After four straight quarters of softening, the Puget Sound region's industrial market is seeing increased activity among tenants, though many of them are just trading spaces to get better deals on rent.

“People are out kicking tires,” says Scott Carter, a partner at Pacific Real Estate Partners.

From the third to fourth quarters, asking rates decreased just over 4 percent to nearly 33 cents per square foot per month, excluding maintenance and insurance costs. However, in 2009 actual lease rates were less because landlords signed deals with price breaks of 15 to 20 percent and offered concessions, such as no rent for the initial term of a lease.

Vacancy rates, meanwhile, continued to rise. The year-end 2009 rate in all industrial product types was 7.9 percent, up sharply from 5.1 percent at the end of 2008, according to Jones Lang LaSalle's industrial team.

The firm's Andrew Harnish said the vacancy rate equals approximately 8.5 million square feet of space that is now vacant compared to the prior year.

The Seattle market is healthier than the national market. Nationwide the vacancy rate was 10.1 percent for all industrial product types at the end of 2009, according to Harnish. He said this region's industrial sector is poised for a recovery.

Harnish said both container activity at local seaports and consumer spending have stopped falling, and housing starts are up in this area. He said landlords and tenants should benefit from the stability of the area's larger employers.

Carter said he and his colleagues are seeing “a handful of deals percolating.” Pacific Real Estate Partners is marketing two buildings at Sumner Corporate Park totaling nearly 737,650 square feet. Carter said there are multiple proposals on both, from prospective users seeking more than 1 million square feet.

Those sound like enticing numbers for landlords, but most companies are only moving to properties whose owners are offering deals. Carter said there's only “a slight hint” of people looking for additional space. Bottom line: even with the activity there won't be a net absorption of space.

The Kent Valley submarket got a jolt last year when U.S. Army Corps of Engineers officials announced the area along the Green River might be susceptible to flooding this winter. Due to structural problems at the Howard Hanson Dam, they said they might not be able to hold back as much water. Market watchers thought this would prompt companies to move out of the South King County/Kent Valley, which is the largest submarket, with 104 million square feet of industrial space.

Activity among affected tenants has waned, according to Carter. He said they still are concerned about flooding, though not as much as last fall. He said companies weighed the cost of a move, and some opted instead to install flood-mitigation measures, such as sandbagging and new walls.

So has the industrial market has hit bottom?

In his fourth quarter market report, Carter wrote: “If not, we feel like it is close... The tide may be hitting slack, but we will be bucking a headwind for awhile.”