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Anyone driving along Novelty Hill Road out of Redmond can’t help but notice the expansion of high-tech space manufacturing in the area.
SpaceX’s logo looms over the entrance of two recently finished buildings in the Redmond Ridge development that house its Starlink operation, which produces the thousands of satellites powering its cash cow communications network. Those sites were among the largest industrial leases recorded in Redmond in the past five years, as space-related ventures have grabbed big new spaces across the greater Seattle area.
“When commercial aerospace was down, we were very fortunate in the region to see a lot of spending and investment from the space sector to really prop things up,” said Bill Ellis, chief economic development officer for Kent, a major regional industrial hub.
The space industry is still a relatively small portion of the overall industrial leasing market, which has been driven by demand for large distribution facilities in recent months, said Elliott Krivenko, director of Seattle-area market analytics for CoStar Group.
But it’s growing quickly, especially in markets like Redmond and Kent, the latter of which has experienced a building spree to meet the demand.
Since Kent adopted its Rally the Valley industrial lands policy in 2020, more than 2.5 million square feet of new construction has been built on 160 acres of land. Manufacturers have snapped up at least half of that, including large expansions at the Pacific Gateway industrial park by the Jeff Bezos-owned rocket company Blue Origin, which added 210,000 square feet to its footprint, and reusable rocket startup Stoke Space, which leased 157,000 square feet of space.
Areas like Redmond, Bothell and Seattle’s Sodo neighborhood have been limited in how much industrial space they can add, with strong demand from other industries like tech, Krivenko said. That’s led to more willingness to break up spaces and design with flexible floor plans to house multiple tenants. With relatively low industrial vacancies (5.5%), swings in leasing have been muted.
“The new startup space companies are utilizing older, opportunistic spaces in proximity to the founders with a heavy emphasis on remote work wherever possible,” while larger companies are building or leasing near available technical labor, Kristina Hudson, CEO of economic development group OneRedmond, told the Business Journal in an email.
That’s as companies such as Amazon’s Project Kuiper transition from a heavy research-and-development focus toward large-scale commercial production.
The demand for skilled aerospace labor helped attract Kuiper, which is headquartered in downtown Redmond, and has had knock-on effects as space-tech companies source parts and materials from Washington vendors, Hudson said.
But the tight market for manufacturing space led Kuiper go to nearby Kirkland when it came time to build out its satellite production facility.
Elon Musk’s SpaceX is so far the clear leader in satellite production, having built around four out of every 10 satellites currently on orbit to support its Starlink network. CNBC last week estimated SpaceX’s valuation had climbed to $150 billion with its most recent capital raise, and tech industry publication The Information said the company told some investors it expects revenue to double to around $8 billion this year.
The space sector directly employs more than 13,000 people in Washington, a study found last year. More than half of those workers were based in the Kent Valley and around a quarter were in Redmond, though the report did not include workforce estimates for companies like AWS, Microsoft and BlackSky, which offer satellite services and data analytics.
The industry’s growth led Redmond to declare itself a “space district” in March.
“Our current businesses are maximizing space in their existing facilities or they are expanding their footprint adjacent to or near their current location,” Hudson said, adding that some local companies have taken advantage of hybrid and remote work options to add employees without expanding their office space.
Meanwhile, consolidation at software and tech companies like Microsoft could offer more square footage for the growing sector, she said.
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