Although we are seeing some gains in employment and other economic indicators on the Kitsap Peninsula, persistent sluggishness in the regional economy also is whittling away at our competitiveness for new investment from outside companies as well as employer retention.

On the heels of releasing their second quarter industrial market statistics for Central Puget Sound (excludes Kitsap), commercial/industrial brokerage CB Richard Ellis is contacting businesses here and elsewhere in the region about the great deals to be had by moving to vacant facilities in King and Pierce counties.

Conditions suggest that our counter strategy must include building value in our real estate by creating more value in areas that have little to do with occupancy costs.

CBRE reports there is nearly 22,000,000 square feet of vacant warehouse/industrial space in Central Puget Sound. Nearly 14,000,000 square feet of that space is within a 20-mile stretch from the Kent Valley to Tacoma.

If the 9 percent-plus vacancy isn’t getting your attention, the downward pressure on lease rates will. Asking rents for warehouse/industrial space in nearby Tacoma-Fife have dropped as much as 40 percent from where they were three years ago, CBRE observes. Today they are marketing space at $0.25-0.29/sf/month plus taxes, maintenance and insurance (triple net). In the Kent Valley where vacancy is at 10 percent, asking rates average $0.38 before concessions. It’s been a long time since facilities near I-5 and the Port of Tacoma were available at those prices.

Obviously, with market demand that weak it isn’t likely we will see much new industrial construction activity soon, even if financing was available. And with an inventory of available space that large, luring companies from the East Sound to the West Sound, and from other states to the West Sound, will need to emphasize other attributes of the business case.

Even more important, we need to enhance our location attributes to retain the companies we have. Regional real estate brokers aren’t the only folks recruiting employers from Kitsap. Other states — notably South Carolina, Idaho, Texas, and Pennsylvania — have been marketing their location advantages and incentives to Washington companies for several months. The economic downturn has left few communities untouched, and we can be sure the business recruitment is ratcheting up throughout the country. No doubt some Kitsap businesses are getting letters and calls.

Kitsap’s competitiveness agenda was put into place in 2007 under the umbrella of Kitsap 20/20. Our collective charge now is to pick up the pace of work and accomplishments. In subsequent columns for the Kitsap Peninsula Business Journal, I will provide more detail of value we have developed, and suggest an agenda we need to improve upon, in the areas of unique workforce talent and supply; business taxes; market development; political access; access to capital; infrastructure; and other operating needs of employers.

While there is cause for concern about the regional real estate market’s potential adverse impact on Kitsap economic development, it’s important to recognize that facilities costs are just one piece of the due diligence for location decisions. Most companies aren’t about their buildings; they are about meeting or exceeding customer expectations of quality, service and pricing.

We can and should influence the business case if we’re all pulling in the same direction. And that will result in meaningful added value for the owners and developers of commercial/industrial facilities here.

Let’s go.