stabilized cap rate of 5.9% even though the building is empty. That works out to about $381 a square foot, a figure that matters more because no tenant is paying it.

Terreno already owns next door, having paid $9.3 million in April for the adjacent property at 9660 153rd Avenue NE, a 33,000-square-foot distribution building that will be renovated to about 26,000 square feet once the current tenant leaves. Both parcels are 1.5 acres, so the two deals come to roughly $17.3 million for about three acres on adjacent lots—the profile of a buyer assembling land rather than collecting rents. Terreno, which owns industrial properties in six major coastal U.S. markets including Seattle, is shopping close to home.

Days before the Redmond purchase, Terreno paid $26.3 million for a fully leased waterfront warehouse in Red Hook, Brooklyn, at $939 a square foot and a 5.2% stabilized cap rate. Against that comp, the Redmond deal's 5.9% stabilized cap on an empty building means Terreno is accepting only 70 basis points more for taking on the vacancy risk. The logic is consistent: pay for the dirt, with the building as a call option on future rent.

The lease-up at 9680 will be the tell: the rent Terreno lands on that empty 21,000 square feet will show whether the cap rate was a discount or a target.