Shield AI Leases Panattoni's 405,680-SF Des Moines, Washington Facility for X-BAT Production

Panattoni Development Company announced that Shield AI has selected a Panattoni-developed facility at Des Moines Creek Business Park West as the production home for X-BAT, the company's AI-piloted vertical takeoff and landing aircraft. The announcement was made Oct. 19, 2026.

Shield AI Lease at Des Moines Creek Business Park West

The facility is a 405,680-square-foot industrial building at 1800 S. 216th St. in Des Moines, Washington. The building is under construction and is expected to open in spring 2027. With Shield AI's commitment, the single-building property is now fully leased. Newmark arranged the lease-up.

The site is also referred to as Shield AI's planned X-Forge 3 manufacturing location. It is positioned approximately 15 minutes south of Seattle-Tacoma International Airport, providing access to the region's aerospace, defense, logistics and engineering infrastructure.

Panattoni's Development Structure

Panattoni developed the facility on land ground-leased from the Port of Seattle. Perlo Construction began work during summer 2025 on what was initially a speculative industrial project. The Shield AI lease converts the project into a fully occupied, single-tenant manufacturing facility ahead of delivery.

Shield AI's use is more specialized than conventional warehouse or logistics occupancy, requiring a large production platform for defense-oriented autonomous aircraft.

Seattle-Area Industrial Market Context

The lease comes as new supply has softened Seattle-area industrial fundamentals. Regional vacancy reached 10.4% in the second quarter of 2026, the highest level in the reported series, after roughly 3.2 million to 3.3 million square feet delivered during the first half of the year. About 83% of the vacancy increase was attributed to newly delivered speculative projects rather than broad tenant contraction.

Average asking rents were essentially flat at $12.73 per square foot NNN, while increased availability and landlord competition contributed to greater use of concessions. Only about 1.2 million square feet remained under construction at the end of the second quarter, equal to approximately 0.4% of regional inventory.

In that environment, securing a full-building tenant during construction reduces lease-up risk for the developer, while an expanding manufacturer can secure a large, modern facility amid current market flexibility.

Potential Further Shield AI Expansion in Puget Sound

The planned operation has been described as an AI-powered military-drone plant, and Shield AI is considering as much as 1 million additional square feet across the Puget Sound region as production scales. Such a requirement would extend the company's regional manufacturing footprint beyond the Des Moines facility.

Advanced manufacturing and defense users can absorb large blocks of industrial space for purposes less directly tied to conventional distribution activity, a contrast with logistics demand, which has faced elevated vacancy and substantial speculative deliveries.

Sources

• Kidder Mathews: Panattoni Secures Shield AI as Tenant at Des Moines Creek Business Park West
• Connect CRE: Panattoni Secures Shield AI as Tenant at Des Moines Creek Business Park West