Fewer spaces means higher rental rates

Maple Valley doesn't have the high-rises or the industry of Bellevue or Seattle, but it does share something with those cities: increasingly high commercial-lease rates.

On average, businesses in South King County are paying annual lease rates of about $23 a square foot, including taxes, insurance and maintenance, but some businesses in Maple Valley say they pay $27 a square foot, sometimes more.

Businesses on the Eastside also pay about $27 a square foot annually, and those in Seattle pay about $31 a square foot, according to brokerage CB Richard Ellis in Seattle.

The explanation is simple: There aren't many acres of land available in the city of about 20,000 for stores and businesses so developers can charge a premium for the space.

But try explaining that to a small-business owner who is trying to shell out the same amount for rent as a national chain with deep pockets.

In the last year, several locally owned businesses in Maple Valley have closed, in part because of the increasingly high rents for commercial space, said Sue Van Ruff, executive director of the Maple Valley-Black Diamond Chamber of Commerce.

"For a small business, their lease is critical to their bottom line," Van Ruff said.

Much of the problem is a classic small-town woe.

Maple Valley has become increasingly popular for developers vying for space to build. As a result, the city has doubled the amount of commercial development in the past seven years to about 600,000 acres.

"The demand is there because it's a growing, affluent neighborhood, but there is little or no new supply," said Constance Wilde, an agent with CB Richard Ellis who is familiar with the Maple Valley market.

Perhaps the most obvious example of the problem can be found at Four Corners, the city's largest commercial center at the intersection of Kent Kangley Road and Maple Valley Highway.

In that area, small businesses are competing to remain afloat as a new 180,000-square-foot shopping center is built, featuring big-name tenants like Walgreens.

One of those small businesses was The Blend Juice & Java Lounge, which was open only a year before owner Stacha McVicar, 31, closed the business.

She knew the rent was high — about $27 a square foot, including utilities and other extras — but she thought the customer traffic at a busy shopping center would make it feasible.

"It was not a good business decision to stay there," said McVicar, who still runs a second location in the city. "Every month I was getting further and further in the hole."

Commercial rents in South King County have increased more than $1 a square foot in the past year and 17.7 percent since the latter part of 2005, CB Richard Ellis figures show.

While rents in Bellevue also have increased over the past eight years, Seattle commercial lease rates have dropped 19.5 percent since the end of 2005.

Until recently, Maple Valley restricted commercial development to 60,000 square feet or less, a requirement that kept many of the larger chain stores at bay.

Now the city is rethinking that decision.

The City Council has placed a moratorium on new commercial and multifamily development within the 250-acre Four Corners area as it decides whether to lift building restrictions, said Ty Peterson, the city's community-development director.

By increasing development potential, small business owners may get some relief.

"If we can, through better planning, create more commercial space, there's more supply, and rates come down," Peterson said.

That would be good news for Mark Libby and his wife, Karen, who operate a Budget Blinds franchise in Maple Valley Commons, a new shopping center owned by local developer Pallis Properties.

Mark Libby declined to disclose his specific lease rate, but said it's between $27 and $30 a square foot, including taxes, maintenance and insurance.

The Libbys, who run two other Budget Blinds franchises in King County, chose Maple Valley Commons because of its high customer traffic.

While their store is a destination location, they say that if more people noticed the showroom, the business would be more likely to draw future customers, said Mark Libby, whose three franchises brought in a total of about $3 million in revenue in 2006.

Still, it's a balance between better advertising and higher rents.

"I do know that in talking to other folks, the consensus conversationally is, 'Man, Maple Valley rents are very high,' " Mark Libby said.

Kirsten Grind is a Seattle-area freelance writer: kirstengrind@gmail.com