One of the largest privately held retail real estate companies in the western U.S., Vestar, announced last Wednesday that it has acquired its first property in the state of Washington. According to public records, the property was purchased from Illinois-based Inland American Real Estate Investment Trust, a private REIT, for $31.4 million. In the last 12 months, Phoenix-based Vestar has acquired five retail centers valued at a total of $670 million.
Located at 6901 S. 19th Street in Tacoma, James Center totals 140,240 square feet and is situated on 15.95 acres. The shopping plaza is leased by a mix of retailers such as Fred Meyer, Starbucks, Verizon, U.S. Bank and FedEx Kinko's. "James Center fits well in Vestar's acquisition strategy of investing in grocery anchored centers with strong demographics," said Clint Marchuk, vice president of acquisitions with Vestar. "This asset offers a key location in an infill area that continues to grow in population and workforce numbers."
"This asset offers a key location in an infill area that continues to grow in population and workforce numbers."
In the second quarter of 2014, The Washington State Retail Survey found that greater Tacoma placed third in the state with 2,013 retail sales of $2.5 billion, behind only Seattle and Bellevue. "The James Center property is a strong retail area. It's a location where three cities come together at the same point," said Rachel Corp, a vice president in the Tacoma office of Kidder Mathews. "You have the city of Tacoma, the Tacoma community college, which is a great attribute right across the street, and then you have University Place and Fircrest that are basically at that same intersection. It's a very good retail community core."
"North Tacoma tends to be better demographics, so I think from that standpoint it is a very good acquisition," added Corp. "Tacoma as a whole has vacancy levels that are going down, and we are seeing a upward movement in rents, not as quickly as you see up north in King County. It all gets down to location, that's what retail is all about. Well located retail is doing very well and is leasing for better rents than they were a year or two ago."
According to Kidder Mathews Fourth Quarter 2015 Seattle Retail report, Pierce County had a total vacancy rate of 7.5 percent, compared to 4.2 percent in King County. In Tacoma, North American Asset Investment LLC is moving forward with a 710,000 square feet Tacoma Town Center, which will include 135,000 square feet of retail in addition to office and apartment components. How new developments will affect the Tacoma retail market is unknown at this time.
Buyers seeking larger yields or a less-competitive bidding environment will look to Pierce and Snohomish counties, where rising valuations have more owners willing to list properties, according to Marcus and Millichap's Seattle-Tacoma Retail Outlook Report for 2016.