By CHRISTOPHER J. CORR Kidder Mathews & Segner

The year was 1971 and two local real estate brokers paid for a billboard ad requesting that the last person in Seattle please turn out the lights.The reason: Boeing cutbacks that sent our economy into a tailspin.

Skip forward to 1998 and 1999.

Boeing slashes jobs and significantly reduces its real estate holdings and everybody fears it will be deja vous all over again. Under pressure from Wall Street to improve profits after its acquisition of McDonnell Douglas, Boeing lists for sale large industrial properties. These include the 800,000-square-foot Interna-tional Gateway Corporate Park, the 363,247-square-foot Space Center East and 14.5 acres of land at Space Center East. It also includes 763,000 square feet of offices at Space Center East.

In past years this amount of property would equal a one-year industrial inventory and two years’ supply of office space, based on historical absorption figures. It would result in empty land parcels and windows for years.

But this is the New Economy. Hello, Information Age. Goodbye, deja vu.

Local developers Dave Sabey and John Pietromonaco had witnessed first-hand the rapid growth of dot-com companies, call centers and Web hosting sites. So Sabey bought the Gateway site and Pietromonaco bought the Space Center East industrial.

It turns out the Boeing facilities come wired and powered with everything technology firms crave. And at the prices Sabey and Pietromonaco paid Boeing, their advertised rental rates are far below rents charged at newly constructed projects. In addition, Sabey and Pietromonaco don’t require the "vise grip" credit guarantees typically sought by landlords. The result is Sabey is already 56 percent leased and Pietromonaco is at 61 percent after less than eight months of holding.

The developer Intracorp bought the Space Center East office project for $40 million and renamed it Center Point. Intracorp gave the project a catchy slogan, "Where it all comes together," and began $30 million in renovations. Already Intracorp is close to announcing the lease up of 180,000 square feet and another 890,000 square feet of proposals outstanding (obviously more than the size of the project). Center Point came with higher levels of infrastructure than its industrial brethren. These buildings were once occupied by Boeing Military and Boeing Computer Science. Oh, and did you Seattle companies hear? Four cars per 1,000 square feet of FREE parking.

The 14.5 acres of Space Center East land along West Valley Highway is now owned by MCI WorldCom, which is building a switching center there. West Valley Highway is now the Information Highway. U.S. West, AT&T and MCI are all providing what these developers had hoped: more infrastructure for their buildings.

With all this technology available in the buildings, we have seen significant deals by companies, such as online grocers WebVan (453,000 square feet) and HomeGrocer.com (100,000 square feet) as well as Office Depot (283,000) and Optiva (146,000). We have also seen third-party warehousing or fulfillment company A&M Warehousing take 250,000 square feet. I predict third-party warehousers will see dramatic increases in their business plans because e-tailers will continue to avoid the "bricks and mortar" of traditional retailers.

With all this growth, and the land supply diminishing, where do we go from here? First, we must consider the existing developable land base in the Kent Valley. The number is arguably 253 acres, assuming no further wetlands, hawks, eagles and various rodents turn up. This acreage equates to roughly 4.6 million square feet of industrial space or two years of absorption.

Therefore the next logical progression for growth is farther south to Pierce County.

Pierce County has the largest land base of yet-to-be-entitled land, and the Port of Tacoma continues to attract new businesses. It is with this large land base, and its excellent proximity to Interstate 5, that Pierce County can accommodate large users. Significant recent transactions in Pierce County include: Costco’s purchase of 95 acres for a distribution center in Sumner; Regal Distribution’s lease of 525,000 square feet in Fife; Norvanco’s lease of 185,000 square feet in Sumner; Regal and Norvanco are both third-party fulfillment companies.

In the Kent Valley there are 1.15 million square feet of proposed projects while Pierce County has 1.185 million square feet proposed. This shows Pierce County has pushed ahead of the Kent Valley.

What all this means in terms of a forecast is that rents should increase 8 percent in 2000 and much more in 2001. Demand for industrial space and office space for both the Kent Valley and Pierce County will remain strong. Vacancy rates will trend further down. The Kent Valley not only will have its lights on, it will be the North Star directing companies toward future growth.