Panattoni Development

Specialty: Commercial, industrial and office development

Management: Bart Brynestad, partner in charge of the Seattle office

Founded: 1986 (Seattle office founded in 2004)

Headquarters: Sacramento, Calif.

Current projects: 914,000-square foot distribution center for Whirlpool in Frederickson; the 108,000-square-foot Casino Road Corporate Park in Everett; the 81,000-square-foot Monroe Corporate Park on Highway 2

Photo courtesy of Panattoni Development One of Panattoni’s current projects is the 914,000-square-foot Whirlpool distribution center in Frederickson.

Bart Brynestad, partner in charge of the Seattle office for Panattoni Development, said the current state of the economy has shifted a large portion of the company’s work from speculative development to looking at other options.

“We’re not looking to do any speculative development in ‘09, whereas in the last five years, maybe half of what we’ve done is spec,” Brynestad said.

Brynestad founded the Seattle office nearly five years ago, so this is the first downturn the office has experienced.

Instead of doing spec, the Seattle office is looking to do more public-private partnership projects like the $18 million civic center campus it is working on in DuPont, its first locally. Once complete in the first quarter of next year, it will be a city hall, police station and fire station.

Panattoni also is chasing a similar public-private project in Seattle that Brynestad wouldn’t comment on.

“We see some opportunities of that sort picking up and we certainly want to work harder at chasing those in the next couple years until the industrial and office markets pick up again,” Brynestad said.

A slow year coming

Panattoni’s Seattle office has a backlog of work that will take it somewhat into 2009. Brynestad said 2008 was a profitable year for the company but most of 2009 will be slow and things won’t pick up until 2010. Then, Brynestad thinks, industrial will pick up before office.

Until they do pick up, Panattoni will fill the rest of its spec gap with build-to-suits for clients, and in value-added opportunities of buying existing buildings that are at low prices, and either improving and leasing them or demolishing them.

“I think there’ll be some good value-added opportunities that are just starting to show in a low economy and that’s something we’ll be looking to do in ‘09 and ‘10,” he said. Brynestad said the company will be sustained easily in this downturn if it can get another couple of public-private projects and some build-to-suit projects.

Slow to lease

Spec projects the office has already completed are taking longer to lease than before, including a project in Lacey that is taking particularly long. Another constraint is that there’s very little financing available.

Brynestad said this region’s office and industrial markets should bounce back quicker than others because it has traditionally been harder to buy land and get permits in the Northwest than in other areas. That means there is less vacant space to fill when things do turn around.

LEED, other trends

Brynestad said a lot more projects are seeking LEED certification and to be environmentally friendly. It’s more pronounced in office and is just starting with industrial. Brynestad also sees a continued trend of industrial development moving south, though south now means Frederickson, Lacey, Chehalis and Centralia. “That’s a trend that is happening and will continue, largely because land is available in those areas and because it’s affordable,” he said.

Location-wise, Panattoni would be “very interested” in doing some projects in Portland, he said. Other than that, the company will probably stick to the Interstate-5 corridor for now.