Port of Olympia commission OKs ground lease for Panattoni warehouse in Tumwater
A process that began almost five years ago between the Port of Olympia and warehouse developer Panattoni reached a milestone on Monday when the commission approved its first ground lease with the business.
Panattoni is now set to move forward with the construction of the South Sound Commerce Center, a 477,000-square-foot warehouse that will be built on Center Street Southwest in the port’s New Market Industrial Campus. The campus is in Tumwater between Interstate 5 and the Olympia Regional Airport.
Although the campus is port-owned property, the land-use process for the warehouse was handled by the city of Tumwater, including decisions reached under the state Environmental Policy Act, or SEPA.
The ground lease covers about 30 acres and could last up to 75 years. It will initially pay the port $51,000 a month or around $600,000 a year.
How this deal developed
Almost five years ago, the port and Panattoni struck an option-to-lease agreement for up to 200 acres of land in the New Market Industrial Campus.
For most of that property, Panattoni can’t move forward until the port and Tumwater come to terms on a habitat conservation plan for endangered species in the area, including the Mazama pocket gopher. However, the current ground lease is not subject to the HCP because the parcel has been certified free of the gopher, according to port information.
Still, there has been local opposition to the warehouse, and about eight residents spoke out at Monday’s Port meeting, raising concerns about trees, groundwater and whether the lease itself should be subject to SEPA review.
After hearing those concerns, port commissioners then asked staff to address some of those questions.
Although trees will be removed to build the warehouse, Panattoni is required to plant about 1,000 trees related to the development, said Shawn Gilbertson, the port’s director of environmental and planning programs.
“It’s important to note that all the stormwater that accumulates from impervious areas will go through enhanced treatment,” he said. “So it will go through one oil-water separation to remove any hydrocarbons from vehicles parked around and whatnot, and then it’ll go through a filtration system to remove all other pollutants. And it’s a very efficient filtration system that they use these days, and that all occurs before it is infiltrated back into (groundwater).
“I think another important note here is that there will be extensive groundwater monitoring as a part of this and on an ongoing basis.”
The port’s attorney explained that entering into a lease isn’t subject to SEPA.
“There’s an exemption for entry into leases,” he said. “It’s the activity that occurs within the leasehold parcel that triggers SEPA review. That’s what was reviewed here by the city of Tumwater and they were the appropriate agency to do that.”
How the Port voted
Before Monday’s meeting started, the ground lease was going to be approved via the consent calendar, a portion of the agenda that is typically approved without discussion. The ground lease was on the consent calendar because it had been discussed at length during the port commission’s April 14 meeting.
The commission then agreed to move the ground lease to the regular agenda, with four commissioners later voting in favor of it. Commissioners Bob Iyall, Jasmine Vasavada, Maggie Sanders and Sarah Montano (previously Tonge) voted for the ground lease while Commissioner Amy Evans Harding abstained from voting.
Harding, a commercial real estate broker, abstained because of past conflict of interest allegations between her and Panattoni.
“I don’t vote on Panattoni even though it (the conflict of interest allegation) was investigated and confirmed that I have no conflict,” she said.
Commissioner Vasavada, the president of the commission, took issue with some of the public comment that claimed the port was acting illegally.
“I am hearing from members of the public that there’s a real, substantive conflict perceived about whether it makes sense to take a parcel that currently is forested and adjacent to an aquifer and develop that parcel,” she said. “I’m hearing that concern loud and clear, but I’m also hearing it cloaked in allegations of illegal activity that I find are distracting from being able to even have any merit-based conversation about the tradeoffs that are involved in governance decisions.”
Now that the ground lease has been approved, Panattoni is expected to begin work on the site soon. Port operations director Warren Hendrickson said a site development permit could be picked up as early as next month.
This story was originally published April 29, 2025 at 5:00 AM.
