Southcenter Leasehold Shopping Center
Retail | 52,139 SqFt
Marketing description
NAI Puget Sound Properties is pleased to exclusively offer for sale the leasehold interest in the Southcenter Parkway Shopping Center, comprising a 52,139 SF multi-tenant retail center located in the highly desirable Southcenter area of Tukwila, WA.
This offering represents a unique opportunity to acquire the improvements for an extremely low cost basis and high stabilized yield. The buildings are subject to two ground leases (one for each parcel) with 19 and 17 years of term remaining, respectively. The ownership of the improvements revert to the landowner at expiration. The center is situated in the heart of the Southcenter retail corridor, one of the Pacific Northwest’s most trafficked retail trade areas, directly adjacent to Westfield Southcenter Mall and surrounded by a dense concentration of national and regional retailers, hotels, and employment centers.
*IMPORTANT — LEASEHOLD SALE: This offering is for the sale of the leasehold improvements only. The underlying land is not included in the sale. At ground lease expiration (17 & 19 years), all improvements revert to the landowner with zero residual value to the buyer. Prospective purchasers should review the ground lease documents carefully and underwrite accordingly.
Investment highlights
+SIGNIFICANT VALUE-ADD UPSIDE – 23.74%+ STABILIZED CAP RATE
With three large vacant spaces totaling ~34,398 SF (Car Toys 8,466 SF; Lamps Plus 11,540 SF; Moe’s Furniture 14,392 SF), a buyer has the opportunity to dramatically increase cash flow through new lease-up activity.
+LEASEHOLD STRUCTURE CREATES LOW BASIS ENTRY POINT
Because this offering excludes the land value, acquisition cost of $67 per foot on the building is significantly lower than a fee-simple equivalent, allowing investors to achieve higher yield-on-cost returns during the remaining lease term.
+ PREMIER SOUTHCENTER LOCATION
The Southcenter submarket in Tukwila, Washington is the premier retail destination in the Pacific Northwest. Anchored by Westfield Southcenter — the region’s largest mall at approximately 1.6 million square feet — the corridor generates some of the highest retail sales volumes in Washington State.
+ COMPELLING 20%+ IRR POTENTIAL THROUGH GROUND LEASE EXPIRATION
The center presents a compelling value-add investment with the potential to generate an IRR of 20%+ over the remaining 17-19 year ground lease term, which factors in leasing the current vacancies at market rents and is inclusive of leasing costs and capital expenditures.
+ OWNER-USER POTENTIAL
With over 34,000 square feet of vacant space across two buildings, the property presents a rare opportunity for an owner-user to occupy one or more suites while the in-place tenants service the debt — effectively acquiring a premier Southcenter retail location at a fraction of the cost of a fee-simple purchase.
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