Overview

The Offering

Kidder Mathews is pleased to present, South Hill Village, a 141,707-square-foot retail center located 30 miles south of Seattle in Puyallup, Washington. This 100% occupied, four-tenant retail center is at a "main and main" location within the area's dominant retail trade corridor serving over 300,000 people. It is less than a block from major freeway with over 95,000 passing cars each day. The asset is shadow-anchored by Walmart and Home Depot and is directly across the street from a 1.1 million square foot regional mall that includes a Target, Dick's Sports, Macy's, JCP, DSW, and Regal Entertainment. South Hill Village is well-constructed and in great condition. This investment offers stable and passive income with minimal landlord responsibilities.

Investment Summary

Price $25,850,000
Price / SF $182
NOI Year 1 $1,706,466
Cap Rate 6.60%
Occupancy 100%
Total Rentable Area 141,707 SF
Total Land Area ±11.04 AC

100% Leased, Passive Investment

  • Ease of management with four national tenants on NNN leases. South Hill Village is shadow-anchored by two of the biggest retailers in the United States, Walmart (#1) and Home Depot (#4).
  • Tenants pay their share of common area expenditures, making South Hill Village perfect for passive investors. There are few landlord responsibilities with virtually all of the operating costs passed through to the tenants.
  • Turn key investment with professional management in place and no deferred maintenance.
  • Landlord is responsible for roof and structure. A new roof installed in 2016/2017 and includes an assignable roof warranty.
  • Scheduled rent increases within the next two years provide near-term rent growth.

Investment Highlights

Strong Real Estate Fundamentals

  • National tenants with a top tier line up of surrounding tenants including shadow anchors WalMart & Home Depot, and neighboring tenants At Home, Target, McDonalds, 24 Hour Fitness, Starbucks, Ross, Best Buy, Bed Bath Beyond, and many others.
  • Sought after location and proven demand in the trade area with recent new leases signed at neighboring properties including At Home, 24 Hour Fitness, Hobby Lobby, Grocery Outlet, and Harbor Freight and Tools.
  • High visibility, high traffic, freeway accessible location - South Hill Village is located on Meridian Avenue, the primary thoroughfare in the trade area, with traffic counts exceeding 45,000 cars per day. The property is only a 1/2 block from SR 512 (over 95,000 cars per day) and easily accessible via 31st Avenue SW.
  • At a list price of only $182/SF, the property will trade well below land-inclusive replacement cost estimated to be over $300/SF.
  • The property offers excellent tenant signage with three prominent pylon signs and high curb appeal. The site provides abundant parking and easy access with five significant curb cut access points.

Dominant Regional Retail Trade Area

  • The property is ideally located directly across the street from the 1.1 million SF regional retail complex South Hill Mall and approximately 30 miles south of Seattle.
  • Just 30 miles south of Seattle, the Puyallup South Hill retail trade serves a trade area of over 300,000 people with average household incomes of over $84,000 and/or management fees.
  • Puyallup is the second largest city in Pierce County and is the 6th largest retail market in the state of Washington.
  • The military is Pierce County’s largest employer and a major economic driver for Pierce County. A 2017 JBLM regional economic impact study valued the economic impact of the military at between $8.3 billion to $9.2 billion and it could range as high as $11.4 billion.

Captive & Growing Market

  • Puyallup’s South Hill submarket is one of the fastest growing areas of Pierce County. Over the past 15 years, the population in the three-mile area of South Hill Village has grown 60%.
  • Forecasters expect Puyallup’s population to continue growing with a 31% increase over the next 10 years.
  • Major nearby employers include Boeing, MultiCare Medical Center, and Joint Base Lewis/McChord, with 55,381 military and civilian employees.

Site Plan

Location

Puyallup Market Overview

The property is located in Puyallup, WA. Puyallup is located in Pierce County approximately 10 miles southeast of Tacoma and 30 miles south of Seattle. As the Seattle boom continues, Puyallup is becoming an increasingly popular commuter city due to its low cost of living, open spaces, and easy access to mass transit. Puyallup is currently the top boarding location for the “Sounder” train which provides rail service to Tacoma, Seattle and Everett (45 minute ride to Seattle). The city’s current population of 40,500 residents has been steadily increasing over the past several decades and is expected to grow to 50,000 by 2030. The city is also known for the Washington State fair which it hosts every fall (the 7th largest fair in the US), is home to South Hill Mall, the 5th largest shopping mall in Washington. Puyallup has an emerging medical community anchored by the $450 million renovation and expansion of the MultiCare Good Samaritan Hospital.

South Hill Market Overview

Puyallup’s South Hill is one of the fastest growing areas of Pierce County and the region. South Hill has seen a dramatic increase in retail, housing and business over the past ten years, making it a magnet for young families. Over the past 10 years, land use for residential purposes has increased by close to 800 acres giving the booming area more room to grow. South Hill is served by the Puyallup School District. The Puyallup School District is the 9th largest school district in Washington State. It serves approximately 120,000 residents.

Retail Market Statistics

Based on a Costar survey of 348 retail properties in the Puyallup submarket, the Puyallup retail market consists of 4.3 million SF of space. South Hill is one of the healthiest retail submarkets in Washington. As of Q1 2019, the vacancy rate was 1.3%.

INVENTORY SF 4.3M
UNDER CONSTRUCTION SF 10.1K
12 MONTH NET ABSORBTION SF 17.1K
VACANCY RATE 1.30%
MARKET RENT SF $19.50
MARKET SALE PRICE / SF $231

Due Diligence

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