multi-tenant retail investment opportunity · news top 100 report, and named “america’s...

MULTI-TENANT RETAIL INVESTMENT OPPORTUNITYDESERT GLEN SHOPPING CENTERNEC of 55th Avenue & Bell Road | Glendale, AZ

CHRIS HOLLENBECKSenior Director +1 602 224 4475 [email protected]

CONFIDENTIALITY AGREEMENT

Cushman & Wakefield (“Advisor”) serves as the exclusive advisor in connection with the solicitation of offers for the purchase of a portion of the Desert Glen Shopping Center (“Asset”). The solicitation and potential sale is to be governed by this Confidential Offering Memorandum, as it may be modified or supplemented (“Offering Memorandum”) and the Purchase Agreement governing the sale of the Asset. Prospective purchasers are advised that as part of the solicitation process, Seller will be evaluating a number of factors including the current financial qualifications of the prospective purchaser. Prospective purchasers are further advised that the Seller expressly reserves the right, in its sole and absolute discretion, to evaluate the terms and conditions of any offer and to reject any offer without providing a reason. Further, Seller reserves the right to terminate the solicitation process at any time prior to final execution of the Purchase Agreement.

The information contained in this Offering Memorandum is confidential, furnished solely for the purpose of a review by a prospective purchaser of the Asset, and is not to be used for any other purpose or made available to any other person without the express written consent of the Seller or Advisor. Prospective purchasers should conduct their own due diligence, including, but not limited to, engineering and environmental inspections, to determine the condition of the Property and the existence of any potentially hazardous material located at the Asset or used in the construction or maintenance of the building(s) at the Asset

A prospective purchaser’s sole and exclusive rights with respect to this prospective transaction, the Asset, or information provided herein or in connection with the sale of the Asset shall be limited to those expressly provided in an executed Purchase Agreement and shall be subject to the terms thereof. In no event shall a prospective purchaser have any other claims against Seller or Advisor or any of their affiliates or any of their respective officers, directors, shareholders, owners, employees or agents, for any damages, liability, or causes of action relating to this solicitation process or the marketing or sale of the Asset. A Prospective purchaser is not to construe the contents of the Offering Memorandum or any prior or subsequent communications from the Seller or Advisor or their affiliates or any of their respective officers, directors, shareholders, owners, employees or agents as legal, tax or other advice. Prior to submitting an offer, prospective purchasers should consult with their own business advisors, legal counsel and tax professionals to determine the consequences of an investment in the Asset and arrive at an independent evaluation of such investment.

SHANE CARTERAssociate +1 602 224 4442 [email protected]

THE BOULEVARD AT SURPRISE POINTE 3

PROPERTY HIGHLIGHTS

ADDRESS 5350 W. Bell Road Glendale, AZ 85308

OFFERING PRICE $2,853,232

CAP RATE 6.25%

NET OPERATING INCOME $178,452

OCCUPANCY 100%

TENANCY Multi-Tenant Shops

PARCEL 200-49-802E

LAND AREA ±1.14 Acres

BUILDING GLA ±8,318 SF

YEAR BUILT 2006

PROPERTY OVERVIEW• 100% leased property in the low vacancy

Arrowhead trade area

• Densley populated trade area with a population of 349,000 in a 5 mile radius

• Strong tenant lineup with a mix of national, regional, and local tenants

• Highly visible out parcel in a busy Kohl’s anchored shopping center

• Strong average household incomes at $74,000 within a 5 mile radius

• High traffic intersection with over 56,000 vehicles per day

• Less than 4 miles headed West on Loop 101 Freeway to the west, and 2.5 miles headed North on the Loop 101 Freeway

• 2.5-3% annual increases from each tenant

4 CUSHMAN & WAKEFIELD | OFFERING MEMORANDUM

RENT ROLL

SUITE TENANT SQUARE FEET LEASE TERM

CURRENT ANNUAL BASE

RENT

CURRENTANNUAL

RENTPER SF

TENANT REIMBURSEMENT

PER SF

TOTAL RENT PER SF ESCALATIONS RENEWAL OPTIONS

130 1,250 May 2015 to Febrary 2022 $17,500.00 $14.00 $7.39 $21.39 3% annual increases

Two (2), Five (5) year options 5% increases each

option period

132 3,568 January 2007 to May 2021 $85,775.00 $24.04 $7.39 $31.43 3% increases

June 1, 2019 None

134 1,200 November 2011 to March 2028 $19,200.00 $16.00 $7.39 $23.39 3% annual increases None

136 2,300 November 2016 March 2022 $45,977.00 $19.99 $7.39 $27.38 2.5% annual increases

Three (3), Five (5) year options with 2.5%

annual increses

TOTALS 8,318 $168,452.00

Guaranteed By


INCOME VALUATION

IncomeBase Rental Income $168,452

Management Fee $10,000

Expense Reimbursement Income $51,450

Total Income $229,902

Operating ExpensesMaintenance Services $9,800

Repairs and Maintenance $4,500

Utilities $5,100

Landscaping $1,800

Fire & Life Safety $450

Fixed Expenses 29,800

Total Expenses $51,450

NET OPERATING INCOME $178,542


TENANT PROFILES

WEBSITE www.crazymikeswings.com

# OF LOCATIONS 1

GUARANTEE Personal

WEBSITE www.marcosorder.com

# OF LOCATIONS 900+

GUARANTEE Personal (franchise)

WEBSITE www.musicarts.com

# OF LOCATIONS 150+

GUARANTEE Corporate

Marcos Pizza was founded in Oregon, Ohio in 1978 by Pasquale “Pat” Giammarco. Pat moved to America from Italy at the age of 9 years old. He grew up working in his family’s pizzeria and eventually ventured out on his own to create high quality pizza for the masses. He developed three standards to ensure the quality and freshness of Marco’s Pizza. The dough is made fresh daily in each store, the sauce is a proprietary blend of imported spices and vine-ripened tomatoes, and their three cheese blend is also never frozen at any location. Today Marco’s Pizza now has over 900 stores in 35 states and 4 countries. Marco’s was recently ranked No. 25 on Entrpeneur’s 2018 Franchise 500 list, the No. 3 fastest-growing U.S. chain on the 2017 Nation’s Restaurant News Top 100 Report, and named “America’s Favorite Pizza Company” for 207 by Market Force. They plan to open their 1,000th store in 2019 with more on the way. There is a strong personal guaranty from the franchisee.

Music & Arts first opened in 1952 offering printed music, music lessons, dance lessons, and art supplies. Shortly after opening the founder Benjamin O’Brien decided to focus on Music to better serve his customers. Since the 1990’s, Music & Arts has expanded nationwide to over through their own organic growth, multiple acquisitions, and mergers. As of 2005, Music & Arts has been the largest band and orchestra instrument retailer via their merge with American Music. Music & Arts today operates over 150 retail stores, employs over 120 educational representatives, and has more than 300 affiliate locations. Music and Arts’ parent company is Guitar Center. The company has ±262 locations with ±2.2B in revenue.

Crazy Mikes’s Chicken is Crazy Mike’s Wings is a restaurant that specializes in chicken wings, chicken tenders, French fries, Boba tea, Smoothies, and various desert. They are known for having 22 different wing flavors and wide variety of side dishes. Since their grand opening, Crazy Mike’s has become a neighborhood staple and has strong customer reviews.

WEBSITE www.gravitatesmokeshop.com

# OF LOCATIONS 5

GUARANTEE Personal

Gravitate Smoke Shop is a successful chain of smokeshops in the Phoenix Metro area. Gravitate is known for knowledgeable and professional staff, as well as a vast selection of tabacco, pipes, vapes, jucies, equipment, and accessories. They currently operate 5 loctions throughout the valley.The guarantor of the lease currently operates 6 smoke shops and 2 taco shops.

Guaranteed By:

http://www.crazymikeswings.com

http://www.marcosorder.com

http://www.musicarts.com

http://www.gravitatesmokeshop.com


PEORIASPORTS COMPLEX

BELL ROAD

51S

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59TH

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67T

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75TH

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83R

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GREENWAY RD

UNION HILLS DR

Your Neighborhood Pizza Joint

SUPERCENTER

SUPERCENTER

THUNDERBIRD SCHOOLOF GLOBAL MANAGEMENT

DEER VALLEY HIGH SCHOOL

ABRAZO ARROWHEAD

HOSPITAL

SITE

INVESTMENT OPPORTUNITYMULTI-TENANT BUILDING FOR SALE


LOCATION MAP

59TH

AV

E

51ST

AV

E

BELL RD

SITE

SUPERCENTER


SITE PLAN

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LF Market

Insp

ire

Sal

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Angelina’s Pho & Grill &

Sushi Bar

Bell Road

55th

Ave

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(VPD 36,100)

(VP

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0,5

44

)

SITE


PROPERTY PHOTOS


DEMOGRAPHICS67

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59T

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51ST

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43R

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UNION HILLS DR

BELL RD

GREENWAY RD

THUNDERBIRD RD

SITE

1 Mile 3 Mile 5 Mile

2010 Population 11,002 112,852 325,291

2017 Population 11,416 120,131 349,490

2022 Population Estimated 11,916 127,146 372,151

2017-2022 Annual Rate 0.86% 1.14% 1.26%

2017 Daytime Population 13,076 116,086 313,906

2010 Households 3,777 42,628 123,013

2017 Total Households 9,904 45,339 131,932

2022 Total Households 4,072 48,006 140,402

2017-2022 Annual Rate 0.85% 1.15% 1.25%

2017 Avg HH Income $84,154 $79,177 $74,062

2022 Avg HH Income $94,269 $87,960 $82,495

2017-2022 Annual Rate 1.11% 1.09% 1.08%

Traffic Counts (ESRI 2017) N/S: 20,544

E/W: 36,100


MARKET OVERVIEW

Location & Market Analysis - Glendale

The City of Glendale is located in the North West portion of Maricopa County and has a current population of 237,000 people. It is approximately 19 minutes from Downtown Phoenix. The community is surrounded by mountain park lands, a regional lake, and pristine open Sonoran desert.

Key Assets:

• Glendale features major employment sectors such as defense, healthcare, education, retail & advanced manufacturing.

• The major employers located here are the United States Air Force with 5,000 employees, Banner Health with 3,000, City of Glendale with 1,600, and Honeywell with 830.

• Glendale sports entertainment is provided by the Gila River Arena which hosts the Coyotes, while The University of Phoenix Stadium hosts The Arizona Cardinals.

• There are two desert parks, Sahuaro Ranch Park and Thunderbird Park, with more than 1,000 acres for hiking.


MARKET OVERVIEW

Economy With a workforce strength in healthcare, some of the top companies in the Northwest Valley are in that industry. Other major employers are in manufacturing, education and local government. Throughout the years, the Northwest Valley has attracted a variety of stable, traditional industries and investments, such as education, healthcare and commercial developments, and this has positioned it for an even more dynamic future. Leveraging the cities strengths is the most important way to sustain a positive economic environment, retain employment and attract new businesses to the community, making the community a great place to live, work, learn and play.

Education The Northwest Valley offers numerous higher education opportunities including Arizona State University’s West Campus, Midwestern University, DeVry University Westgate and Western International University and the Thunderbird School of Global Management – the No. 1 International full-time MBA School, according to U.S. News & World Report. In addition, residents of Peoria enjoy one of the state’s highest performing school districts, the Peoria

Unified School District. As the third largest school district in Arizona, it serves 38,000 students.

Housing Glendale has 10 Historic Districts with homes ranging from bungalows to midcentury moderns to classic ranch style homes. The Glendale-Peoria area is home to over 144,886 residential units. Of these units 86% are occupied and over 51% of those are owned. The number of units in the area is set to increase with the completion of 9920 II (68-units), Bungalows at Olive (153-units), Plaza del Rio (333-units) and Zanjero (340-units). These developments are set to deliver in 2017 and 2018. The 286-unit Velaire at Aspera is the most recent multifamily development to be completed in the area.

MAJOR GLENDALE EMPLOYERS

• U.S. Air Force (4,992)

• Banner Health (3,000)

• Peoria Unified School (2,543)

• Walmart (2,175)

• City of Glendale (1,758)

• Glendale Unified School (1,583)

• City of Peoria (1,375)

• Deer Valley Unified School (1,258)

• Fry’s (844)

• Humana (840)

• Honeywell (830)

• Midwester University (660)

Location & Market Analysis - Glendale

The median housing value in the Glendale area is $148,611.


MARKET OVERVIEW

Market Analysis

RETAIL MARKET SNAPSHOT Metro Phoenix • First Quarter • 2018

Average asking rates for the Metro Phoenix retail market were $14.73 per square foot (psf) on an annual triple net basis in the first quarter. This marks a -$0.13 decrease from the $14.86 psf triple net rate recorded in the fourth quarter of 2017. However, the first quarter of 2018 is up $0.27 from the $14.46 psf recorded in the first quarter of 2017. The CBD submarket saw the largest increase of $1.48 from $20.98 to $22.46 quarter-over-quarter. The higher vacancy rate and average asking rate in CBD are attributed to the structural makeup of the submarket and the Metro Phoenix retail market. Cushman & Wakefield is tracking 270,000 sf of construction in the Metro Phoenix retail market for the first quarter of 2018. The San Tan Pavilions project in the Southeast Valley submarket is the largest, with over 82,000 sf. Approximately 82,000 sf of new supply was added during the first quarter of 2018, less than the nearly 255,000 sf added in the fourth quarter of 2017. The Crossroads Towne Center (50,000 sf) was the largest of the deliveries in the first quarter of 2018.

As e-Commerce continues to meet rising demands, large-scale department store retailers such as Macy’s and Sears continue to reduce brick and mortar locations. Shopping centers continue to renovate existing locations in order maintain tenant and customer appeal.

One main motivation for these renovations include new restaurant concepts that are aimed at attracting new tenants. The addition of Lou Malnati’s and Creamistry at Uptown Plaza led to a renovation of the neighborhood & community center. With eateries like this, local restaurateurs continue to reinvent the food industry by finding niche concepts that provide mass appeal and continue to add enormous value to neighborhood & community and strip centers.

ECONOMIC INDICATORS

Overall Net Absorption/Overall Asking Rent 4-QTR TRAILING AVERAGE (IN THOUSANDS)

$12

$14

$16

$18

$20

200

250

300

350

400

450

500

550

Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017

Thou

sand

s

Net Absorption, 000's Asking Rent, $ PSF

RegionalQ1 2017 Q1 2018 12-Month

Forecast

Household Income $61,997 $62,676

Population Growth 2.3% 2.3%

Unemployment 3.8% 4.1%

National Q1 2017 Q1 2018 12-Month Forecast

GDP Growth 2.0% 2.9%

CPI Growth 2.6% 2.3%

Consumer Spending Growth 2.9% 2.8%

Retail Sales Growth 5.2% 4.8%

*Q1 Estimates. Values represent year-over-year % change. **Forecast by Cushman & Wakefield.

Moody’s data buffet for HH Income, Population Growth

Average Asking Rate By Market(NNN)CBD OVERTAKES HIGH WATER MARK

$20.98

$18.99

$11.27

$15.68

$12.41

$14.43

$20.73

$15.86

$19.56

$13.93

$19.94

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

$20.00

$22.00

$24.00

Cen

tral B

usin

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Dis

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East

Pho

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Mes

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Tem

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MARKET OVERVIEW

Market Analysis

1 Northwest Phoenix

2 Southwest Phoenix

3 North I-17

4 North Central Phoenix

5 Scottsdale

6 Mesa

7 Southeast Valley

8 Tempe

9 Sky Harbor Airport

10 East Phoenix

11 Central Business District

The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.

Copyright © 2018 Cushman & WakedfieldAll rights reserved.

SUBMARKET INVENTORY SUBLET VACNANT

DIRECT VACANT

VACANCY RATE

Q3 NET ABSORPTION

2017 NET ABSORPTION

AVERAGE ASKING RATE

(NNN)

Neighborhood & Community 91,216,920 208,903 9,493,161 10.9% 265,432 265,432 $14.13

Strip 13,181,053 9,150 1,565,652 11.9% 15,057 15,057 $15.62

Power & Regional Mall 31,304,649 93,713 1,712,175 5.8% 84,229 94,229 $19.28

Lifestyle 1,749,240 - 101,321 5.8% 5,959 5,959 $26.25

All Types 137,451,862 311,766 12,872,309 9.6% 370,677 370,677 $14.73

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P H O E N I X

M E S A

C H A N D L E R

G I L B E R T

Q U E E N C R E E K

S A LT R I V E RP I M A - M A R I C O PA

C O M M U N I T Y

F O R TM C D O W E L L

YAVA PA I N AT I O N

F O U N TA I N H I L L S

S C O T T S D A L E

PA R A D I S E VA L L E Y

G I L A R I V E R C O M M U N I T Y

T O L L E S O N

AV O N D A L E

G O O DY E A R

L I T C H F I E L DPA R K

G L E N D A L E

P E O R I AS U R P R I S E

E L M I R A G E

T E M P E

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P H O E N I X

1011

RETAIL MARKET SNAPSHOT Metro Phoenix • First Quarter • 2018

Outlook• As vacancy rates continue to

decrease, average asking rates are expected to continue to rise, quar-ter-over-quarter.

• Construction continues to slow down for Metro Phoenix shopping centers, down nearly 377,000 sf (82% y-o-y); a trend with is likely to continue througout 2018.

• With vacancy rates hitting a 10 year low, inventory demand is expected to increase throughtout 2018.

• Neighborhood and community centers continue to show consis-tency and strength by recording nine straight quarters of positive absorption.

Approximately 82,000 SF of new supply has been added in Northwest Phownix during Q1 of 2018.

CHRIS HOLLENBECKSenior Director

+1 602 224 4475 [email protected]

2555 E Camelback Rd, Suite 400Phoenix, Arizona 85016

ph: +1 602 954 9000fx: +1 602 253 0528

cushmanwakefield.com

DESERT GLEN SHOPPING CENTER NEC 55th Ave & Bell Road | Glendale, AZ

SHANE CARTERAssociate

+1 602 224 [email protected]

multi-tenant retail investment opportunity · news top 100 report, and named “america’s...

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