Tukwila, WA, August 17, 2016 – BKM Capital Partners, an institutional fund manager with a niche focus on value-add, multi-tenant light industrial investments, has acquired the Tukwila Commerce Center, a 27-building 476,765 square-foot multi-tenant light industrial park in the Seattle metro area, for $45,200,000. The property, which is situated in the Kent submarket of Tukwila, Washington, was acquired at a discount to replacement cost and peak pricing, according to Brian Malliet, CEO and Co-Founder of BKM Capital Partners.
“Kent is the third largest industrial area in the U.S. and one of the fastest growing markets,” says Malliet. “Our ability to source and acquire an industrial park of this size at a significant discount to replacement cost in such a strong, growing market speaks to the strength of our reputation and investment strategy. We are capable of identifying what an asset can be rather than what it is now, and we recognize the tremendous value in this asset, and in the overall Kent Valley.”
Malliet explains that the Kent Valley submarket boasts 97.4 percent industrial occupancy with extremely high barriers to entry, providing a strong opportunity for long-term demand and rent growth.
Seattle is home to Boeing (ranked 27th on the Fortune 500 list), Amazon (ranked 29th on the Fortune 500 list) and Microsoft (ranked 31 on the Fortune 500 list). Boeing currently has a record high backlog of $489 billion in orders, which equates to more than 7 years of work.
Additionally, Apple just announced a search for one million square feet in the Seattle Metro. “Industrial rental rates are soaring throughout the region based on extremely low vacancy rates, high barriers to entry and strong demand from prominent warehouse distribution and manufacturing centers across the country,” says Malliet.
“Industrial rental rates are soaring throughout the region based on extremely low vacancy rates, high barriers to entry and strong demand from prominent warehouse distribution and manufacturing centers across the country,” says Malliet.
Constructed in 1978 by the Koll Company, BKM Capital Partners plans to upgrade the Tukwila Commerce Center through a series of key cosmetic improvements. Despite its lack of newer amenities, the asset has historically demonstrated strong tenant retention, according to Brett Turner, Director of Acquisitions at BKM Capital Partners, who notes that approximately 31 percent of tenants have occupied the location for over 10 years.
“The asset’s historically high retention rate further proves the property’s quality location and functionality,” says Turner. “Using our integrated approach, the BKM team will optimize and fully reposition the property through a series of capital improvements, ultimately adding significant value to the property.”
BKM Capital Partners plans to implement improvements to the interior and exterior of the buildings, totaling $7.9 million, that will enhance the overall aesthetic and functionality of the property. Planned improvements include creative upgrades to the paint, landscape, exterior facades, tenant and monument signage and common areas, among others.
“By implementing these cosmetic improvements, we will be able to bring current rents up to market value and further attract quality, long-term tenants,” adds Turner. The property is located at 601-699 Strander Blvd and 800-1164 Industry Drive in Tukwila, Washington, just off the intersection of the I-5 and 405 freeways and approximately 13.5 miles from downtown Seattle. The seller was represented by Darla Longo and Brett Hartzell at CBRE.
About BKM Capital Partners
BKM Capital Partners was founded in 2013 by Brian Malliet and Nima Taghavi. Headquartered in Irvine, California, BKM Capital Partners is a fund manager specializing in the acquisition and improvement of value-add multi-tenant light industrial properties in metro areas across the Western U.S. Combining a deep knowledge of this niche industrial product type with in-house capabilities including on-site property management, asset management, and structured financing, the firm continues to build on its proven track record, generating strong results with high levels of transparency and engagement for investors.