Kitsap industrial survey: consultants recommend rapid buildout to meet Navy demand

A consultant who prepared an industrial lands survey told the Port Orchard Economic Development and Tourism Committee on March 10 that Kitsap County must accelerate creation of new industrial buildings and supporting infrastructure to capture a wave of federal investment and meet U.S. Navy demand.

“Create new industrial facilities and supporting that infrastructure as quickly as possible” was the central recommendation, Joe Morrison, executive with Kitsap EDA and the report presenter, said, summarizing the study his team commissioned and reviewed with city staff.

The report, prepared after a competitive selection of consultant CAI, notes that Kitsap faces a once-in-a-generation influx of federal investment — Morrison cited an estimate of more than $10,000,000,000 for a county of about 290,000 people — and that Navy needs for administrative, laydown, industrial and warehouse space have repeatedly returned to the market in recent solicitations.

Morrison said the Navy sought roughly 280,000 square feet of industrial and warehouse space in a February 2024 solicitation and has since placed a follow-up solicitation that seeks more than 800,000 square feet in total, while the industrial/warehouse component again runs near 280,000 square feet. The study team recommended planning for at least 350,000 square feet of new industrial buildings to account for both Navy demand and existing market shortfalls.

The report flagged several market constraints: average industrial buildings in the Kitsap market are more than 35 years old; there have been virtually no new industrial building deliveries in the county since before 2020; vacancy rates have been unusually low — below 5% since 2015 and below 2% since late 2016 — and lease rates have risen from roughly $7 to over $11 per square foot in the period described in the study.

Morrison said industrial users value reliable power and wastewater capacity, and that many potential industrial parcels in Kitsap lack that infrastructure. The survey identified that more than 90% of land zoned for industrial uses in the county is concentrated along the Highway 3 corridor and in the Puget Sound Industrial Center — Bremerton (PSIC-Bremerton), and recommended prioritizing infrastructure extensions in gap areas there.

The report also proposed targeted strategies used by other communities: subdividing and fee-simple sale of catalytic sites, a site-readiness initiative, reduced permitting timelines where legal, and investigation of infrastructure funding options such as tax-increment financing, local infrastructure financing tools, transportation benefit districts and local improvement districts. Morrison cautioned that incentives are difficult to create under Washington law but said permitting predictability and infrastructure funding are practical levers.

Committee members asked whether land would be set aside primarily for Navy use. Morrison said the study used a “ground truth” approach that excluded long-term Navy-occupied parcels that are not truly market-available, and that the Navy’s current requests appear to be for temporary, roughly 10-year needs rather than permanent acquisition in many cases.

Gary Anderson, a private-sector participant, told the committee that prospective developers typically prefer to own land outright rather than lease, and that large leased industrial parks — such as parts of PSIC-Bremerton that are port-owned and leased — appeal to only some developers. He and others on the call urged the city to stress post-Navy demand when marketing sites so developers would build with longer-term uses in mind.

The committee briefly discussed where new industrial zoning or annexation could accommodate growth; Nick Bond, Port Orchard community development director, said the report identified the Bethel South corridor (south of the city boundary and Fred Meyer) as a potential area for re-designation to light industrial/warehouse uses and that annexation plus comprehensive-plan amendments might be considered in 2026.

Morrison said the full report (posted for public comment in February) is effectively 99% complete and available on the project website, and the consultant’s team recommended follow-on steps to pursue site-readiness and address infrastructure gaps.

Committee members and private-sector participants generally framed the findings as an opportunity tied to Navy solicitations but noted that delivery of buildings, upgrades to utilities and site assembly would be required before the region could capture those contracts. No formal motions or votes were taken during the committee discussion.