a retail investment opportunity in kirkland, washington · is currently 200,000 square feet and the...

A Retail Investment Opportunity in Kirkland, Washington

OFFERING MEMORANDUM | 12856 NE 85th Street, Kirkland, WA

Table of Contents

Exclusively offered byThe information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Kidder Mathews and should not be made available to any other person or entity without the written consent of Kidder Mathews.

This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Kidder Mathews has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, current or past tax payments, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Kidder Mathews has not verified, and will not verify, any of the information contained herein, nor has Kidder Mathews conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

This information has been secured from sources we believe to be reliable. We make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Recipient of this report must verify the information and bears all risk for any inaccuracies.

Damian Sevilla [email protected]

kiddermathews.com

Investment HighlightsInvestment SummaryKirkland Location Currently

Undergoing Re-Branding

Location OverviewKirklandEmploymentMajor Kirkland Employers MapPuget Sound MapLocation AerialDemographics

Tenant Profile

01

02

03

Jason Miller [email protected]

PEP BOYS | OFFERING MEMORANDUM 3

Investment Highlights

01

Investment Summary

Kirkland Location Currently Undergoing Re-Branding

PEP BOYS | OFFERING MEMORANDUM | KIDDER MATHEWS 4


INVESTMENT SUMMARY

Address: 12856 NE 85th St, Kirkland, WA 98033

10 year lease (started 12/01/2017)

First year NOI: $164,672.04

3% annual increases

Absolute NNN lease (no Landlord responsibility)

One 5 year option with minimum rent increase of 3% and maximum increase of 10%

Corporate guarantee

Located in Kirkland, WA (submarket of Seattle)

Average household income within 1 mile: $129,586

Located on major arterial of NE 85th Street

High barriers to entry

Recent Phase 2 study

Traffic Count: 32,317+ vehicles per day

Lot Size: 21,412 SF

$3,660,000PRICE

4.5%CAP RATE


Property History and Rebranding

This property has a strong history of being an automotive services business, having been leased to Goodyear Tires for 30 years starting in 1987

In 1997 Goodyear Tires sublet the property to one of their local certified dealers, Elliott Bay Tires

In December of 2017, Pep Boys acquired all 10 Washington locations of Elliott Bay Tires

Rebranding completed in 2018

This deal is one of the latest in a series of high-profile acquisitions Icahn Automotive Group LLC (Pep Boys) has carried out, with plans to continue acquisitions and expanding its automotive business from coast to coast


KIRKLAND LOCATION RECENT REBRANDING


Location Overview

02

Kirkland

Employment

Major Kirkland Employers Map

Puget Sound Map

Demographics

REPRESENTATIVE PHOTO


Location OverviewKIRKLAND

Kirkland is located on the eastern shores of Lake Washington directly across from Seattle.

It’s one of the Eastside’s premier cities and was recently ranked #5 Best Places to Live

in the Nation by Money Magazine. Kirkland itself supports over 31,000 employees from

Fortune 100 companies to local businesses.

Kirkland is the only Eastside city with a downtown waterfront, which is lined with public

parks, beaches, popular restaurants, bars, hotels, boutiques and art galleries. The city

features unique neighborhoods and prides itself on its strong sense of community, and

places a strong emphasis on maintaining a highly desirable quality of life for its residents.

Public and private capital projects continue to improve the city, including new park and

infrastructure improvements, the Kirkland Urban redevelopment, and the Village at Totem

Lake development.

EMPLOYMENT

Redmond has an employment base of more than 79,000 and over 5,600 active business

licenses. The city is home to world class companies and is a major Puget Sound growth

center. Redmond is well known as a center of technology with over 59% of their jobs in the

industry. A number of nationally known high-tech and biomedical companies are located in

Redmond including AT&T, Microsoft, Nintendo, and Physio-Control.

The city’s employers attract an educated workforce to other nationally known high-tech and

biomedical companies as well, including Concur, Data I/O Corporation, General Dynamics

Airborne Electronic Systems, Medtronics Emergency Response Systems, BrickArms, and

most recently, SpaceX. Redmond is known for its pro-business environment. The city offers

a business friendly tax structure with no B&O tax on income, a streamlined permitting

system, newly improved infrastructure, and other city amenities.

Microsoft

Microsoft is the world’s largest software company with their

global headquarters located in Redmond. Microsoft currently

employs over 121,500 globally with 45,535 employees in the Puget Sound Region, making

it the second largest employer in the state behind Boeing. Over 34,000 employees are

located at their Redmond headquarters with the remaining employees centered in Bellevue

and South Lake Union. Economists report that the multiplier for each Microsoft job is an

additional 3.4 new jobs in the area. The average Microsoft salary is $225,000 including

options and benefits, which is one of the highest in the tech industry.

Microsoft’s Redmond campus has over 10 million square feet of existing office space and

includes open space, ball fields, trails, restaurants, and a health club. Microsoft recently

completed a major expansion at their campus that added 3.1 million square feet of new

office space, making it one of the largest corporate campuses in the world. Future plans call

for an additional 1.1 million square feet that is currently in the planning stages.

Microsoft in Bellevue

The software giant employs over 5,000 people in downtown Bellevue with 2.2 million

square feet of office space at The Bravern, Lincoln Square, and City Center Plaza. These

offices include their Bing! division and their North American sales and marketing division.

Microsoft also leases 600,000 square feet in the Advanta Class A office building along I-90

in Bellevue’s Factoria neighborhood, which houses an additional 2,500 employees.


The Microsoft Effect

Microsoft has spawned, through direct investment/development or from former Microsoft

employees, over 250 companies in the Puget Sound Region including companies such as

Expedia, Vulcan, Real Networks, and Oynx Software.

Microsoft has created over 12,000 millionaires that live in the greater Seattle area.

Historically, the software giant hires approximately 3,000 employees each year, not

including independent contractors. Over the last five years, the company has had an

average of 5% employment growth annually.

Google

Google currently employs 1,900 people between its Seattle, Kirkland,

and Bothell offices, making the Puget Sound the company’s third

largest engineering campus in the U.S. Google’s Kirkland and Seattle

workforce is comprised mostly of engineers who make significant contributions to Android,

AdSense, AdWords, Analytics, Cloud, Chrome and Chrome OS, Gmail, the Google App.,

Search, YouTube, and much more.

Google’s presence in the Puget Sound region began in 2004, when it leased 30,000 square

feet of space from Getty Images in Seattle’s Fremont neighborhood. Their Fremont location

is currently 200,000 square feet and the company recently announced plans to expand to

607,000 square feet in Seattle by 2019.

In 2009, Google opened its Kirkland campus in the city’s Houghton neighborhood. The

three-building, LEED-certified complex consisted of 280,000 square feet of office space, an

employee gym, locker rooms, massage room, massage chairs, cafeteria, rock-climbing wall,

doctor’s office, football tables, and pool tables.

In 2011, the online search giant opened another office in Bothell at the Schnitzer Tech

Campus with a total of 58,000 square feet, which added 840 Google jobs to the region.

Google Kirkland Campus Expansion

Google’s 180,000 square foot expansion was recently completed at their Kirkland

campus which roughly doubled the campus size to 375,000 square feet and will be able

to accommodate an additional 1,000 Googlers. The expansion features curved walls and

rooftop green space, and an expansive lawn. The expansion achieved LEED certification

EASTSIDE’S LARGEST EMPLOYERSLocation Overview


and at completion, Building C’s tenant improvements were one of only eight certified LEED

Platinum buildings in the State of Washington.

Google included several features available to the public within their expansion in order to

invest in the community. The outdoor space between their buildings in now a public park

with basketball, sand volleyball, and seating areas. The Interurban Trail connects to the park

and runs through the Google campus allowing easy access for area residents and visitors.

EvergreenHealth Medical Center

EvergreenHealth Medical Center, which serves nearly 850,000 residents, is situated on a

35-acre campus, the hospital employs approximately 3,000 workers with 950 physicians

representing 70 clinical specialties. Evergreen, which is licensed for 318 beds, is a fully

accredited hospital with services and programs that are among the most comprehensive

in the region. The EvergreenHealth Medical Center also supports a multi-specialty group

of 200 physicians at 12 primary care clinics, including two urgent care clinics. U.S. News &

World Report recently named EvergreenHealth one of the best hospitals in Washington in

the 2016-17 edition of its “Best Regional Hospitals” rankings.

Bellevue Employment

Directly south of Redmond is the city of Bellevue, a major regional job center employing

more than 140,000 people, and a leader in commerce, international trade and technology

innovation. The city is also establishing itself as a global player with large companies

having major world, national or regional offices, including Microsoft, T-Mobile, Eddie Bauer,

Verizon Wireless, InfoSpace, Symmetra Financial, PACCAR, Yahoo!, Overlake Hospital,

Group Health, Northwest Labs, Puget Sound Energy, The Walt Disney Company, Drugstore.

com, The Boeing Company, and smartphone manufacturer HTC Corporation. Other large

employers in Bellevue include Bellevue College, City of Bellevue, Safeway, QFC, Nordstrom,

Savers (the Value Village operator), and the Bellevue School District, one of the top school

districts in the nation.

Although services and retail are the largest employment sectors, the high tech sector

continues to expand and drive growth. Outside of the usual suspects, many tech

companies based in Bellevue are video game developers, including: 5th Cell, which created

Scribblenauts and Drawn to Life; Bungie, most famous for the Halo franchise; ArenaNet,

a PC game developer known for Guild Wars; Sucker Punch Productions, a Sony game

developer; and Valve, a computer software/video game developer responsible for several

best-selling games such as the Half-Life series and Team Fortress 2.

Bellevue is home to numerous companies with more than 1,000 employees including

more than 150 company headquarters. Microsoft is the largest employer with over 7,500

employees in Bellevue. T-Mobile is second with 3,200, and Boeing is the third largest

employer with nearly 3,000 employees. In all, there are 10 major companies in Bellevue with

over 1,000 employees.

Location Overview


Kirkland Employment

Kirkland employs over 37,000 workers in several prosperous business districts, with

companies such as Bluetooth, Clearwire, Google, IBM, Microsoft, video game developer

Monolith Productions, UIEvolution, and Wave Division Holdings, the parent company of

Wave Broadband. Retail giant Costco Wholesale was founded in Kirkland and their private

label brand “Kirkland Signature” is named after the city it was headquartered in for so many

years. Costco moved its headquarters to Issaquah in 1997, just 15 minutes south of its

prior location. Other top employers in Kirkland include Google, PACCAR’s Kenworth Truck

Company, Astronics, WB Games, Wave Broadband, Inrix, and Tableau.

Bothell Employment

Bothell has attracted over 200 companies in the past decade and commercial expansion

continues. The biotech, life science, computers, engineering, and telecommunications

industries have created over 20,000 jobs since the late 1990’s and it continues to grow in

the Canyon Park and North Creek business districts.

Biotechnology is the biggest industry in Bothell, with companies such as Alder

Biopharmaceuticals, which develops antibody therapeutics, Blue Heron Biotechnology,

which has the patented GeneMaker® Technology for synthesizing any DNA sequences,

CMC Icos, which developed the drug Cialis, Elitech, Iverson Genetic Diagnostics, Marina

Biotech, OncoGenex Pharmaceuticals, which is focused on cancer treatment, and

Seattle Genetics.

In all, 20% of Washington’s life sciences companies are located in Bothell. The North Creek

Business Park is the area’s high-tech and biotech campus at over 2.8 million square feet.

Canyon Park is a 300-plus-acre business park with approximately 2.25 million square feet

of industrial and flex space.

Boeing

Everett’s Boeing factory, the largest building in the world by

volume at nearly 100 acres and 472 million cubic feet,

produces Boeing’s 747s, 767s, 777s, the new 787

Dreamliner, and now the refueling tankers for the Air Force.

The tanker deal which Boeing signed in 2011, is worth an estimated $40 billion and is

expected to support 50,000 U.S jobs, of which 11,000 are in Washington State. Boeing

has been delivering a record number of planes in the past several years with a record 762

airplanes delivered in 2015. In 2016 Boeing delivered 748 airplanes, its second highest

record for the 100-year old company. Of those deliveries, 490 were 737 airplanes. Boeing

currently has over 5,700 firm orders for commercial airliners, which is a seven year backlog

of inventory.

Boeing: New 777X

A newly signed 8-year contract will ensure that the Boeing 777X new composite wing will

be fabricated and assembled out of Boeing’s Everett location, which recently completed a

one million square foot expansion to accommodate the wing production. Inclusive of new

manufacturing equipment, total construction cost of the new facility was $1 billion.

The Boeing 777X will be the largest and most efficient twin-engine jet in the world. The 114-

foot 777X composite wing will be made with the most advanced carbon fiber technology in

the world, and will be exclusively produced in the Puget Sound.

Location Overview


NE 85th St

Location Overview

Seattle

KirklandKirkland

Bellevue

Renton

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Redmond

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MAJOR KIRKLAND EMPLOYERS MAP PUGET SOUND MAP


Location Overview

NE 85th St

NE 80th St

126th Ave N

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Pásala bien.

LOCATION AERIAL


Location Overview

1 MILE 3 MILES 5 MILES

2017 4,761 45,620 104,693

2022 5,108 49,254 112,951

HOUSEHOLDS


2017 $129,586 $134,344 $136,989

2022 $162,561 $174,771 $175,845

AVERAGE HOUSEHOLD INCOME


2017 11,887 104,741 248,817

2022 12,844 114,106 270,722

POPULATION

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5 MILES

1 MILE

Kirkland

Bellevue

LAKE WASHINGTON

DEMOGRAPHICS

Redmond

3 MILES


Tenant Profile

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REPRESENTATIVE PHOTO


Tenant Profile

Type Automotive Retailers

Pep Boys

Pep Boys is owned by Icahn Automotive Group LLC,

which was formed by its parent, Icahn Enterprises

L.P., to invest in and operate businesses involved in

aftermarket parts distribution and service

Founded in 1921 in Philadelphia, Pennsylvania, Pep

Boys has grown to over 900 stores in 35 states

Source: pepboys.com

Contact Information

Jason Miller [email protected]

Damian Sevilla [email protected] 206.296.9648

Kidder Mathews 601 Union Street, Suite 4720 Seattle, WA 98101

kiddermathews.com

a retail investment opportunity in kirkland, washington · is currently 200,000 square feet and the...

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