INVESTMENT HIGHLIGHTS
PRO-FORMA 7.45% CAP RATE - FAIR MARKET RENT IN LEASE OPTION
The tenant is currently paying just $10.74/SF + NNN with market rents achievable in the $19-$21/SF + NNN range. The tenant’s option in 3 years is at Fair Market Rent, allowing an investor near-term upside above a 7% cap rate by simply increasing rent to market ($20/SF + NNN achieves a 7.45% cap rate).
TENANT IN PLACE WITH STRONG HISTORICAL OCCUPANCY
The Property is currently leased to Foss Audio, a car stereo, window tint, and remote start installation company, with six locations throughout the northwest of Washington State, and a 41-year operating history. Foss Audio has been at this location for 10+ years.
PRIME LOCATION
The Property is only two blocks from Westfield Southcenter Mall, the # 1 performing mall in Washington State and #6 nationally (Placer.ai), which boasts in excess of 14.9 million visitors annually. It is nearby numerous national retailers including Costco, Target, The Home Depot, Lowes, REI, and Total Wine & More. The Property is located in the thriving Tukwila Urban Center which hosts a myriad of retail, office, and industrial uses, providing synergies for tenants of all types.
HIGH-TRAFFIC, HIGH-VISIBILITY LOCATION
The Property is located directly on Strander Blvd (18,600+ VPD), with dedicated left turn access into the Property, and is nearby I-5 (252,800+ VPD) and I-405 (143,000+ VPD), providing excellent visibility and easy access.
FLEXIBLE ZONING ALLOWING NUMEROUS USES
The Property is zoned TUC-TOD (Tukwila Urban Center – Transit Oriented Development) which permits numerous commercial uses including retail, office, hospitality, multifamily, senior housing, government, education, and transportation uses. If the tenant were to leave at the end of its lease term and option term, a new owner would be able to backfill the space with a tenant from nearly any business sector or redevelop the property into a higher and better use opportunity.
HIGH BARRIER-TO-ENTRY MARKET WITH STRONG RENT GROWTH (9.5%)
Tukwila/Renton retail rents have increased 9.5% in the past three years and the vacancy rate is only 2.6%, per CoStar. With no new retail development under construction and no new supply delivered in the past 12 months, the development lull creates an incredibly high barrier-to-entry as demand for space remains high.
DENSE DEMOGRAPHICS / HIGH-GROWTH POPULATION SUBMARKET
The Property is located in the dense and rapidly growing Tukwila, WA submarket and benefits from a population of over 287,000 residents within a 5-mile radius. Since 2010 the population has grown over 11% within a 5-mile radius and nearly 32% within a 1-mile radius.
NNN LEASE / MINIMAL LANDLORD RESPONSIBILITIES
The Tenant operates on a NNN lease structure with very limited landlord management or repair responsibilities (landlord responsible for roof & structure).
CORPORATE GUARANTEE
The lease features a Corporate Guarantee from Foss Audio, backed by all 6 locations.
LOCATED NEAR SEATTLE, BELLEVUE, AND SEATTLE-TACOMA INTERNATIONAL AIRPORT (SEA)
The Property is located just a 20-minute drive to both downtown Seattle and downtown Bellevue. It is located roughly a 7-minute drive from Seattle-Tacoma International Airport, the largest international airport in Washington State with 19 million visitors per year and the 18th most visited in the U.S. SEA has a regional economic impact of more than $22.5 billion in business revenue and generates more than 151,400 jobs (87,300 direct jobs), per the Port of Seattle.
INCOME TAX-FREE STATE
Washington State is an Income Tax-Free State.
Listing Agents:
CLAYTON J. BROWN
RUTHANNE LOAR
206.493.2622
ruthanne.loar@marcusmillichap.com
