Panattoni Development Co.

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: 120,000-square-foot building in the Kent Valley for a commercial laundry company; 80,000-square-foot medical office building on the Eastside


Bart Brynestad, partner in charge of the Seattle office of Panattoni Development, is confident the market will come back. But when it does, the companies that survive will need to focus on adaptability and being nimble.

Brynestad said the nation went into this recession in an unusual way and it will come out of it in an unusual way too. Because of that, people are scared and cautious about what’s going to happen next.

“It’s not just ‘Hey, it’s going to be down for a year or two and then it’s business as normal.’ Business as normal might be different,” he said. “I think firms such as ourselves might need to adapt to whatever that different is.”

Looking for tenants

Work is way down for Panattoni. It is doing less than half of what it has done during the past five years. Like development companies across the country, Brynestad said business “fell off the cliff starting in September of last year.”

In 2009, the company finished a 108,000-square-foot industrial project in Everett, which it leased completely to Seattle Goodwill, and a 914,000-square-foot distribution center for Whirlpool in Frederickson. It also finished an 81,000-square-foot corporate park in Monroe that is vacant and needs a tenant. Brynestad said his first priority is to fill up that building and others, which total about 100,000 square feet of vacant space.

Panattoni also has open space in Federal Way and Lacey. The Lacey space was complete in 2008. Brynestad said having space vacant that long is not normal but “it could be a lot worse.”

Public-private projects

For 2010, Panattoni is looking for more public-private projects, build-to-suit projects and value-added opportunities. Projects that are distressed in some fashion, like those with financing issues or in need of a lot of work, could provide some good deals. DJC records show Panattoni bid on six public projects in 2009, compared to one in 2008.

Panattoni is also staying close to the brokerage community, as that is where it gets most of its leads.

During the next year, it will be working on a 120,000-square-foot build-to-suit project in the Kent Valley for HCSA, a commercial laundry company, for which a site has yet to be selected. It will also be working on an 80,000-square-foot medical office building on the Eastside.

Hunkering down

Panattoni focuses on industrial, then office, then retail. For those sectors to pick up, Brynestad said firms need to start hiring people to create more demand for that space. There are snippets of companies hiring, but there are also companies still laying off, Brynestad said. Layoffs will likely continue for a few months before companies begin to start hiring, he said.

Brynestad expects projects to be moving again by the second half of 2010, though he said it will be a slow uptick; it will take a few years until the market is back to where it was before. Once the market returns and industrial vacancy has dropped from today’s rate of 8 percent to 4 percent or 5 percent, Panattoni can go back to buying speculative land, building speculative buildings and doing a fair number of built-to-suits. Panattoni is not doing any spec development in 2010 and likely will not do any in 2011.

In the mean time, Panattoni is laying low. The Seattle office has laid off about six people and cut overhead. “We’re kind of hunkering down and making sure we can survive before we thrive in the upturn,” Brynestad said. “Absolutely it’ll come. It always does.”



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