Pacific Real Estate Partners

Principals: Steve Schwartz, Bill Pollard, Mark Flippo, Stuart Williams, Scott Carter, Troy Gessel, Kip Durrell

Specialty:Office, industrial and sales in the greater Puget Sound; corporate tenant representation

Year founded: 1992

Headquarters: Bellevue

To find a bright spot in the local real estate market, one may do well to head south.

That’s where Pacific Real Estate Partners has recently brokered sales for properties such as Kent’s CenterPoint Corporate Park and landed big warehouse tenants Proctor & Gamble (200,000 square feet at Valley Centre Corporate Park in Auburn) and J.C. Penney (350,000 square feet at Valley South Corporate Park in Sumner).

Scott Carter, a principal at the firm who specializes in industrial properties, said the segment has made a comeback despite sluggishness elsewhere.

Driving the activity are retail tenants such as J.C. Penney who are in need of storage space. Third-party logistics companies such as Exel, which handles stock for Williams-Sonoma and Crate & Barrel, have also set up shop.

“We’re really excited about that segment of the market,” Carter said. He predicts owner concessions in that submarket will begin to dwindle in the latter part of 2004. For now, he said, “tenants are really driving the bus.”

Sales activity throughout the local real estate market has been brisk, thanks to low interest rates. Carter cited several recent sales in the $10 million to $50 million range, including the sale of Everett’s JanSport Distribution Center to the state Department of Natural Resources.

Prospective owners haven’t been spooked by the specter of low occupancy rates.

“The cost of money is very inexpensive,” Carter said. “Relative returns are still OK.” That long-term view, he said, has “really driven the prices of building up a lot.”

Carter is bullish about prospects for next year, now that the economy appears to be improving.

“The general feeling is that we’ve pretty much bottomed out,” Carter said, noting that tenants who have managed to hold on are no longer giving up space or going out of business.

But in the meantime, leasing and sales activity, particularly in the office market, remains light.

“Transactions have taken a long time to come together in the investment and sales arena,” Carter said.

Amid the slowdown, owners have had to go the extra mile to fill their buildings — and that includes paying higher commissions to those who fill them.

“Brokers are being handsomely paid even though the market is down,” Carter said. “It’s an oxymoron in the market.”