Capital Markets Investment Properties - Retail Shell Gas Station 5059 West Olive Ave Glendale, AZ Net Leased Investment
01 Executive Summary The Opportunity Investment Highilights Asset Profile Lease Summary Demographics 02 Property Overview Aerials Phoenix Metropolitan Area Map 03 Market Overview Phoenix Metropolitan Area Metropolitan Phoenix Retail Market Table of contents EXCLUSIVELY LISTED BY: Andrew K. Fosberg Vice President Investment Properties - Retail CBRE Capital Markets 602.735.1723 andrew.fosberg@cbre.com www.cbre.com/andrew.fosberg www.cbre.com Max Bippus Vice President Retail CBRE Capital Markets 602.735.5518 max.bippus@cbre.com www.cbre.com/max.bippus www.cbre.com Molly M. Busch Senior Associate Investment Properties - Retail CBRE Capital Markets 602.735.1771 molly.busch@cbre.com www.cbre.com/molly.busch www.cbre.com
01 Executive Summary The Opportunity Investment Highlights Asset Profile Lease Summary Demographics
THE OPPORTUNITY CBRE has been retained as the exclusive sales representative for the Net Leased Shell Gas Station located on the hard Southeast corner of 51st Ave and Olive Ave in Glendale, AZ. The Tenant, operating under the Shell Flag, entered into a 5-year lease extension at a below market rent of ±$51,000 annually with one 5-year option to extend. This opportunity offers an investor a net-leased fuel service station ideally located on the going to work side of Olive Ave, a major commuter thoroughfare. There are over 450,000 people who live within 5-miles of the property. The Shell Gas station shares the dynamic hard-corner intersection with 2 major grocers: Wal-Mart and Fry s, as well as a multitude of other complimentary retailers. INVESTMENT HIGHLIGHTS Recent Lease Extension The operator of the gas station operating under the Shell flag recently extended their lease for 5 years with one option to extend for an additional 5 years. Dynamic Intersection with 3 Major Grocery Chains Fry s Food & Drug and Walmart Neighborhood Market are all located at the subject intersection of 51st Avenue and Olive Avenue. The Subject Property is strategically located on the southeast hard corner. Below Market Rent The in-place rent is just over $51,000 annually, creating additional upside in the future. Densely Populated More than 450,000 people live within a 5-mile radius of the subject property. Executive Summary Demographics 1 Mile Radius 3 Mile Radius 5 Mile Radius 2014 Estimated Population 18,892 165,686 450,251 2019 Projected Population 19,262 170,712 465,713 Growth 2010-2014 0.57% 1.54% 1.90% Growth 2014-2019 1.96% 3.03% 3.43% 2014 Est. Average Household Income 7,029 59,605 157,386 2014 Est. Average Housing Value 7,280 62,217 164,554 traffic count West Olive Avenue 51st Avenue Source: Costar ±34,900 VPD ±24,600 VPD page 4 Shell Gas Station PAGE 4 4
ASSET PROFILE Address: Price: $799,000 Cap Rate: 6.43% Net Operating Income: $51,411 Rentable SF: ±1,125 Parcel Size (SF): ±29,621 Occupancy: 100% Year Built: 1976 Zoning: Gas Pumps: 8 Parcel number: 5059 West Olive Avenue Glendale, AZ 85302 C-2, City of Glendale 148-09-002B lease summary Tenant: Manish Bista and Bijaya Bista Hamal Tenant Operating Name: Shell Gas Station Lease Type: NN Rent Commencement: 10/1/2014 Annual Rent $51,411 Lease Expiration: 9/30/2019 Lease Term: 5 Years Rental Increases: 1976 Options to Renew: One (1), Five (5) year upon the same terms Landlord Obligations: Grounds, exterior of building, roof, foundation Executive Summary page 5 Shell Gas Station PAGE 5 5
DEMOGRAPHICS 1 mile radius 3 mile radius 5 mile radius 2014 Estimated Population 18,892 165,686 450,251 2019 Projected Population 19,262 170,712 465,713 2010 Census Population 18,785 163,166 441,837 2000 Census Population 19,469 165,775 440,591 Growth 2010-2014 0.57% 1.54% 1.90% Growth 2014-2019 1.96% 3.03% 3.43% 2014 Estimated Median Age 38.20 34.09 32.67 2014 Estimated Average Age 38.76 35.91 34.86 2014 Estimated Households 7,029 59,605 157,386 2019 Projected Households 7,280 62,217 164,554 2010 Census Households 6,836 57,454 151,725 2000 Census Households 7,107 59,775 155,402 Growth 2010-2014 2.82% 3.74% 3.73% Growth 2014-2019 3.57% 4.38% 4.55% 2014 Est. Average Household Size 2.63 2.75 2.83 2014 Est. Median Household Income $49,750 $40,916 $39,079 2019 Prj. Median Household Income $50,704 $41,925 $39,964 2000 Cen. Median Household Income $50,574 $41,278 $39,747 2014 Est. Average Household Income $57,316 $51,073 $50,814 2014 Estimated Per Capita Income $21,325 $18,373 $17,762 2014 Estimated Housing Units 7,631 67,800 180,056 2014 Estimated Occupied Units 7,029 59,605 157,386 2014 Estimated Vacant Units 602 8,195 22,670 2014 Est. Owner Occupied Units 5,102 36,075 87,744 2014 Est. Renter Occupied Units 1,927 23,530 69,642 2014 Est. Median Housing Value $128,204 $116,039 $120,299 2014 Est. Average Housing Value $140,570 $132,990 $142,833 Executive Summary page 6 Shell Gas Station PAGE 6 6
02 Property Overview Aerials Phoenix Metropolitan Area Map
AERIAL olive avenue Property Overview Walmart Neighborhood Market 51st avenue N page 8 Shell Gas Station PAGE 8 8
AERIAL subject 17 Property Overview 10 N not to scale 10 QUEEN NCREEK RD. ALMA SCHOOL RD. page 9 Shell Gas Station PAGE 9 9
03 05 Market Market Overview Overview Phoenix Phoenix Metropolitan Metropolitan Overview Metropolitan Flagstaff Metropolitan Phoenix Retail Overview Market
PHOENIX METROPOLITAN AREA Phoenix is the fifth most populous city and is the most populous state capital in the entire United States. Incorporated in 1818, it is the largest city in Arizona and makes up the greatest portion of the Phoenix Metropolitan Statistical Area (MSA). The Phoenix MSA is home to approximately 4.5 million residents and is consistently recognized in the National Top 10 for both employment and population growth. The City s famous climate and ideal geography are two of Phoenix s several economic and lifestyle advantages. The Phoenix MSA boasts approximately 330 days of sunshine per year and an average annual temperature of 76 degrees. Arizona s largest industry, Sports and Tourism, draws over 10 million visitors annually. There are endless hiking, biking and horseback riding trails, including the Grand Canyon, as well as infinite resorts, restaurants, sporting events, museums, theaters and spas. Phoenix hosts the highest-attended PGA tour tournament, The Waste Management Open, as well as MLB s Cactus League Spring Training Season and the Tostitos Fiesta Bowl (NCAA College Football). Phoenix will also host the 2015 NFL Super Bowl. Phoenix is only one of six cities nationwide with a professional franchise in each of the nation s four major sports. The dry climate and lack of natural disasters have also made Phoenix an ideal location for the tech and bio-science industries. Companies such as Intel, TGEN, Boeing, and Apple continue to locate, operate, store, research and develop in Phoenix. Phoenix is headquarters to four Fortune-500 Companies Avnet, PetsMart, Freeport McMoran and Republic Services. Phoenix also has two highly-ranked State Universities Arizona State University and University of Arizona (main campus in Tucson, AZ) both of which are leaders in STEM-focused education and innovation. Arizona State University recently aligned with the award-winning Thunderbird School of Global Management, a top Business Management Master s Program. The Phoenix MSA is the central location of the Interstate-10 Southwest Shipping Corridor that begins in Southern California and services Utah, Colorado, West Texas and Mexico. Over 50 shipping companies utilize the corridor daily to transport hundreds of millions of dollars worth of freight to more than 20 markets, including Arizona s own lucrative farming and ranching exports. Also as a result of its favorable geography, Arizona has been designated a Foreign Business/Trade Zone by dozens of international countries. Mexico which is both Arizona s AND the U.S. s largest trading partner has stabilized its banking system and currency and quickly moving up the Global Economic Chain. Arizona s GDP grew over 4% from 2012 to 2014 and is projected to experience accelerated growth based on the rapidly-increasing influx of International interest in U.S. real property and companies. Market Overview page 11 Shell Gas Station PAGE 11 11
metro phoenix retail market The metropolitan Phoenix retail market study reflects both shopping centers and freestanding retail buildings greater than 30,000 sq. ft. The overall vacancy rate at the end of Q2 2014 was 9.8%. One year ago, the vacancy rate was 10.9%. A trend for market participants to watch going into Q3 2014 is the impact of persistently low levels of available big box space, particularly for Class A assets, on asking rental rates. Available big box space is classified using a ranking system of A, B, C and D, with A space receiving the highest score for quality. At the end of Q2 2014 there were 113 spaces greater than 20,000 sq. ft., totaling 4.43 million sq. ft. of available big box space. Of the 113 spaces available in Q2 2014, Class A space totaled only 12 opportunities. At the same time, Class B space totaled 33 opportunities and Class C and D space accounted for 60% of all available big box space with 37 and 31 opportunities, respectively. A significant imbalance exists in the market for Class A big box space as an increasing number of prospective tenants are competing for a stagnant supply of space. Correspondingly, the market for premium big box space heavily favors owners and their ability to increase asking rental rates. Further contributing to this supply and demand imbalance is a lack of new development taking place in the market. Throughout Q2 2014, no new product was added to the metropolitan Phoenix retail market. Only 12,900 sq. ft. of new product was delivered over the course of Q1 2014. For purposes of comparison, 415,000 sq. ft. of new product was added to the metropolitan Phoenix retail market throughout the first half of 2013 and from 2000 to 2010, an average of 5.5 million sq. ft. of new retail space was delivered to the metropolitan Phoenix retail market annually. So long as developers of premium big box space remain on the sidelines, the metropolitan Phoenix retail market will largely be characterized by asking rental rate appreciation as continued Market Rentable Area SF (±) Vacancy Rate YTD Net Absorption SF (±) Under Construction SF (±) NNN Average Asking Lease Rate - SF/YR Sun City 9,058,042 8.4% 21,691 103,000 $17.13 North Bell Road 15,811,858 8.9% 9,385 - $15.68 Northwest Phoenix 12,463,737 15.3% 140,915 60,000 $13.06 West/Southwest Phoenix 19,200,808 7.8% 46,036 15,000 $15.06 Paradise Valley 7,951,668 6.8% 237,751 - $18.55 North Scottsdale 15,383,538 7.0% 223,254 75,000 $20.87 East Phoenix 3,519,823 9.7% (21,102) - $21.00 Scottsdale 4,401,889 5.3% 17,014 - $15.63 Tempe/Ahwatukee 17,938,367 6.4% 159,907 - $14.84 Mesa/Chandler/Gilbert 37,651,003 14.1% (57,517) 94,500 $14.47 Apache Junction 4,795,732 6.7% (25,987) 64,497 $16.35 Maricopa 528,488 2.7% 2,544 - $17.00 Metropolitan Phoenix 148,704,953 9.8% 753,891 411,997 $15.60 SOURCE: CBRE Research, Q2 2014 Market Overview page 12 Shell Gas Station PAGE 12 12
metro phoenix retail market demand for premium big box space will be supported by strong underlying economic fundamentals. Big box tenants have an incentive to expand their presence in the market, especially as the local employment market continues to improve and consumer balance sheets return to more healthy levels. It should be noted that developers being more cautious when considering new speculative projects is not unwarranted. The continued emergence of e-commerce continues to impact retailers customer facing strategies. Moreover, consumers spending and saving habits have changed since the most recent economic downturn. Metropolitan Phoenix Population Forecasted to Grow by 457,700 by 2018 Population Growth in metropolitan Phoenix is forecast to average 91,500 over the next five years according to the Forecasting Project at the University of Arizona. Arizona Restaurant Sales Growth Ranks #1 According to the National Restaurant Association s 2014 Restaurant Industry Forecast, sales at Arizona restaurants are projected to grow a nationwide best 4.9% in 2014, outpacing the U.S. forecast of 3.6%. vacancy rates The overall retail vacancy rate in metropolitan Phoenix ended Q2 2014 at 9.8%. The prevailing retail vacancy rate represents a quarter-over-quarter decline of 20 bps and a year-over-year decline of 110 bps. The vacancy rate at the end of Q2 2014 for strip/in-line centers was 17.1%, neighborhood centers reported 11.6% vacancy, followed by community centers with 10.0% vacant space and power centers reporting 5.3% vacancy. No new retail space was delivered to the market during the second quarter. However, there exists 411,997 sq. ft. of retail space under construction in metropolitan Phoenix, which exceeds the 176,997 sq. ft. reported under construction in the previous quarter. metro phoenix retail vacancy % Vacant 14% 12% 10% 8% 6% 4% 2% 0% 2009 2010 2011 2012 2013 2014 YTD SOURCE: CBRE Research, Q2 2014. Projected Market Rent Growth Years Rent Inflation 2015 4.8% 2016 7.1% 2017 7.9% 2018 7.0% 2019 5.7% Source: Econometric Advisors Q3 2014 Report Market Overview page 13 Shell Gas Station PAGE 13 13
metro phoenix retail market asking rental rates The average net asking lease rate among existing retail centers in metropolitan Phoenix decreased slightly from $15.64 per sq. ft. in Q1 2014 to $15.60 per sq. ft. at the end of Q2 2014. Examining the data over a longer duration, the $15.60 per sq. ft. average net asking lease rate recorded for Q2 2014 represents a year-over-year increase from Q2 2013, which recorded an average net asking lease rate of $15.44 per sq. ft. The submarket with the highest average asking rate was East Phoenix, which posted a rate of $21.00 per sq. ft. in the quarter. The North Scottsdale and Paradise Valley submarkets commanded the next highest average asking rents of $20.87 and $18.55 per sq. ft., respectively. The submarkets with the lowest asking rental rates include Tempe/Ahwatukee, Mesa/Chandler/Gilbert and Northwest Phoenix which had average asking lease rates between $14.84 and $13.06 per sq. ft, with Northwest Phoenix being the lowest. At the end of the second quarter, the average net asking lease rate for existing space in power centers was $20.47 per sq. ft., with community centers asking $16.20 per sq. ft., neighborhood centers asking $14.65 per sq. ft. and strip centers at $13.47 per sq. ft. metro phoenix asking rental rates NNN Average Asking Lease Rates $15.60 Per Sq. Ft. NNN $30.00 $25.00 $20.00 Price Per Sq. Ft. $15.00 $10.00 $5.00 $0.00 2009 2010 2011 2012 2013 2014 YTD SOURCE: CBRE Research, Q2 2014. Market Overview net absorption In Q2 2014, the metropolitan Phoenix retail market recorded positive net absorption of 366,665 sq. ft. with 1.2 million sq. ft. of gross activity. The metropolitan Phoenix retail market has recorded positive net absorption in eleven of the last twelve quarters. At the submarket level, Paradise Valley recorded the most significant gains in net positive absorption adding 212,107 sq. ft. The North Scottsdale retail market added 138,867 sq. ft. Notably, the two submarkets that experienced the most significant gains in net positive absorption throughout the second quarter are characterized by higher retail asking rental rates compared to peer submarkets. Tenants demand for premium space and their coinciding willingness to allocate more capital towards rent reflects the notion that consumer balance sheets are continually improving and the fact that segments across the retail spectrum are becoming increasingly competitive; a trend that undoubtedly benefits owners of premium space. metro phoenix net absorption 4,000 3,000 Total Sq. Ft. (000 s) 2,000 1,000 0-1,000-2,000 2009 2010 2011 2012 2013 2014 YTD page 14 Shell Gas Station PAGE 14 14
Confidentiality Agreement 2015 CBRE, Inc. operates within a global family of companies with many subsidiaries and/or related entities (each an Affiliate ) engaging in a broad range of commercial real estate businesses including, but not limited to, brokerage services, property and facilities management, valuation, investment fund management and development. At times different Affiliates may represent various clients with competing interests in the same transaction. For example, this Memorandum may be received by our Affiliates, including CBRE Investors, Inc. or Trammell Crow Company. Those, or other, Affiliates may express an interest in the property described in this Memorandum (the Property ) may submit an offer to purchase the Property and may be the successful bidder for the Property. You hereby acknowledge that possibility and agree that neither CBRE, Inc. nor any involved Affiliate will have any obligation to disclose to you the involvement of any Affiliate in the sale or purchase of the Property. In all instances, however, CBRE, Inc. will act in the best interest of the client(s) it represents in the transaction described in this Memorandum and will not act in concert with or otherwise conduct its business in a way that benefits any Affiliate to the detriment of any other offeror or prospective offeror, but rather will conduct its business in a manner consistent with the law and any fiduciary duties owed to the client(s) it represents in the transaction described in this Memorandum. This is a confidential Memorandum intended solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Property. This Memorandum contains selected information pertaining to the Property and does not purport to be a representation of the state of affairs of the Property or the owner of the Property (the Owner ), to be allinclusive or to contain all or part of the information which prospective investors may require to evaluate a purchase of real property. All financial projections and information are provided for general reference purposes only and are based on assumptions relating to the general economy, market conditions, competition and other factors beyond the control of the Owner and CBRE, Inc. Therefore, all projections, assumptions and other information provided and made herein are subject to material variation. All references to acreages, square footages, and other measurements are approximations. Additional information and an opportunity to inspect the Property will be made available to interested and qualified prospective purchasers. In this Memorandum, certain documents, including leases and other materials, are described in summary form. These summaries do not purport to be complete nor necessarily accurate descriptions of the full agreements referenced. Interested parties are expected to review all such summaries and other documents of whatever nature independently and not rely on the contents of this Memorandum in any manner. Neither the Owner or CBRE, Inc, nor any of their respective directors, officers, Affiliates or representatives make any representation or warranty, expressed or implied, as to the accuracy or completeness of this Memorandum or any of its contents, and no legal commitment or obligation shall arise by reason of your receipt of this Memorandum or use of its contents; and you are to rely solely on your investigations and inspections of the Property in evaluating a possible purchase of the real property. The Owner expressly reserved the right, at its sole discretion, to reject any or all expressions of interest or offers to purchase the Property, and/or to terminate discussions with any entity at any time with or without notice which may arise as a result of review of this Memorandum. The Owner shall have no legal commitment or obligation to any entity reviewing this Memorandum or making an offer to purchase the Property unless and until written agreement(s) for the purchase of the Property have been fully executed, delivered and approved by the Owner and any conditions to the Owner s obligations therein have been satisfied or waived. By receipt of this Memorandum, you agree that this Memorandum and its contents are of a confidential nature, that you will hold and treat it in the strictest confidence and that you will not disclose this Memorandum or any of its contents to any other entity without the prior written authorization of the Owner or CBRE, Inc. You also agree that you will not use this Memorandum or any of its contents in any manner detrimental to the interest of the Owner or CBRE, Inc. If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return this Memorandum to CBRE, Inc. AF9830_01/2015 Market Overview Shell Gas Station PAGE 15 page 15 15
Shell Gas Station 5059 West Olive Ave Glendale, AZ FOR MORE INFORMATION PLEASE CONTACT: Andrew K. Fosberg Vice President Investment Properties CBRE Capital Markets 602.735.1723 andrew.fosberg@cbre.com www.cbre.com/andrew.fosberg www.cbre.com Max Bippus Vice President Retail CBRE Capital Markets 602.735.5518 max.bippus@cbre.com www.cbre.com/max.bippus www.cbre.com Molly M. Busch Senior Associate Investment Properties CBRE Capital Markets 602.735.1771 molly.busch@cbre.com www.cbre.com/molly.busch www.cbre.com