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78-Unit, Garden-Style Multifamily
Property in Lakewood, Washington
$7,250,000
Sandman IV Apartments
OFFERING MEMORANDUM
Tyler StanekAssociate Vice [email protected]
Arielle DormanAssociate Vice [email protected]
Dirk StegemanAssociate Vice [email protected]
Exclusively offered by
This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. Consult your attorney, accountant, or other professional advisor.
This Offering Memorandum contains confidential information pertaining to the property known as Sandman IV Apartment Community and is provided by Kidder Mathews for the sole purpose of evaluating recipient’s possible interest in acquiring the property.
Kiddermathews.com
Table of Contents
Sandman IV Apartments
1. Offering Summary
2. The Property
• Property Overview• Property Highlights• lnterior Pictures• Site Aerial• Neighborhood Amenities• Regional Aerial
3. Financial Information
• Scheduled Income• Expenses and Operating Data• Rent Comparables• Sales Comparables
4. Market Overview
• Pierce County Overview• Puget Sound Overview
Sandman IV Apartments Offering Memorandum | Kidder Mathews 3
Offering Summary
01
Sandman IV Apartments Offering Memorandum | Kidder Mathews 4
THE INVESTMENT OPPORTUNITY
TACOMA POSTED 10.6% RENT INCREASE (4TH HIGHEST IN NATION) FROM MARCH 2016-2017
NOT ENOUGH CONSTRUCTION (APARTMENT OR HOME) TO MEET POPULATION GROWTH
TACOMA AREA IS A BEDROOM COMMUNITY FOR ALASKA AIR, AMAZON, BOEING, COSTCO, EXPEDIA, EXPEDITORS, NORDSTROM, PACCAR, REI, STARBUCKS, AND WEYERHAUSER
CLOSE IN TACOMA / INTERSTATE 5 LOCATION
TACOMA AREA VACANCY AT 2.8%
VALUE ADD OPPORTUNITY AND RENT GROWTH THROUGH MODEST INTERIOR IMPROVEMENTS
Sandman IV Apartments Offering Memorandum | Kidder Mathews 5
EXECUTIVE SUMMARY
As exclusive brokers for Sandman IV Apartments, we are pleased to offer for sale this 78-unit, garden-style multifamily property. One of Sandman IV’s greatest attributes is its location relative to Interstate 5 and Highway 512 for its ease of access to Tacoma, Joint Base Lewis-McChord, Puyallup, and the Puget Sound metropolis.
Sandman IV is located in close proximity to major retailers, distribution facilities, healthcare providers, private and government employers. Lakewood Towne Center is 3 miles away and anchored by Target and Safeway. Tacoma Mall is 4 miles away and anchored by Nordstrom, Macy’s, JC Penney, and Sears. The main gate to Joint Base Lewis-McChord (JBLM), the largest military installation west of the Mississippi and the second largest employer in Washington State, is located 5 miles south. JBLM employs approximately sixty-six thousand military and civilian workers surrounding the base. Tacoma CBD is located approximately 9 miles away and Seattle-Tacoma International Airport and Seattle CBD are located 28 and 40 miles, respectively. Interstate 5 links the Puget Sound markets to Oregon and California along with Canada and Mexico and it is critical to the region, state, and national economy. It is also the busiest roadway in Western Washington.
The Property
Sandman IV consists of 78 apartment units, the property’s residential buildings are wood framed, two-story construction with mostly pitched roofs. In 2016-2017, the property was renovated including the installation of new, double-pane, insulated vinyl windows and sliding glass doors with fresh air vents, new septic tanks, and updated electrical panels.
The Market
The hub of the Pierce County market consists of four cities: Tacoma, Lakewood, University Place and Puyallup/Fife. The Pierce County population is estimated at 831,928 for 2014. The population of Lakewood, a suburb of Tacoma, increased by 1.0% between 2010 and 2013 and the median age is 36.3 years as of 2014.
PROPERTY OVERVIEW
Address 10102 Sales Rd. S, Lakewood, WA
# Units 78
Occupancy 100%
Net Rentable SF 54,334 SF
Year Built 1964
Parking 115 open spaces & 13 leased garages
Parking Ratio 1 unit: 1.47 open spaces
Parcel # 031906-1100
FLOOR PLAN SIZEAVG CURRENT RENT
PRO FORMA
Studio 500 SF $675 / $1.35 PSF $750 / $1.50 PSF
1 Bed / 1 Bath 667 SF $744 / $1.11 PSF $875 / $1.31 PSF
2 Bed / 1 Bath 800 SF $831 / $1.04 PSF $1,095 / $1.37 PSF
2 Bed / 1.5 Bath 750 SF $820 / $1.09 PSF $1,100 / $1.47 PSF
3 Bed / 1.5 Bath 850 SF $935 / $1.10 PSF $1,200 / $1.41 PSF
TOTAL / AVG 697 SF $774 / $1.11 PSF $948 / $1.36 PSF
Offering Summary
Sandman IV Apartments Offering Memorandum | Kidder Mathews 6
The King County border is just 12.5 miles north, the largest county in Washington State with a population estimated at 2.08 Million in 2014.
According to rental data firm Zumper, Lakewood posted the highest rent increase in the Puget Sound region in April 2017, for one-bedroom apartments, a year over year of nearly 12 percent increase from April 2016, the full article can be read at www.thenewstribune.com/news/business/article146923124.html. Dupre + Scott report that Lakewood’s market 2017 vacancy was 3.2% with a 5 year average of 4.4% and a 21% rent growth since 2013.
Local Economy
Sandman IV location allows for easy access to a diversified array of employment centers such as the Port of Tacoma, the Kent Valley’s ever-growing industrial market, Seattle-Tacoma Airport, Downtown Tacoma, JBLM, the rapidly expanding Fife/Puyallup industrial market, DuPont and the Fredrickson Industrial park. Notable companies and organizations located within these employment centers include the Boeing Company which has facilities in both Fredrickson and the Kent Valley, Weyerhaeuser, REI, the University of Washington - Tacoma, MultiCare Health System, one of the largest healthcare providers in the Nation, Franciscan Health System, Amazon, and State Farm Insurance who over the last 2 years have hired an additional 1,400 individuals. Other major employers include public and private school systems, hospitals, and State, County and Municipal government organizations. Employment diversity provides a hedge against downturns and future job growth appears positive. A recent study commissioned by the State Department of Transportation concluded that the planned completion of the State Route- 167 freeway from Puyallup to the Port of Tacoma will contribute to an additional 79,000 new jobs. Planning and design work for the freeway are in process and funding is a priority agenda item.
The Investment Opportunity
At 78 units, Sandman IV allows a multifamily owner the opportunity to increase their market presence and grow the operating income through management efficiencies as well as raising the current average rent of $1.08 psf to the market average of $1.24 psf.
PROPERTY INFORMATION
Price $7,250,000 ($92,948 / unit)
Actual / Pro Forma Cap Rate
5.39% / 8.12%
Actual / Pro Forma EffectiveGross Scheduled Rent
$793,014 / $1,002,187
Actual / Pro Forma Expenses with Reserves
$401,917 / $413,506
Actual / Pro Forma NOI $391,097 / $588,681
Net Rentable SF 54,334 SF
Average Unit Size 697 SF
Actual / Proforma Average Monthly Rent
$774 / $984
Actual / Proforma Average Rent / SF
$1.11 / $1.36
Overview The property consists of nine, two-story garden-style residential building, 115 open parking spaces and 13 rented garages.
Apartment Home Amenities
Range & oven, refrigerators, dishwashers, disposal, electric hot water tanks, baseboard heaters, blinds or drapes, and private decks or patios.
Property Amenities Mature landscaping, new double-pane, insulated vinyl windows and sliding glass, on-site trash/recycling area, and 8 laundry rooms.
Location Located in Lakewood, Washington close to Tacoma CBD and Joint Base Lewis-McChord.
Sandman IV Apartments Offering Memorandum | Kidder Mathews 7
02 The Property
Property OverviewProperty Highlights
Interior Pictures Site Aerial
Neighborhood Amenities Regional Aerial
Sandman IV Apartments Offering Memorandum | Kidder Mathews 8
Sandman IV Apartments PROPERTY SUMMARY
Address 10102 Sales Rd S, Lakewood, WA
Number of Units 78 Units
Age 1964
Number of Buildings Nine, two-story garden-style residential buildings
Construction Wood frame construction with mostly pitched composition shingle roof covering, and new, vinyl, double-pane, insulated windows and new sliding glass doors with fresh air vents
Parcel Number 031906-1100
Land Area 3.73 AC / 162,479 SF
Density 20.91 units / acre
2017 Levy Rate $14.97 per thousand
Utility Providers Power - Lakeview Light and PowerSewer - Septic SystemWater - Lakewood Water Service
FLOOR PLAN SIZE AVG CURRENT RENT PRO FORMA
Studio 500 SF $675 / $1.35 PSF $750 / $1.50 PSF
1 Bed / 1 Bath 667 SF $724 / $1.08 PSF $875 / $1.31 PSF
2 Bed / 1 Bath 800 SF $796 / $0.99 PSF $1,095 / $1.37 PSF
2 Bed / 1.5 Bath 750 SF $820 / $1.09 PSF $1,100 / $1.47 PSF
3 Bed / 1.5 Bath 850 SF $935 / $1.10 PSF $1,200 / $1.41 PSF
Total / Avgs 697 SF $775 / $1.08 PSF $946 / $1.36 PSF
Monthly Rent $58,795 $73,820
Total Scheduled Rent $705,539 $885,840
PROPERTY OVERVIEW
Sandman IV is a 78-unit residential community located in Lakewood, Washington that underwent capital improvements over the last 12 months: new vinyl double pane windows and sliding doors, updated electrical panels, and new septic tanks. Residents enjoy open floor plans averaging 697 SF. Unit types consist of studio, one bedroom/one bath, two bedroom/one bath, two bedroom/one half bath, and three bedroom/one half bath. The property is well constructed with enhanced sound proofing, large double-pane insulated windows, mostly pitched roofs with composition shingles, and wood-frame construction. The property has nine, two-story residential buildings with open parking available along with 13 leased garages.
Community Amenities
Sandman IV offers its residents community amenities such as high speed internet and cable access, 13 garages (for rent), and 8 laundry rooms.
Unit Amenities
Each of the residences in Sandman IV were designed with superior quality finishes. All apartments have new vinyl, double-pane insulated windows and sliding glass doors. The kitchens come with a standard oven/range, refrigerator, dishwasher, and disposal. In addition, the units are equipped with electric hot water heaters, balcony or patio, and eight-foot ceilings.
Sandman IV Apartments PROPERTY SUMMARY
Address 10102 Sales Rd S, Lakewood, WA
Number of Units 78 Units
Age 1964
Number of Buildings Nine, two-story garden-style residential buildings
Construction Wood frame construction with mostly pitched composition shingle roof covering, and new, vinyl, double-pane, insulated windows and new sliding glass doors with fresh air vents
Parcel Number 031906-1100
Land Area 3.73 AC / 162,479 SF
Density 20.91 units / acre
2017 Levy Rate $14.97 per thousand
Utility Providers Power - Lakeview Light and PowerSewer - Septic SystemWater - Lakewood Water Service
FLOOR PLAN SIZE AVG CURRENT RENT PRO FORMA
Studio 500 SF $675 / $1.35 PSF $750 / $1.50 PSF
1 Bed / 1 Bath 667 SF $724 / $1.08 PSF $875 / $1.31 PSF
2 Bed / 1 Bath 800 SF $796 / $0.99 PSF $1,095 / $1.37 PSF
2 Bed / 1.5 Bath 750 SF $820 / $1.09 PSF $1,100 / $1.47 PSF
3 Bed / 1.5 Bath 850 SF $935 / $1.10 PSF $1,200 / $1.41 PSF
Total / Avgs 697 SF $775 / $1.08 PSF $946 / $1.36 PSF
Monthly Rent $58,795 $73,820
Total Scheduled Rent $705,539 $885,840
PROPERTY OVERVIEW
Sandman IV is a 78-unit residential community located in Lakewood, Washington that underwent capital improvements over the last 12 months: new vinyl double pane windows and sliding doors, updated electrical panels, and new septic tanks. Residents enjoy open floor plans averaging 697 SF. Unit types consist of studio, one bedroom/one bath, two bedroom/one bath, two bedroom/one half bath, and three bedroom/one half bath. The property is well constructed with enhanced sound proofing, large double-pane insulated windows, mostly pitched roofs with composition shingles, and wood-frame construction. The property has nine, two-story residential buildings with open parking available along with 13 leased garages.
Community Amenities
Sandman IV offers its residents community amenities such as high speed internet and cable access, 13 garages (for rent), and 8 laundry rooms.
Unit Amenities
Each of the residences in Sandman IV were designed with superior quality finishes. All apartments have new vinyl, double-pane insulated windows and sliding glass doors. The kitchens come with a standard oven/range, refrigerator, dishwasher, and disposal. In addition, the units are equipped with electric hot water heaters, balcony or patio, and eight-foot ceilings.
Sandman IV Apartments PROPERTY SUMMARY
Address 10102 Sales Rd S, Lakewood, WA
Number of Units 78 Units
Age 1964
Number of Buildings Nine, two-story garden-style residential buildings
Construction Wood frame construction with mostly pitched composition shingle roof covering, and new, vinyl, double-pane, insulated windows and new sliding glass doors with fresh air vents
Parcel Number 031906-1100
Land Area 3.73 AC / 162,479 SF
Density 20.91 units / acre
2017 Levy Rate $14.97 per thousand
Utility Providers Power - Lakeview Light and PowerSewer - Septic SystemWater - Lakewood Water Service
FLOOR PLAN SIZE AVG CURRENT RENT PRO FORMA
Studio 500 SF $675 / $1.35 PSF $750 / $1.50 PSF
1 Bed / 1 Bath 667 SF $744 / $1.11 PSF $875 / $1.31 PSF
2 Bed / 1 Bath 800 SF $831 / $1.04 PSF $1,095 / $1.37 PSF
2 Bed / 1.5 Bath 750 SF $820 / $1.09 PSF $1,100 / $1.47 PSF
3 Bed / 1.5 Bath 850 SF $935 / $1.10 PSF $1,200 / $1.41 PSF
Total / Avgs 697 SF $774 / $1.11 PSF $948 / $1.36 PSF
Monthly Rent $60,025 $73,820
Total Scheduled Rent $720,300 $885,840
PROPERTY OVERVIEW
Sandman IV is a 78-unit residential community located in Lakewood, Washington that underwent capital improvements over the last 12 months: new vinyl double pane windows and sliding doors, updated electrical panels, and new septic tanks. Residents enjoy open floor plans averaging 697 SF. Unit types consist of studio, one bedroom/one bath, two bedroom/one bath, two bedroom/one half bath, and three bedroom/one half bath. The property is well constructed with enhanced sound proofing, large double-pane insulated windows, mostly pitched roofs with composition shingles, and wood-frame construction. The property has nine, two-story residential buildings with open parking available along with 13 leased garages.
Community Amenities
Sandman IV offers its residents community amenities such as high speed internet and cable access, 13 garages (for rent), and 8 laundry rooms.
Unit Amenities
Each of the residences in Sandman IV were designed with superior quality finishes. All apartments have new vinyl, double-pane insulated windows and sliding glass doors. The kitchens come with a standard oven/range, refrigerator, dishwasher, and disposal. In addition, the units are equipped with electric hot water heaters, balcony or patio, and eight-foot ceilings.
Sandman IV Apartments Offering Memorandum | Kidder Mathews 9
PROPERTY HIGHLIGHTS
Unit Amenities
Spacious, efficient floor plans averaging 697 SF
Five unique floor plans ranging from a studio (500 SF), 1x1’s (667 SF), 2x1’s (800 SF), 2x1.5’s (750 SF), and a 3x1.5 (850 SF)
All kitchens are equipped with oven/range, refrigerator, dishwasher, and garbage disposal
Most apartment homes have 8-foot ceilings
Private decks or patios
Double-pane, insulated vinyl windows and sliding glass doors
Community Amenities
Ample open parking and 13 garages
High speed internet and cable access
On-site trash and recycling area
Eight laundry rooms
Low density / 20.91 units per acre
Prime Pivot Point Location
Minutes to Downtown Tacoma and next to Interstate-5 and Highway 512
Close proximity to major employers, retailers and health care providers
Major retailers include: Target, Safeway, Nordstrom’s, Macy’s, and Fred Meyer
Appeals to broad resident base due to Interstate 5 corridor location
Easy access to efficient intercity transit system
Sandman IV Apartments Offering Memorandum | Kidder Mathews 10
INTERIOR PICTURES
Sandman IV Apartments Offering Memorandum | Kidder Mathews 11
SITE AERIAL
Sales Rd S
SANDMAN IV APARTMENTS
SITE AERIAL
Sales Rd S
SANDMAN IV APARTMENTS
SITE AERIAL
Sales Rd S
SANDMAN IV APARTMENTS
Sandman IV Apartments Offering Memorandum | Kidder Mathews 12
NEIGHBORING AMENITIES
S 72nd St
JBLMMCCHORD AFB
S 56th St
Lake
wo
od
Dr
SW
SANDMAN IV APARTMENTS
96th St S
112th St S
Pacific A
venue
CHARLTON LAKE
MT TAHOMA HS
WAPATO PARK
LAKEWOOD INDUSTRIAL
PARK
Gra
velly
Lak
e D
r
Steilacoom Blvd SW
Bri
dg
epo
rt W
ay S
W
84th St S
LAKEWOOD TOWNCENTER
LAKE STEILACOOM
ST. CLAIR HOSPITAL
PIERCE COUNTY TRANSIT
GRAVELLY LAKE
LAKEWOOD
TACOMA MALL
Sandman IV Apartments Offering Memorandum | Kidder Mathews 13
REGIONAL AERIAL
PORT OF TACOMA
LAKEWOOD
STEILACOOM
FIRCREST
FEDERAL WAY
PUYALLUP
SUMNER
SANDMAN IV APARTMENTS
DOWNTOWN TACOMA
GIG HARBOR
UNIVERSITY PLACE
JBLMMCCHORD AFB
TACOMA MALL
LAKEWOOD TOWNE CENTER
Sandman IV Apartments Offering Memorandum | Kidder Mathews 14
Financial InformationScheduled Income
Expenses and Operating DataRent ComparablesSale Comparables
03
Sandman IV Apartments Offering Memorandum | Kidder Mathews 15
Financial Information
UNIT TYPE # OF UNITS APPROXIMATE / AVERAGE SF
CURRENT AVERAGE RENTS
CURRENT RENTS / SF
PRO FORMA RENTS
PRO FORMA RENTS / SF
Studio 1 500 $675 $1.35 $750 $1.50
1 Bed / 1 Bath 52 667 $744 $1.11 $45,500 $1.31
2 Bed / 1 Bath 6 800 $831 $1.04 $6,570 $1.37
2 Bed / 1.5 Bath 18 750 $820 $1.09 $19,800 $1.47
3 Bed / 1.5 Bath 1 850 $935 $1.10 $1,200 $1.41
Total / Avgs 78 697 $760 $1.11 $946 $1.36
Monthly Rent $60,025 $73,820
TOTAL SCHEDULED RENT $720,302 $885,840
OTHER INCOME (ANNUAL)
2017 YTD ANNUALIZED
PRO FORMA
Utility Reimbursement $72,216 $123,033
Late/NSF Fees $4,293 $4,422
Screening Fees $1,440 $1,483
Pet Fees $177 $183
Move in Fees $0 $0
Month to Month Premium $0 $0
Forfeit Deposit $4,690 $4,831
Bad Debt Recovery $286 $294
Garge Rental $15,262 $15,720
Laundry/Vending Income $8,679 $8,940
Miscellaneous $1,684 $1,735
Total Other Income $108,727 $160,639
SCHEDULED INCOME*
*CURRENT RENTS BASED ON NOVEMBER 2017 RENT ROLL ANNUALIZED WITH PRO FORMA RENTS REFLECTING CURRENT MARKET RENTS.
Notes
OTHER INCOME - PRO FORMA: This income based on YTD annualized (Jan - Nov 2017) with a 3% annual growth, except utility reimbursement estimated at 95% consumption
OTHER INCOME - YTD ANNUALIZED (JAN - NOV 2017): Utility reimbursement - Based on November 2017 billing for utility reimbursement, annualized
Sandman IV Apartments Offering Memorandum | Kidder Mathews 16
2017 YTD ANNUALIZED
PRO FORMA
Wages / Salaries / Benefits / Taxes $76,131 $78,415
Repairs/Maintenance/TO $37,683 $38,814
Landscaping $8,636 $8,895
Utilities $129,508 $133,394
Marketing $3,049 $3,141
Administrative $17,436 $17,959
Insurance $17,949 $18,487
Management Fee $30,361 $31,272
Property Taxes $65,563 $67,530
TOTAL EXPENSES $386,317 $397,906
Reserves ($200 / unit) $15,600 $15,600
TOTAL EXPENSES W RESERVES $401,917 $413,506
Expenses Per Unit w/ Reserves $5,153 $5,301
Expenses Per SF w/ Reserves $7.40 $7.61
EXPENSES
Notes
PRO FORMA EXPENSES
Based on current 2017 YTD Profit & Loss - Annualized with a 3% annual growth. Taxes based on 2017 county assessor rate.
Sandman IV Apartments Offering Memorandum | Kidder Mathews 17
2017 YTD ANNUALIZED PRO FORMA
Scheduled Gross Rent $720,302 $885,840
Vacancy / Model ($36,015) ($44,292)
Rent Booked $684,287 $841,548
Concession $0 $0
Effective Gross Rent $684,287 $841,548
Utility Reimbursement $72,216 $123,033
Late/NSF Fees $4,293 $4,422
Screening Fees $1,440 $1,483
Pet Fees $177 $183
Move in Fees $0 $0
Month to Month Premium $0 $0
Forfeit Deposit $4,690 $4,831
Bad Debt Recovery $286 $294
Garage Rental $15,262 $15,720
Laundry/Vending Income $8,679 $8,940
Miscellaneous $1,684 $1,735
Effective Gross Income $793,014 $1,002,187
Total Operating Expenses Before Reserves ($386,317) ($397,906)
NET OPERATING INCOME $406,697 $604,281
Less Reserves @ $200 / unit ($15,600) ($15,600)
NOI AFTER RESERVES $391,097 $588,681
ANNUALIZED OPERATING DATA
Sandman IV Apartments Offering Memorandum | Kidder Mathews 18
RECENT RENT COMPARABLES
PROPERTY ADDRESS AVG UNIT SF # OF UNITS YEAR BUILT AVG RENT RENT / SF
Sandman IV Apartments 10102 Sales Rd, Lakewood 697 78 1964 $753 $1.08
Altitude 104 2201 104th St. St, Tacoma 759 120 1989 $1,146 $1.51
The Willows 2100 112th St. S, Tacoma 616 125 1969 $770 $1.25
Wisteria Walk 3615 112th St SW, Lakewood 610 120 1970 $828 $1.36
Notch 8* 9210 S Hosmer St, Tacoma 765 126 1986 $1,147 $1.50
Waterfall 1718 S 84th St, Tacoma 720 50 1974 $892 $1.24
Meadows Apartments 7702 Custer Rd W, Lakewood 440 34 1963 $580 $1.32
AVERAGE 652 96 1975 $893 $1.36
SALE COMPARABLES
PROPERTY ADDRESSSALE DATE
SALE PRICE
PRICE / UNIT
PRICE / SF
# OF UNITS
YEAR BUILT
CAP RATE
Sandman IV Apartments 10102 Sales Rd, Lakewood $7,500,000 $96,154 $138 78 1964 6%
Notch 8 9210 S Hosmer St, Tacoma Apr-16 $11,592,000 $92,000 $120 126 1986 5.5%
Majestic Firs 6111 88th St SW, Lakewood Apr-17 $1,670,000 $119,286 $162 14 1971 5.8%
Valley Vista 6830 Tacoma Mall Blvd, Tacoma Oct-16 $11,400,000 $105,556 $121 108 1987 5.75%
Oliver Apartments 420 Wheeler St S, Tacoma Jun-17 $5,300,000 $110,417 $129 48 1968 5.7%
Wapato Creek Village 2335 58th Ave E, Fife Mar-17 $12,850,000 $110,775 $159 116 1980 3.3%
AVERAGE $107,607 $138 82 1978 5.21%
Sandman IV Apartments Offering Memorandum | Kidder Mathews 19
Market OverviewPierce County OverviewPuget Sound Overview
04
Sandman IV Apartments Offering Memorandum | Kidder Mathews 20
In addition to being the home of the second largest city in Washington, Tacoma, Pierce County has been one of the fastest growing counties in the state of Washington since the 1960’s, and has consistently exceeded the state’s overall rate of growth. Pierce County supports manufacturers such as Boeing, Milgard Manufacturing, James Hardie Building Products, Toray Composites (America), Inc., and Medallion Foods. Recreational Equipment, Inc. (REI), Whirlpool, and Costco also have major distribution centers here. State Farm Insurance has a regional headquarters in Pierce County, and innovation thrives at the research divisions of Intel and Madigan Army Medical.
The majority of population increase has been due to the migration of people into the County. This continued migration is the result of Pierce County’s relatively stable economy and exceptional quality of life. The low-cost living, award-winning education, and lifestyle opportunities combined with the area’s competitive cost of doing business, create an outstanding environment for businesses and residents to work, play, and live.
Economy
Two words best describe the business climate found in Pierce County’s economy: emerging opportunity. In part, this is because of the county’s strategic location at the mid-point between the major metropolitan areas of the central Puget Sound to the north, and Portland, Oregon to the south. The presence of the military exerts a stabilizing influence on the Pierce County economy and employs nearly 57,000 residents of Pierce County.
In the last several years, the county has noticed quite a dramatic shift in the regional diversification of its workforce. Professional services rank as one of the leading components of industry. These include a solid anchor of Intel, multiple web design firms, and legal and consulting companies.
Impacts of Joint Base Lewis-McChord
Pierce County is home to Joint Base Lewis-McChord (JBLM), the largest military installation on the West Coast, and the 4th largest in the United
States. JBLM employs over 40,000 active, National Guard and Army Reserve service members, and approximately 15,000 civilian workers. The base supports 60,000 family members and nearly 30,000 retirees living within 50 miles, 65% of whom live in Pierce County. JBLM has a significant impact on the economy of Pierce County, providing a stable base of customers for retail trade, as well as providing a talented pool of trained workers who are transitioning out of the military and into the local workforce.
Port of Tacoma
The Port of Tacoma is an independent seaport located on more than 2,400 acres of land that are used for shipping terminal activity, warehousing, distributing and manufacturing. The port plays the largest international trade role in the Pacific Northwest handling between nine and thirteen million tons of cargo and more than $25 billion in commerce. Major imports include automobiles, electronics, and toys; major exports include grain, forest products, and agricultural products. Based on tonnage, the port’s largest export is grain (corn and soybeans) which comes into the port by rail from the Midwest.
In 2015, the Port of Tacoma’s top trading partner, based on two-way trade value, was China / Hong Kong. China / Hong Kong was also the top partner ranked by volume imported and value imported. Japan was the top partner ranked by volume exported and value exported. The top commodities exported, by value, were cereals and grains. The top commodities imported, by value, were vehicles and parts, followed by industrial machinery and electronics.
The port is among the top ten largest container ports in North America. Containers hold everything from computers and lawn furniture, to apples and frozen meat. More than 70 percent of the containers imported through the port move by rail to markets in the Midwest and East Coast. The port is served by the BNSF Railway and Union Pacific railroads. Shortline rail service is provided by Tacoma Rail, which is owned by the City of Tacoma.
Market OverviewPIERCE COUNTY OVERVIEW
Sandman IV Apartments Offering Memorandum | Kidder Mathews 21
U.S. Oil and Refining operates an oil refinery in the Port of Tacoma. Oil tankers bring crude oil, which is refined into a variety of products, including JP-8 jet fuel for McChord Field Air Force Base. Port activities are related to more than 43,000 jobs in Pierce County, and 113,000 jobs in Washington State.
Recreation Opportunities
Puget Sound bays and outlets offer an abundance of year-round outdoor recreational activities such as sailing, fishing, canoeing, diving, and kayaking. Numerous trails for biking and hiking are conveniently located 120 miles away at Mt. St. Helens, at Mt. Rainier which is 81 miles away, and 74 miles away at Ocean Shores. PGA level golf courses and many other fine public and private courses are also around the area. Entertainment attractions include several of the Northwest’s largest gaming casinos.
Art and Culture
Pierce County is home to some of the most active communities in Washington. Puyallup is home to numerous fairs, festivals, museums, galleries, and antique districts. Artists and performers showcase their talents through live theater at Broadway Center for the Performing Arts, Northwest Sinfonietta, Tacoma Art Museum, Tacoma Opera, and The Tacoma Symphony Orchestra.
Health Care Hub
Pierce County is home to six top-notch full-service hospitals, Good Samaritan Hospital and Rehab Center, Madigan Army Medical Center, St. Joseph Medical Center, Saint Clare Hospital, St. Anthony Hospital and Tacoma General Allenmore Hospital. The area’s health care hub has hundreds of clinical trials underway and a medical community committed to research and collaboration with local universities and other research institutions. Numerous specialized medical clinics are located throughout the region.
Sandman IV Apartments Offering Memorandum | Kidder Mathews 22
Education
The quality of education in Pierce County is a major draw to the South Puget Sound area. Pierce County students consistently show educational attainment levels exceeding both state and national averages. Thirty-five percent of Pierce County residents typically hold bachelor or graduate degrees, and more than ninety percent attain a high school or GED diploma. Pierce County students also consistently achieve SAT scores above state and national averages.
PACIFIC LUTHERAN UNIVERSITY
Pacific Lutheran University is a private institution that was founded in 1890. It has a total undergraduate enrollment of 3,195 students. Pacific Lutheran University’s ranking in the 2017 edition of Best Colleges in Regional Universities (West), was fifteenth.
UNIVERSITY OF PUGET SOUND
University of Puget Sound is a private institution that was founded in 1888. It has a total undergraduate enrollment of 2,651. University of Puget Sound’s ranking in the 2017 edition of Best Colleges is National Liberal Arts Colleges, was seventieth.
PIERCE COLLEGE
Pierce College is designated an institutional member of Service members Opportunity Colleges (SOC), a group of more than 1,700 colleges and universities providing voluntary postsecondary education to members of the military throughout the world. Pierce College provides education programs at Joint Base Lewis-McChord. These programs are specifically designed to serve the needs of active-duty military personnel, their family members, VA benefit recipients, and civilians in the community. Located on two campuses in Pierce County, current student enrollment is approximately 23,855.
TOP EMPLOYERS
RANK COMPANIES EMPLOYEES
1 Joint Base Lewis-McChord 57,120
2 Local Public School Districts (K-12) 13,408
3 Multicare Health System 8,247
4 State of Washington 6,844
5 Franciscan Health System 6,099
6 Pierce County Government 3,001
7 Fred Meyer 2,560
8 City of Tacoma 2,138
9 State Farm Insurance 2,050
10 Emerald Queen Casino 2,026
11 Boeing 1,750
12 Safeway Stores 1,512
13 Tacoma Public Utilities 1,417
14 Walmart 1,287
15 U.S. Postal Service 1,214
16 Costco 1,205
17 Puyallup Tribe of Indians 1,099
18 Milgard Manufacturing, Inc 1,061
19 Comcast Cable 1,046
20 Longshore Labor Union 1,026
21 Pierce Transit 884
22 Pierce College 830
23 Target 772
24 Group Health Cooperative 742
25 Home Depot 706
26 Amazon 700
27 University of Puget Sound 693
28 Tacoma Community College 688
29 Sears Roebuck 672
30 Davita 660
TOTAL 123,457
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PUGET SOUND OVERVIEW
Greater Seattle Area
Seattle is the largest city in the four-county metropolitan area known as the Puget Sound region. The area’s other major metropolitan cities include Bellevue, Tacoma, Everett, and Bremerton. Surrounding these are growing cities that include Kirkland, Redmond, Kent, Renton, Bothell, and Issaquah.
Climate
The temperate climate lets residents and visitors enjoy the outdoors year-round. High temperatures in July average just 75 degrees, while low temperature drop below freezing an average of only 15 days per year. The rainfall keeps the region’s vegetation a lush green, however, it rarely rains heavily and the total average rainfall is 35 inches, less than New York City or Miami.
Outdoor Activities, Culture, Sports
The Seattle area’s natural beauty and mild climate encourage year-round activities such as hiking in the Olympic or Cascade Mountains, kayaking on Lake Union, or cycling on any of the many rails-to-trails paths.
Art and culture are also driving forces in the region. There are 34 museums, 30 performing arts centers, and—at last count—at least 29 professional theatre companies.
Professional sports teams include major league football and baseball as well as soccer and hockey. The region’s professional football club, The Seattle Sounders FC, won the MLS Cup in 2016. In addition, there is thoroughbred racing, minor league baseball, and the University of Washington Huskies to cheer on.
Demographics
The region consists of approximately 3,944,507 (2015, U.S. Census Bureau) residents in King, Snohomish, Pierce, and Kitsap counties. The current figure represents a 6.6 percent increase over the 2010 Census. Positive population growth in the region is expected to continue through
the end of the forecast period. The Puget Sound Regional Council is estimating the area’s population to be 4,513,589 in 2030, an 14.4 percent increase.
The Seattle-Tacoma-Bellevue metropolitan area (MSA) is clearly the economic engine of Washington State. The MSA ranks 13th among 362 markets nationwide in terms of effective buying income (EBI or after-tax, discretionary spending power). The median household EBI in the Greater Seattle Area is 20 percent higher than the national median.
Approximately 56 percent of the population is in the prime workforce age of 25-64. Residents are among the most highly educated in the nation, with more than 35 percent having at least a bachelor’s degree and one-third of those holding a graduate or professional degree.
Long-term forecasts call for the Greater Seattle area to resume its historic strong growth patterns. The Puget Sound Regional Council expects the area to add approximately 855,000 new jobs by 2040.
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Education
Washington State is home to six public four-year colleges and universities, 34 public community and technical colleges, and more than 300 private colleges, universities, career, and vocational schools.
The University of Washington continues to gain increased national recognition. According to the America’s Best Colleges, U.S. News & World Report in 2016, the UW was ranked 54 among all national universities, tied with Ohio State University-Columbus. The U.S. News 2016 graduate school rankings show many of the UW’s graduate programs among the best in the nation. The medical school ranked first among all schools in the country for primary care and the School of Nursing also retained its top ranking for the 30th year. Overall the UW School of Medicine ranked twelfth among research medical schools and first among public medical schools. The graduate program in computer science ranked sixth and the college of education graduate program was ninth.
Seattle University is a Jesuit university situated on 48 acres in Seattle’s First Hill and Capitol Hill neighborhoods. The school was founded in 1891 and is the largest independent university in the Pacific Northwest. The university has a total enrollment of 7,400 students of which 63 percent are undergraduates. Seattle University employs 1,400 faculty and staff. The U.S. News 2014 rankings place Seattle University eighth among the top universities in the West that offer a full range of masters and undergraduate programs.
Transportation
King County has a well-developed transportation system which provides links to all parts of the country and world. Seattle’s port is closer to the main trading partners in Asia than any other major U.S. port and the region’s distribution networks move goods efficiently inland.
The region’s multi-modal transportation system includes two transcontinental railroads, nationwide trucking capacity, three interstate highways, a ferry system, a world-class port, and an international airport.
The Burlington Northern Santa Fe (BNSF) and Unions Pacific Southern Pacific (UPSP) railroad serve the greater Seattle area. Both railroads have
spur lines that span the area, making it possible to deliver almost any type of load. Outside of Puget Sound and across the state, there are over 4,000 miles of operable track.
Truck transportation in Washington is made possible by over 3,700 interstate trucking companies, including common carrier and contract companies. The State ranks among the top 10 states in general freight tonnage carried by trucks intrastate. The competition results in favorable negotiated freight rates.
All regional communities are accessible from Seattle over an efficient, well-planned freeway system. The average commute between Seattle and outlying cities and suburbs is 23 minutes (non-peak) and 45 minutes (peak). The region’s highway network is anchored by three main highways:
U.S. Interstate 5 which runs north-to-south from Vancouver, British Columbia to San Diego, California.
Interstate 90 which runs west-to-east connecting Seattle with New York.
Interstate 405 (Washington) is a 30-mile stretch of freeway that bypasses Seattle east of Lake Washington. I-405 runs from Lynnwood in the north to Tukwila in the south.
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Clean Technology
Analysts predict a boom in clean technologies amid an oncoming energy crunch. The alternative-energy industry’s revenues are projected to quadruple to $226 billion by 2019, according to a report by Clean Edge, a Portland-based market-research firm.
There are more than 400 clean technology companies located in region employing more than 21,000 people. There is a 64 percent greater concentration of clean technology, or “green,” jobs in the Seattle area than the U.S. average.
Statewide, the clean technology industry accounted for more than 62,000 jobs in the sectors of energy efficiency, renewable energy, reducing pollution and pollution cleanup. The sectors of wind, solar, biomass, wave / tidal and geothermal energy currently employ more than 17,000. Washington State has long supported clean technology and has the largest coordinated hydro-electric system in the world, providing 73 percent of the state’s electrical power.
The Washington Clean Technology Alliance (WCTA) was established in 2007 to take full advantage of the opportunities presented by this emerging sector and to ensure Washington’s continued leadership.
Information Technology
Many of the most well-known names in the software and information technology industry are located in the Great Seattle area. The established companies include Microsoft, Amazon, Nintendo, T-Mobile, RealNetworks, Expedia, and several others.
The strong base of businesses has created the largest employment cluster in the region, supporting nearly 110,000 jobs. The Greater Seattle area has several world-leading strengths in the IT sector. The State of Washington is the largest employer of software publishing workers in the US. Washington ranks first in the country in the creation of new software companies.
Top Puget Sound Area Companies
Amazon.com
AT&T Wireless
Alaska Airlines
Berlex Laboratories
Boeing
Children’s Hospital
Costco
Expedia, Inc.
Group Health Cooperative
Macy’s
Microsoft
MultiCare Health System
Nintendo
Nordstrom
Paccar, Inc.
Providence Health Care
REI
Safeco
Safeway
Starbucks
Swedish Health Services
Symetra Financial
T-Mobile
The Kroger Company
University of Washington
Virginia Mason Medical Center
Weyerhaeuser
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Microsoft is the second largest employer in the state of Washington. In addition to the nearly 42,940 employees in the region, the company historically has had an estimated 3.4 implied employment multiplier. As a result, the company currently also supports nearly 98,000 indirect jobs in the area. Microsoft has also greatly impacted the region through next generation companies. Since Microsoft’s founding, over 250 companies have been spun off through investment and development or from former Microsoft employees.
Amazon continued its strong employment growth, adding over 12,000 employees worldwide last year, an expansion of more than 42 percent. The company doesn’t release detailed employment information for the region; however, recent local leasing activity indicates many of the new and planned hires will be based in the Seattle area.
Amazon leased approximately 460,000 square feet at the 1918 Eighth office tower in Downtown Seattle. This lease is in addition to the 1.7 million-square-foot headquarters in South Lake Union which is apparently
already near capacity. They are currently under construction on the first of four city blocks totaling approximately three million square feet. Tech companies require approximately 250 square feet per employee. Therefore they plan to house an additional 10,000 employees upon completion of this Amazon campus. In addition, Amazon opened a 1,000,000-square-foot distribution center in Kent and DuPont.
The rich and deep pool of talent has led other industry leading IT companies such as Google to establish the area as an important location for growth. In the Greater Seattle area, Google has a complex of new buildings in Kirkland and offices in the Fremont neighborhood of Seattle. A local manager has indicated that at least 100 positions will be added to the 700 employees already working in the two locations. The local engineers are working on the high priority projects such as the Chrome browser and operation systems and Google Talk.
Interactive Media
The Puget Sound is an undisputed global leader in Interactive Media development. Starting with Cyan’s PC games of the nineties, Myst and Riven, to Valve’s Half Life and Portal, and Bungie’s Halo trilogy, the history of the area is strong. With Microsoft, Nintendo, and RealNetworks in the region, along with over 150 noteworthy game-technology companies, the Greater Seattle area can claim to be of the top three game-development centers in the world.
Industry leaders such as Warner Bros. Interactive, Gas Powered Games, NCSoft, and Sony Online Entertainment have offices here. Over the last few years, an industry task force gathered and collaborated with public and private sector leaders to develop the Washington Interactive Media Program—the first of its kind in the nation. The program is designed to promote, nurture, and grow the video game industry in the area.
AMAZON CAMPUS
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Life Sciences
The life science industry in Greater Seattle includes, but is not limited to, biotechnology companies, medical device companies, research institutions, and global health organizations. The industry employs approximately 22,000 individuals. The strongest industry association is the Washington Biotechnology and Biomedical Association (WBBA) to which over 500 local companies belong. The growth of this sector in Washington State is reflected in the fact that the WBBA added 70 new members in 2010. The overall industry is estimated to generate nearly $7 billion in annual revenues.
In 2005, Washington State created the Life Sciences Discovery Fund to support the life science industry as a $350 million commitment to research over a 10-year period.
With a current endowment of $37 billion, the Bill and Melinda Gates Foundation is also a major supporter of the area’s life science companies. Recent funding helped the University of Washington move the Departments of Genome Sciences and Bioengineering into a new, shared facility and helped establish a Department of Global Health.
The Foundation opened its new campus at 500 5th Avenue N in June 2011. The 12-acre Gates campus reinforces the area’s comeback, while adding a more buttoned-down sensibility. A pair of curved office buildings, a reception pavilion, and a 1,000 car parking structure anchor three corners of the site and may be joined by a third office building in the future. Construction costs for this 640,000-square-foot complex totaled $500 million, housing 1,116 employees.
The South Lake Union biotechnology area, near both the Foundation and the University, houses The Fred Hutchinson Cancer Research Center, the Institute for Systems Biology, the Pacific Northwest National Laboratory (Seattle office), Amgen’s Helix Campus on Elliot Bay, the Allen Institute for Brain Science, the Pacific Northwest Research Institute, the Infectious Disease Research Institute, PATH, the Seattle Biomedical Research Institute, and the Benaroya Research Institute at Virginia Mason.
The distinct healthcare industry which includes hospitals, healthcare products and services, training, and research, accounts for 96,000 jobs in Seattle and annual revenue of $10 billion. Collaboration among professionals in healthcare, life sciences and information technology has led to advances in bioinformatics and health informatics.
Tyler StanekKidder MathewsAssociate Vice [email protected]
Arielle DormanKidder MathewsAssociate Vice [email protected]
Dirk StegemanKidder MathewsAssociate Vice [email protected]
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