An Indianapolis-based developer is planting a second flag in the Puget Sound region, with plans for a 185,000-square-foot speculative industrial project in Auburn. Scannell Properties, which only recently finished its debut Washington warehouse near Everett, is now setting its sights on the South Sound as the broader warehouse market cools considerably.
The Auburn project marks Scannell Properties' second project in the Puget Sound region, according to The Business Journals. The company, based in Indianapolis, completed its first Washington development last year — a warehouse near Everett's Paine Field — before turning its attention south to Auburn for this latest spec build.
That first Washington venture began with Scannell Properties acquiring 16.35 acres in Everett for a speculative industrial development, according to a statement from Scannell Properties. The company had initially planned a 130,000-square-foot building there, with construction expected to start in the second quarter of 2023 and wrap up in 2024, per the same announcement. The Everett site sits near Paine Field, roughly 25 miles north of Seattle.
What actually got built ended up larger than first announced: a 125,000-square-foot speculative warehouse near Boeing's Everett campus, as reported by bizjournals.com. That project represented the developer's first foray into Washington state, and the outlet noted at the time that it likely wouldn't be the company's last move in the state — a prediction that's now bearing out with the Auburn plan.
A Weakening Market for Warehouse Space
Scannell Properties' expansion comes as the region's industrial sector shows clear signs of strain. A January report found the Seattle-area industrial vacancy rate had climbed to 9.3%, with bizjournals.com noting that demand for industrial space in the Puget Sound region had fallen to its lowest level in 15 years.
By mid-2026, the numbers had moved further in that direction, though different firms measured the slide differently. Colliers reported regional industrial vacancy at 11.0% at mid-year, up 70 basis points from the 10.3% recorded the prior quarter, according to its Puget Sound Industrial Report. Savills, meanwhile, put the Seattle/Puget Sound vacancy rate at 12.6% for the same quarter, up 300 basis points year over year and the highest level in five years, per its Q2 2026 industrial market report.
The absorption figures tell a similarly rough story. Colliers recorded negative net absorption of 959,638 square feet regionwide in the second quarter, with warehouse and distribution space alone accounting for more than 1.1 million square feet of that decline. Savills put year-to-date net absorption at negative 1.7 million square feet through the second quarter, compared with positive 1.3 million square feet over the same stretch in 2025. Despite the glut, Colliers found the region's direct weighted-average industrial asking rent held flat at $1.09 per square foot per month, unchanged from both the prior quarter and a year earlier, while 2.3 million square feet of industrial space remained under construction as of mid-year.
Savills reported that developers pulled back sharply on new construction as vacancy climbed, even as speculative projects already underway kept adding unleased space to the market — a dynamic that frames the risk embedded in any new spec building breaking ground now.
Auburn's Industrial Pipeline Keeps Growing
Scannell Properties isn't the only developer circling Auburn. A separate 1.6 million-square-foot industrial project is also planned for the city, though no start date has been announced, according to djc.com. That project traces back to a 2022 deal in which Industrial Realty Group paid the federal government $80 million for a property now known as the Auburn 18 Business Park, which spans roughly 129 acres and currently holds 11 older buildings totaling about 1.5 million square feet, with CBRE serving as broker.
Auburn's industrial market has also seen recent investment activity. A 385,986-square-foot, two-building warehouse property known as Auburn Park 167 sold for $83.1 million in a sale recorded July 25, according to southsoundbiz.com. The property, located at 3703 and 3941 I St. NW on about 17.6 acres next to State Route 167, is fully leased and features buildings with 30-foot clear heights along with grade- and dock-high loading doors.
Against that backdrop of rising vacancy and cautious new construction elsewhere in the region, Scannell Properties' decision to push forward with another speculative build suggests the developer sees Auburn's industrial fundamentals — and its own track record since entering the state — as reason enough to keep building.
