By Meghan Hall
Well-located and strongly-anchored retail centers are continuing to attract interested buyers, even in the wake of COVID-19. In a recent deal, which closed on August 11th, Tacoma’s Evergreen Plaza Retail Center traded for $13.4 million. According to public records, the seller was a private owner based in Mercer Island, Wash., while the buyer is affiliated with Azose Commercial Properties.
The asset is located at 5015, 5037, 5219 & 5209 Tacoma Mall Blvd. The property was originally constructed in 1988 and totals 73,288 square feet. A listing by Azose indicates that currently, the property has two vacancies in the center, totaling just under 7,000 square feet of space..The suites are listed at $18.00 per square foot, triple net.
The property is surrounded by strong demographics, with the population in the surrounding area expected to grow by eight percent through 2024. At that time, more than 338,000 people are expected to be living within a five mile radius of the asset. Median household income is expected to be around $53,849 per year.
The asset also borders both commercial and residential neighborhoods, just off ofInterstate 5. Other businesses in the area include Pro Golf Discount Tacoma, Chuck E. Cheese and Best Buy. The Apple Tacoma Mall is located just up the road from the plaza, while downtown Tacoma is just slightly further north.
Despite the pandemic, retail properties throughout the Puget Sound are holding onto their fundamentals. According to recent analysis by brokerage firm Marcus & Millichap, the metro has fared better than a number of other markets due to economic drivers in place prior to the pandemic.
“As the metro is one of the nation’s stronger and rapidly expanding economies, Seattle’s retail demand drivers have been exceptionally robust in recent years, placing property metrics on stable ground entering the pandemic,” explained Marcus & Millichap in its second quarter retail report. “Demand for retail space quickly softened last year and businesses were challenged to survive as health restrictions set in and indoor gatherings were limited. Property fundamentals held onto a strong position, though, with vacancy remaining tight and stable year-over-year rent gains.”
The unemployment rate is expected to fall from 7.2 percent to 3.5 percent through the end of the year, and construction activity has been limited, with just 508,000 square feet of deliveries expected. This will help to ease supply pressures as the market recovers.
Additionally, net absorption remained positive at 390,000 square feet year-over-year, although vacancy is expected to tick up slightly to 3.1 percent. However, with minimal supply, rents continued to increase, jumping nearly seven percent from 2020 to $22.63 per square foot. Tacoma and other suburban markets recorded double-digit rent growth, the strongest in the Puget Sound. Combined, the metrics provide a solid basis for investors who are looking to break into the market, as pricing continues to climb.