Necessity Centers Cover Wide Berth, Attract Investors
Necessity and value-focused shopping centers, even in tertiary market areas, continue to perform well, such as Triangle Center, the one-stop location for Longview, WA residents and the overall trade area.
LONGVIEW, WA—Neighborhood/necessity centers continue to pull their weight throughout the country. A recent acquisition example in the Pacific Northwest is Triangle Center, a community center 98% leased to national and regional credit tenants. The center sold for $38.3 million. A private buyer based in San Diego purchased Triangle Center to complete a 1031 exchange.
Built in 2004, Triangle Center is a 260,627-square-foot community shopping center situated on 36.9 acres at 1015 Ocean Beach Highway in Longview, roughly 50 miles north of downtown Portland, while downtown Seattle is located 125 miles north. Triangle Center is located in the supply-constrained downtown Longview trade area with limited sites available for future development, creating high barriers to entry.
Tenants include Winco Foods (not a part of the sale), Ross Dress for Less, Bed Bath & Beyond, Michaels, Petco, Rite Aid, Ace Hardware, Ulta Beauty, Big 5, Office Depot along with Five Guys, Great Clips and GameStop. The large site, ample parking and flexible zoning allow a multitude of uses to serve the surrounding residential and commercial density, further enhancing the long-term value preservation at the property, CBRE vice president Jimmy Slusher tells GlobeSt.com.
CBRE executive vice president Philip D. Voorhees says the national retail partners-west completed the sale. CBRE retail experts Slusher, Kirk Brummer, James Tyrrell, Dino Christophilis, Alex Martinac and Voorhees represented the seller, Highlands REIT, a Chicago-based investment trust.
“Private capital investors snapping up institutional-quality shopping centers around the west is certainly a theme in 2018,” said Voorhees. “Our team sourced a high-net-worth family office investor based in San Diego completing a 1031 exchange for Triangle Center. The buyer’s offer was more competitive in price and terms than both institutional and well-known regional investors active in the Pacific Northwest.”
CBRE’s debt and structured finance team led by Shaun Moothart and Danielle Priore exclusively advised the buyer in procuring debt financing for the acquisition.
“Our team canvassed the debt market to drive leverage to a 72.5% loan-to-value at a 154-spread with multiple years of interest only, maximizing the buyer’s levered cash on cash returns,” said Moothart.
CBRE’s marketing efforts produced more than 284 confidentiality agreements/offering memoranda. Through the team’s managed-bid offer process, it generated multiple offers to purchase the property, according to Slusher.
“Necessity and value-focused shopping centers, even in tertiary market areas, continue to perform well,” said Slusher. “Triangle Center is the one-stop location for Longview residents and the dominant community center in the trade area, pulling from a wide radius in this part of rural Washington.”
There are more than 52,900 people in a three-mile radius with an average household income exceeding $55,805. More than 68,100 people reside in a five-mile radius with an average household income exceeding $58,100 and more than 87,730 people in a 10-mile radius with an average household income exceeding $63,989, GlobeSt.com learns.
The city of Longview is part of the Longview-Kelso, WA trade area. These are the two economic and social epicenters for Cowlitz County and for the expanded region. These cities are located along the I-5 corridor between the Olympia market to the north and the Portland/Vancouver market to the south. Today, Longview is a thriving community of 37,000, growing in both size and diversity. The city has a strong economic base and a wide array of recreational, educational and cultural offerings. Longview offers convenient access to regional arterials, such as I-5 and Highway 30, with an I-5 entrance 1.5 miles east of the subject.
“The asset offered a diverse collection of national retailers making for a one-stop shopping destination serving the Cowlitz County to the tune of a 20- to 30-mile trade area,” Slusher tells GlobeSt.com. “Triangle Center offered the buyer a synergistic value-focused tenant mix catering to the property’s trade area and providing a regional draw, as well as benefiting from the day-to-day foot traffic created by Rite Aid, Ace Hardware and the shadow-grocery anchor, Winco Foods. More than 159,860 square feet or 59% of the in-place tenancy has operated at this location for 10 years or more, proving the viability of this retail location.”
The Port of Longview, established in 1921, has eight marine terminals handling a wide range of cargo from windmills, pencil pitch, calcined coke, pulp bales, lumber, grain, logs and steel. The Port works for national and worldwide commerce. Serving as the connection point between Washington’s exports and the rest of the world, the Port of Longview makes international trade possible, whereby supporting the global economy as well as the national infrastructure. Additionally, following the 1980 eruption of Mount St. Helens, tourism expanded rapidly and is now a major industry in Cowlitz County, GlobeSt.com learns.