Spokane Journal of Business

Business is booming in Spokane Valley

Sullivan Road area sees construction project cluster valued near $15 million

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-Samantha Peone
SDS Realty General Manager Carlos Herrera says some Stay Alfred employees operate out of temporary space in the former Itron campus.

The ongoing redevelopment of the former Itron campus, construction of a new warehouse and a heavy equipment dealership nearby, and high occupancy rates at the Spokane Business & Industrial Park, together are spurring business growth in Spokane Valley’s north Sullivan Road area, some commercial real estate professionals here say.

A spate of recent construction and tenant improvement projects clustered in the area totals nearly $15 million, building permit records show.

Just south of SBIP, a developer is expected to complete work on a warehouse facility under construction at 15909 E. Marietta before the end of March, says Carlos Herrera, general manager at Spokane commercial real estate brokerage SDS Realty Inc., which handles the leasing of the building.

“We knew there was a need in the market,” says Herrera.

SDS Realty is owned by Stephen Schmautz, who also owns Marietta LLC, the real estate holding company for the warehouse.

SDS Realty already has a tenant planned for that site, says Herrera. He declines to identify the tenant, but says it would take a sizeable portion of the building’s space.

As previously reported by the Journal, the $9 million facility will include 110,400 square feet of space and will occupy three parcels totaling 7.6 acres. S&L Sullivan LLC, which Schmautz also owns, bought the vacant site along with the adjacent former Itron campus last November for $5.5 million.

Garco Construction Inc., of Spokane, is the contractor for the warehouse project.

Just west of the warehouse project site, the former Itron campus, at 2818 N. Sullivan Road, a portion of which now is home to the new etailz Inc. headquarters, has garnered significant attention, Herrera claims.

Itron currently is headquartered at 2111 N. Molter Road, in Liberty Lake. The publicly traded company provides products and services that measure, manage, and analyze energy and water.

The south portion of the campus is undergoing renovations valued at $450,000 for Spokane-born vacation rental company Stay Alfred’s new 37,000-plus-square-foot headquarters, Spokane Valley building permit records show.

SDS Construction Management LLC, of Spokane, is the contractor updating Stay Alfred’s future space. The construction company is co-owned by Schmautz and Charles Silva and focuses on tenant improvement projects, some of which are for properties SDS Realty manages.

Etailz has already moved into its new, 40,000-square-foot space. Representatives there declined to disclose remodeling project costs; however, building permit records regarding a number of tenant improvement projects there earlier this year total more than $100,000, building permit records show.

SDS Realty is negotiating another potential 16,000-square-foot lease for an undisclosed tenant, leaving a little more than 20,000 square feet still available for lease, Herrera estimates.

Some Stay Alfred employees currently operate out of a temporary 4,000-square-foot, second-floor space on the campus, while its future main space undergoes tenant improvements, he says.

At first SDS Realty was unsure of whether it should redevelop the former Itron campus into warehouse space or something else, Herrera says.

“Once etailz had interest, we knew the market had these larger companies with lots of employees who’d like a campus-type of environment with many amenities,” says Herrera.

The property includes a number of common areas, such as yoga room, full gym, volleyball pit, and a space for barbecuing.

Herrera says the facility is geared toward companies that need at least 10,000 square feet of main-floor space, with roughly 7,000 to 8,000 square feet second-floor space as well.

One reason tenants have been attracted to the campus is that it offers larger companies the capability to consolidate their operations into one big facility, while also having amenities such as parking, asserts Herrera.

Additionally, just renovating the property and giving it new life could be attracting interest, he says.

“You come in, you shock the system, and you have a different vision,” says Herrera. When people do that, others start talking, and that creates a chain effect, he says.

A few blocks north, at 3515 N. Sullivan Road, Kent, Wash.-based PacWest Machinery LLC is constructing a new Volvo construction equipment dealership facility.

Construction crews broke ground last month, and the company plans to move from its current, smaller office at 4030 E. Trent by next April.

A building permit issued by the city of Spokane Valley enables the construction of up to 43,900 square feet of space at a construction cost of $5 million, which would include the heavy equipment dealership and service center and handling related site improvements.

Amenities at the new dealership include a warehouse, modern showroom, and service capabilities.

The company supplies sales, rental, service, and aftermarket parts for Sweden-based Volvo construction equipment in Washington, Oregon, and northern Idaho, according to its website. It also offers equipment from other manufacturers, such as Iowa-based GOMACO Corp. and Texas-based TYMCO Inc.

Spokane County Assessor’s records show PacWest Machinery purchased the project site in March for $1.3 million.

PacWest Machinery LLC is the project owner. Architectural Ventures, of Spokane Valley, is the building permit applicant, and Divcon Inc., of Spokane Valley, is listed on the permit application as the general contractor.

The demand for industrial and commercial space likely has contributed to recent developments in the area, says Dean Stuart, vice president of Crown West Realty LLC, which owns the Spokane Business & Industrial Park.

The SBIP, which occupies 650 acres of land at 3808 N. Sullivan Road, is currently 99 percent occupied, Stuart claims.

Such high occupancy is more than the park sees normally, although the entire industrial market is tight due to the growing economy, Stuart asserts.

Much of the recently leased space at the park has been filled by existing tenants who are growing their businesses, he says.

In the past 24 months, Inland Empire Distribution Systems Inc., North 40 Outfitters, Pyrotek Inc., Walker’s Furniture Inc., and several other park tenants have expanded their spaces in the park, he says.

“The market vacancy is in the low single digits, so there’s demand for space in the market,” he says.

The park consists of 5 million square feet of building space and holds about 130 tenants which have a total of roughly 5,000 employees.

When available, leasable spaces can range from 1,250 square feet all the way up to about 120,000 square feet, he says, adding however, that as of Sept. 20, available leasable spaces ranged from 3,500 to 20,000 square feet.

Samantha Peone
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Reporter Samantha Peone joined the Journal in 2015 as research coordinator before later transitioning into a reporter role. She covers real estate and construction.

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