Kitsap County Assessor

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1 Kitsap County Assessor Narrative for Countywide Model Tax Year: 2018 Appraisal Date: 1/1/2017 Property Type: Countywide Retail - Big Box Updated 6/8/2017 by CM20 Area Overview Countywide models are for properties located throughout Kitsap County, rather than by neighborhood. Property Type Overview Big Box Retail are buildings typically in excess of 100,000 square feet. They fall into two categories, the fully finished retail stores such as Walmart and Target, and the warehouse discount stores like Lowe's, Home Depot, and Costco. These properties are predominately owner occupied and rarely sell. Kitsap County has a total of 13 Big Box Retail stores with 2 vacancies. Economic Overview: The overall condition is stable with the exception of the 2 long term vacancies located on Wheaton Way in Bremerton. Valuation Summary Approach Used: Income Analysis and Conclusion Summary: The three approaches to value were considered. The cost approach was given little consideration in the appraiser's final analysis. Cost approach components such as replacement cost new, effective age, and depreciation are difficult to accurately calculate in a mass appraisal model. A market/sales comparison approach uses sale prices of comparable properties to calculate value. The market/sales approach was not applied as Kitsap County lacks sufficient, recent sales. The income approach was selected as the best method for valuing these properties. The data used to develop our current model data was collected from our mail survey, site visits, local sales, national publications, and data supplied for review or appeal. Model Calibration Preliminary Ratio Analysis: Analysis of sales resulted in a mean ratio of 0%, a median ratio of 0%, and a coefficient of disperson (COD) of 0. /Sales Comparison Approach Data and Analysis Sales: Range of Sale Dates: 1/1/2012 to 12/31/2016. A total of 0 local sales, and 6 regional sales, and 0 national sales were used in the sales analysis. Additional information is provided on the sales analysis data sheet. Kitsap County attempts to review, analyze, and validate via telephone, mail, or in person interviews, all commercial sales within the county for inclusion or exclusion in our market/sales approach. With the limited population, Big Box Retail was valued on a countywide basis. Due to limited sales activity, additional sales from other counties was researched. /Sales Rates: Sales ranged from $80.46 to $ per square foot. No market rates were developed. Printed 6/8/2017

2 Property type: Countywide Retail - Big Box (continued) Income Approach and Data Analysis Values were calculated using a triple net (NNN) income model. Income and expense information was collected from mailed surveys, property representatives, on-site visits, and market research (publications, newsletters, websites, etc.) Only 1 rent was received from Kitsap County. s from listings and other counties were reviewed. Data: The Assessor validated rents from 7.7% of the market. Typical reported rents had a range of $5.80 to $ We selected $6.50 to $11.69 for our model. Vacancy Data: Typical reported vacancy had a range of 0% to 0%. We selected 8% to 20% for our model. Expense Data: Typical reported expense had a range of 0% to 0%. We selected 6% to 6% for our model. Capitalization Rate (Cap) Data: Typical sale cap rates ranged from 6.07% to 7.3%. We selected 8.75% to 9.75% for our model. Cap rates from national publications range between 4.85% and 9.14% with median asking price between $156- $158/sqft. Vacancy over life of building, not actual, is listed between 6.50% and 7.70%. Income Model Value Range: The income approach calculates a range of values from $50.13 to $ per square foot. Final Ratio Analysis: Analysis of sales resulted in a mean ratio of 0%, a median ratio of 0%, and a coefficient of disperson (COD) of 0. Sources Kitsap County Board of Equalization appeal documentation. Washington State Board of Tax appeal documentation. Kitsap County income and expense surveys. Kitsap County sales questionaires. The Dictionary of Real Estate Appraisal, Appraisal Institute, Third Edition, 1993 Property Appraisal and Assessment Administration, IAAO, 1990 Glossary for Property Appraisal and Assessment, IAAO,1997 LoopNet - loopnet.com Commercial Brokers Association - commercialmls.com Boulder Group, Net Lease Big Box Report, Q42016 Situs RERC Investment Survey, Q42016 Calkain, Net Lease Caps Big Box, Q42016 Colliers, 2016 Year End North American Big Box Report Printed 6/8/2017

3 Class Description Location Visibility Traffic A KITSAP COUNTY ASSESSOR TAX YEAR 2018 BIG BOX MODEL DEFINITION New stand-alone concrete shell buildings with good to excellent quality materials and workmanship. The buildings have minimal partitioning for office and storage areas. Ceilings, walls, and floors have average or fair quality finish and the building has a prominent entrance High visibility, high traffic count, easy access, typically lighted intersection, multiple access points. Lighted Corner High High Yes B C Stand-alone concrete shell buildings with new or better quality materials and workmanship. The buildings have minimal partitioning for office and storage areas. Ceilings, walls, and floors have average or fair quality finish and the building has a prominent entrance. (Fred Meyer, Target, Walmart, Poulsbo Home Depot) Newer stand-alone concrete shell buildings with fair to average quality materials and workmanship. The buildings have minimal partitioning for office and storage areas. Ceilings, walls, and floors have average or fair quality finish and the building has a prominent entrance. (Home Depot, Lowe s, Costco) High visibility, high traffic count, easy access, typically lighted intersection, multiple access points. Good visibility, average traffic count, easy access, multiple access points. High High Yes Good Possible D Older stand-alone concrete shell buildings with fair to average quality materials and workmanship. Standard entrance design, partitioning, and interior finish. visibility, fair to average traffic count to Good Fair to Possible E Stand-alone concrete shell buildings with fair quality materials and workmanship. Minimal entrance design, partitioning, and interior finish, may need significant remodel and/or have functional obsolescence. Limited visibility, fair traffic count Fair to Fair No

4 Kitsap County Assessor Tax Year: 2018 Property Type: Retail Countywide Neighborhood: 0 Rtl>20K Outside Rtl>100K SA Drug Class A Class B Class C Class D Class E Income Mode

5 Tax Year 2018 Retail - Countywide Big Box Sales from 01/01/2013 to 12/31/2016 Local Sales No. Neighborhood - Vicinity Account Number Project Name Units Excise Sale Date Out of Area Sales No. Neighborhood - Vicinity Account Number Project Name Units Excise Sale Date Cap $/SF NOI 1 Kent King Fred Meyer 166,593 E# /12/2013 $13,338,000 $ Federal Way King Former Target 101,909 E# /19/2014 $8,200,000 $ Bellingham Whatcom Home Depot 104,950 E# /09/2015 $25,590,000 $ % $ Yakima Yakima Shopko Yakima 94,237 E# /26/2015 $9,931,506 $ % $ Tacoma Pierce Home Depot 137,071 E# /30/2015 $32,655,000 $ % $ Kent King Midway Lowes 135,041 E# /08/2016 $14,115,500 $ Lease Information Median $ No. Neighborhood - Vicinity Account Number Project Name Units Source Sale Date Cap $/SF NOI 1 Pierce Assessor Actual $ Pierce Assessor Actual $ Pierce Assessor Actual $ Pierce Assessor Actual $ Kitsap Assessor Actual $ 9.35 Median $ 10.86