Frederickson Town Center, a newly constructed retail property located at 17513 Canyon Pkwy E in Tacoma, Wash., has recently been sold for an $8.5 million, or roughly $676 per square foot. The sale was facilitated by Jameson Sullivan and Josh Parnell of First Western Properties, who represented the seller, Pallis Properties, Inc. The 12,572-square-foot property was able to attract attention from possible investors due to its desirable location, stable tenant base, and attractive financials.
Situated in the South Tacoma area just south of State Route 512, the retail property is close to a number of major employers such as Boeing, IKEA, Whirlpool, and Lemay. The surrounding community boasts a robust workforce, which ensures a steady flow of potential customers for the property’s tenants. According to the marketing documents for the property, nearly 234,000 people live within a five-mile radius of the shopping center. Within one mile of the center, the average household income is nearly $103,000.
The property’s tenant lineup includes popular establishments such as MOD Pizza, Heartland Dental, and Olympic Sports and Spine. These businesses provide essential services and attract a diverse customer base.
Investors were drawn to the Frederickson Town Center retail property due to its strong financials. The property was listed at just over $8.5 million, at a 6 percent capitalization rate, and with a net operating income surpassing $510,000.
Furthermore, the property is fully leased, thanks to its brand new 10-year triple net leases signed with the three tenants above. These leases, secured by corporate signatures, provide investors with the confidence of steady rental income and minimized management responsibilities.
Frederickson Town Center benefits from its strategic location, experiencing high traffic counts of approximately 42,720 vehicles per day on Canyon Road and 25,400 vehicles per day on 176th Street, according to the marketing materials.
Despite challenges posed by reduced office usage, the retail sector in the Seattle-Tacoma region is displaying strong performance, surpassing historical expectations. With the exception of Downtown Seattle, every submarket reported vacancy rates in March that were lower than their long-term averages. Tacoma and Southend stood out in particular, with metrics that exceeded their historical lows by over 200 basis points, according to a recent second quartet of 2023 retail market report by Marcus & Millichap.
Mild construction has also fueled tenant demand for available space, keeping local conditions tight. Tacoma and Southend’s delivery volume over the past year represented about one-half of Northend’s. That trend continues, as the two areas will receive less than 40,000 square feet of new supply in 2023, the report stated.
In the University Place-Lakewood area, the number of completed deals has more than doubled during the first five months of 2023 compared to the latter half of 2022, according to Marcus & Millichap. This region is witnessing significant multifamily construction, with at least half of Tacoma’s ongoing projects taking place here. In 2024, over 1,800 units are expected to be delivered, benefiting nearby retailers in the long run. The growing local renter base will contribute to increased retail sales, leading to positive net absorption and generating investor interest.
The central suburbs of Tacoma have seen the highest volume of single-tenant trades in the metro area so far in 2023. These suburbs remain attractive to out-of-state investors due to their lower costs. The majority of completed deals during the first five months were priced below $450 per square foot, well below the metro area’s average of $533 per square foot for single-tenant properties.
