Following roughly a decade of aggressive expansion, the sprawling Spokane Business & Industrial Park now is preparing to build what its owner says likely will be the final new structure there for some time.


The Spokane Valley landmark houses more than 140 companies, from street sweeping businesses to aircraft propeller manufacturers, in a 615-acre park along north Sullivan Road. It has grown by about 1 million square feet of floor space, to about 5 million square feet, since 1997, when Spokane-based Crown West Realty LLC bought the park and began to expand it.


Dean Stuart, Crown Wests director of marketing, says the company plans to build a $5 million, 125,000-square-foot building in SBIPs business park, located south of the older, industrial part of the park. Crown West, he says, hasnt decided on which parcel it will build the structure, and has narrowed the decision to two or three locations, but says the project is expected to start late this year.


The company plans to hire Vandervert Construction Inc., of Spokane, to build the structure, which is being designed by Russell Page Architects, of Spokane.


Stuart says the company doesnt have tenants lined up for the new building, which, like its other structures in the business park, will be a warehouse building aimed at distribution companies that need a lot of storage space. Its 28-foot-high ceilings, also found in the business parks other newer buildings, optimize warehouse capacity for those companies while keeping a smaller footprint, Stuart says.


In the past, weve built a building, filled it, and when its 80 percent full, we break ground on the next one, he says.


Now, however, both the business park and the industrial park are pretty much built out, says Stuart, and Crown West doesnt plan to add more buildings there for some time after the new structure is finished, though at some point in the future the company might replace some of the older buildings in the industrial park. It has sold to several buyers most of the land to the north of the industrial park, which it previously had considered building on, Stuart says. He says there are a few possible spots for smaller buildings, but the company would not build such structures unless they were pre-leased.


Finger off the triggerHe says Crown West has pulled back a bit on construction, not pulling the trigger on a new building in the business park in about two years. Stuart says the business parks newest building, which was completed in 2006, took about a year to fill with tenants. He says major factors in the companys decision to slow further development there have included the volatile cost of construction, a dwindling amount of available land for additional structures, and, the flagging economy.


Looking ahead, Crown West anticipates that the economy will rebound by the time the new project is ready, in the first or second quarter of 2009, and Stuart says theres enough demand for such space that the company doesnt expect to have a problem finding tenants.


Stuart says Crown West charges about 20 percent more for leases in its newer buildings than for what it calls its value product, the mostly decades-old former U.S. Navy supply depot buildings in the industrial portion of its park. Those older buildings lease for between 42 cents and 45 cents a square foot.


For a building shell, well be right around 50 cents a square foot, Stuart says, which he says is still a good value in a high-bay market that has only a 2 percent to 3 percent vacancy rate. Also, he says, there isnt much competition in the market here, because only a handful of companies are building such structures.


Stuart says that with about 5 million square feet of floor space altogether, Crown West owns the biggest industrial and business park in Washington state, and that it prices its 4.2 million square feet of industrial space below the market in order to keep it full. He says the vacancy rate in those buildings currently is about 5 percent.


Despite the age of the buildings, Stuart says the company works to keep every building upgraded.


Once youre inside, you dont know if youre downtown or out here, he says.


He says the parks newer buildings, which together have about 979,000 square feet of space, are nearly 100 percent occupied, with regional and national companies that dont mind paying more to have newer, state-of-the-art buildings. Those tenants include companies such as Irvine, Calif.-based Golden State Foods Corp., with which Crown West recently signed a lease for a 16,000-square-foot space in the business park. Stuart says Golden State, which distributes food products to companies such as Starbucks Coffee Co. and is new to the Spokane area, will occupy the only remaining space the company had on the business park side.


Conversely, he says, the value customers are more regional and local companies. Theyre looking for the most value for their dollars.


An additional benefit to tenants in the industrial part of the park is rail service, provided by both Union Pacific Corp. and BNSF Railway Co., which Stuart says gives those tenants improved leverage when negotiating shipping rates.


The new tenants on the industrial park side include Archway & Mothers Cookie Co., of Battle Creek, Mich., and Snohomish, Wash.-based Jaco Environmental Inc.


With its huge industrial spaceswith the exception of the planned project, the largest buildings have 120,000 square feet of leasable space in themSBIP has become an unusual property in Crown Wests overall portfolio, which outside of Spokane now includes mostly office buildings, Stuart says. Since acquiring the park, the company has greatly expanded its footprint outside of Washington state, including into such markets as Phoenix; Denver; Atlanta; Charlotte, N.C.; and Washington, D.C.


Our business model was to find properties struggling due to absentee ownership or low occupancy. We focused first on Phoenix and what we identified and acquired happened to be office or flex buildings, Stuart says.


The company currently has about $80 million in additional real estate acquisitions expected to close by August, he says. Those deals are expected to add about 1 million square feet of floor space to the companys total of about 8 million square feet, he adds.


Stuart says getting financing to continue buying additional property elsewhere is becoming more of a challenge in the current economic and lending environment, and that factor could slow the companys acquisition pace for a time. Still, Crown West intends to continue adding to its portfolio over the long run.


Our appetite for acquisition is very strong, he says.


Despite anticipated future growth in other markets, the Spokane Business & Industrial Park will remain the companys primary focus, Stuart says.


This is really the engine that runs the company, he says.


Contact Jeanne Gustafson at (509) 344-1264 or via e-mail at jeanneg@spokanejournal.com.