By Meghan Hall
As the future of brick and mortar shopping hangs in the balance, an affiliate of Oakland-based Kaiser has bought up a Kent retail center. In a transaction that closed on December 4th, but just recently recorded, the Kaiser Foundation Health Plan of Washington Corp. purchased the Kent Kmart Center for an even $15 million, According to public documents, the seller is affiliated with Clarke A. Smith, with Costa Mesa, Calif.-based Smith & Sons Investment Co.
Located at 24800 West Valley Highway South, the property totals nearly 368,000 square feet, or 8.44 acres, based on information from a leasing brochure released by Pacific Asset Advisors, Inc. Current tenants of the property include Goodwill, UPS, Jiffy Lube, Bento Teriyaki, Cardoza’s Market, and others. The former Kmart—also a tenant—is closing. The building which houses the retail totals 84,180 square feet, and 550 parking stalls are also part of the site.
Demographics surrounding the center are promising and continuing to grow, which could work to the retailers’ advantage in the future. Within a one-mile radius of the property, there are 18,858; within five miles there are more than 270,000 people. By 2023, the estimated population within those radii are expected to increase to 20,924 and 291,510, respectively. Income is also expected to jump; for those within a one-mile radius, the average income is expected to increase to $64,587 annually, up from $59,652. Within a five-mile radius, average income will increase from 93,193 to $102,203 by 2023.
It is unclear what Kaiser’s plans are for the property, and currently, no plans for the redevelopment of the property have been filed with the City of Kent. The asset is within a short distance several major residential projects, including Marquee on Meeker, a mixed-use development with 500 units and 12,000 square feet of retail, as well as a 350-unit complex pitched by Goodman Real Estate. Also nearby is the 382-unit Driftwood Apartments complex, a luxury development on West James Place currently under renovation.
While the retail industry has been hit hard on a national level, Washington state has fared well relative to the rest of the United States, according to a recent report released by Kidder Mathews. Across the region, direct vacancy increased 24 basis points to 2.93 percent during the third quarter. While rent growth came in at 3.2 percent year-over-year, Kidder Mathews predicts the pandemic will depress rents between three to four percent by early 2021. Strong investor demand remains for retail properties with fast food, drugstore and food retail tenants, and cap rates for Class B and C centers have increased as a result. However, single tenant properties with long-term leases in place remain key and will likely continue to dominant investment sales moving forward.