Cynergy Centre | 100% Occupied NNN Medical Office
3.75% Seller Financing Available
Marketing description
The Brown Group of Marcus & Millichap has been selected to exclusively market for sale Cynergy Centre, a stabilized, 100% occupied Class A NNN medical building in the high-growth Tri-Cities market. The property is fully leased to a diverse mix of healthcare, financial services, personal care, and retail tenants, with medical uses comprising 61% of the GLA across physical medicine and rehabilitation, women's health, dermatology, and hospice care. The Seller is offering attractive seller financing at 3.75% interest, resulting in a 9.05% cash-on-cash return in Year 1 of new ownership. Specialized medical buildouts reinforce long-term tenant retention, and nine of eleven tenants feature 2.5%-3% annual rent escalations through initial terms and options. All tenants operate on NNN leases with full expense reimbursement, including management fees. The property has undergone extensive renovations since 2020, including a new roof in February 2024 with a 20-year transferable warranty, full suite upgrades, HVAC replacements and repairs, exterior paint, and parking lot improvements. Situated at the roundabout of W 27th Ave and S Union St (24,000+ VPD), just off Hwy 395 (22,000+ VPD), the property offers excellent visibility and access from major arterials serving the greater Tri-Cities. The Kennewick-Richland office market is supply-constrained with a 2.1% vacancy rate for Class A product and a 3.1% average annual rent growth over five years. The broader trade area supports over 128,000 residents within five miles, average household incomes exceeding $97,000, and over 27% population growth since 2010. Washington's lack of state income tax further enhances after-tax returns.
Investment highlights
- FULLY OCCUPIED NNN MEDICAL BUILDING WITH DIVERSE TENANT MIX - The property is 100% leased by a diverse mix of tenants including medical, financial services, real estate, personal services, graphic design, and restaurant, offering a stable and diversified income stream.
- ATTRACTIVE SELLER FINANCING AVAILABLE | 9.05% CASH-ON-CASH RETURN - The Seller is willing to provide seller financing at a rate aggressively more favorable than current conventional rates. The seller financing offered features a 3.75% interest rate, 37.3% loan-to-value, a 3-year term, and interest-only payments throughout the term. This financing option provides a cash-on-cash return of 9.05% in Year 1.
- 61% MEDICAL OCCUPANCY WITH SPECIALIZED BUILDOUTS - The property is 61% occupied by medical tenants of different specialties, including physical medicine and rehabilitation, women's health, dermatology, and hospice care, providing a strong tenant base for the continued success of the property. Medical suites typically require expensive buildouts, increasing the likelihood for tenants to remain in the building for the long term.
- 100% NNN LEASE STRUCTURE - All tenants operate under NNN leases with reimbursement of nearly all expenses, including management fees, providing a hedge against rising operating expenses.
- ANNUAL RENT INCREASES FOR MAJORITY OF TENANTS - Nine of the eleven tenants' leases feature annual rent increases ranging from 2.5% - 3% through both initial lease terms and option periods, delivering consistent, contractual growth and a hedge against inflation.
- NEW ROOF INSTALLED IN 2024 - The property features a brand-new roof installed in 2024, featuring a new 20-year transferable roof warranty.
- FULL PROPERTY RENOVATION - Since 2020 the property has undergone extensive renovations including new roof, renovation of all interior suites, HVAC unit replacements/repairs, exterior paint, parking lot seal/stripe, and atrium window tinting (to reduce tenant utility costs).
- CLASS A CONSTRUCTION WITH METICULOUS MAINTENANCE - Built in 2006 with high-end finishes, the property has been meticulously maintained and consistently upgraded, reinforcing its positioning as a premier medical and office building.
- STRATEGIC LOCATION WITH EXCELLENT VISIBILITY & ACCESS - The Property benefits from its location on the corner of W 27th Ave and S Union St. (24,000+ VPD) and being just off Hwy 395 (22,000+ VPD). All three roadways are main arterials through Kennewick, providing easy access for employees and customers coming from anywhere within Kennewick. The Property also benefits from being surrounded by residential neighborhoods, with nearly 128,000 residents within a 5-mile radius.
- HIGH BARRIER-TO-ENTRY MARKET WITH CONSTRAINED SUPPLY - The Kennewick-Richland office market vacancy rate for Class A office is currently only 2.1% and the overall five-year average office vacancy rate for Kennewick-Richland is only 5.4% (approximately 1/3 the current national average of ~15.9%, per Marcus & Millichap), per CoStar. Additionally, the market has averaged 3.1% annual rent growth over the past five years, per CoStar. With less than 5.5% office footprint growth over the past decade, the constrained supply creates an incredibly high barrier-to-entry and demand for quality space remains elevated.
- HIGH-GROWTH MARKET WITH AFFLUENT DEMOGRAPHICS - The Tri-Cities MSA has experienced approximately 25% population growth over the past decade. Within a 5-mile radius of the Property, there are more than 128,000 residents with average household incomes exceeding $97,000 annually.
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