Narrative for Area 1 - Silverdale/Central Kitsap West Tax Year: 2018 Appraisal Date: 1/1/2017 Property Type: Restaurants, Bars, and Taverns Updated 6/5/2017 by CM20 Area Overview Silverdale including rural West Central Kitsap, South Bangor, Seabeck, Chico. Property Type Overview Restaurants are constructed for the purpose of preparation and sale of food and beverages. The average dining area is 60 to 70 percent of the gross building size. The balance is used by the kitchen, storage, and prep areas. Bars and taverns are designed mainly for the sale of beverages with limited food production and typically will have a higher seating ratio. Economic Overview: Sales of restaurants or bars/taverns are infrequent. Vacancy and rents appear stable. There are approximately 114 properties countywide improved with single tenant buildings developed as restaurants or bars/taverns. Sizes range between 388 and 10,100 square feet with a countywide average of 3,850 square feet. Area 1 has 21 restaurants and three bars/taverns representing 2 of the overall population countywide. Sizes range from 2,135 to 6,410 square feet with an overall average of 4,292 square feet. 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. Insufficient data was available from individual population areas. s and sales were reviewed countywide. No change to value was made between tax year 2017 and 2018. Model Calibration Preliminary Ratio Analysis: Analysis of sales resulted in a mean ratio of 89%, a median ratio of 9, and a coefficient of disperson (COD) of 26.66. /Sales Comparison Approach Data and Analysis Sales: Range of Sale Dates: 1/1/2013 to 12/31/2016. A total of 1 local sales, and 10 regional sales, and 0 national sales were used in the sales analysis. Additional information is provided on the sales analysis data sheet. Printed 6/5/2017
Property type: Restaurants, Bars, and Taverns (continued) 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. /Sales Rates: Sales ranged from $51.45 to $453.64 per square foot. 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.) Insufficient data was available from individual population areas. s were reviewed countywide. Data: The Assessor validated rents from 12% of the market. Typical reported rents had a range of $6.15 to $18.72. We selected $5.40 to $24.89 for our model. Vacancy Data: Typical reported vacancy had a range of to 10. We selected 5% to 7% for our model. Expense Data: Typical reported expense had a range of 6% to 28%. We selected 6% to 6% for our model. Capitalization Rate (Cap) Data: Typical sale cap rates ranged from 6.57% to 11.39%. We selected 8. to 11.5% for our model. Cap rates from local sales were reviewed. Additional cap rate information was reviewed from national publications. The Boulder Group, Net Lease Casual Dining Report, Q1 2016 lists caps from 5.0 to 6.75%. Calkain Report Q4 2016 lists cap rates between 4.1 and 12.0 with an average cap rate of 6.18%. Realty Rates 1st Quarter 2017 states a cap rate of 11.57%. Income Model Value Range: The income approach calculates a range of values from $68.82 to $222.66 per square foot. Final Ratio Analysis: Analysis of sales resulted in a mean ratio of 89%, a median ratio of 9, and a coefficient of disperson (COD) of 26.66. 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 Printed 6/5/2017
Class Location Construction Exterior Finish Interior Finish Age/Condition Unit size Wall Height Parking A B Waterfront, view amenity, and/or superior location with high traffic flow, good visibility, corner location, and usually has synergy from surroundings Good visibility on or near a main highway or major road with good traffic flow, may have synergy from surroundings Heavy Frame, Wood, Steel, Concrete, Metal, or Masonry Wood, Steel, Concrete, Metal, or Masonry Eating & Drinking - Restaurant & Bar - Model Definition Individual design, ornamental exterior, good quality finish and fenestration, mix of textured concrete, brick, tile, wood, metal, or stucco Better than average design, good quality finish and fenestration, mix of concrete, brick, tile, wood, metal, or stucco Good quality finish, insulation, floor covering, wall finish, trim, heat system Better quality finish, floor covering, wall finish, trim, heat system New or recent complete renovation, in excellent to very good condition, very little to no deferred maintenance or obsolescence evident, all major short-lived items are like new, high curb appeal 7 to 15 year effective age, little deferred maintenance evident, but not everything is new, no obsolescence evident, appearance and utility above the basics Smaller structures tend to have higher SF rents if all else is equal (Restaurant < 2,000sf) Smaller to average structures tend to have higher SF rents if all else is equal (Restaurant 2,000sf - 3,200) Tendency toward higher ceilings and vaulted areas Tendency toward higher than typical ceilings, could have vaulted areas Ample off paved Ample off paved C Visible, average traffic flow, may have some synergy from surroundings Wood, Steel, or Concrete Frame Average design, typical finish and fenestration, concrete, wood, stucco, or metal with mix of other exterior Average quality finish, typical floor covering, wall finish, trim, heat system 15 to 25 year effective age, some deferred maintenance and/or functional obsolescence evident but major components still function and have utility, not unappealing Average or typical size (Restaurant 3,200sf - 3,945 sf, Bar 2,700sf) Typical or average ceiling height Sufficient off paved D Limited visibility, near a main road, little to no synergy from surroundings Wood or Concrete Frame Plain design, less than typical finish and fenestration, sheet, metal, wood, concrete, or stucco Plain, inexpensive finish, floor covering, wall finish, and heat 25-35 year effective age, deterioration is somewhat worse than normally expected, some obvious deferred maintenance and/or functional obsolescence, appears worn Average to large size, larger structures tend to have lower rents per SF if all else is equal (Restaurant 3,945sf - 5,000sf) Lower than typical ceiling height Limited off E Side or not visible, low traffic flow, negative synergy Wood or pole frame Simple very plain design, little fenestration and very plain finish, inexpensive exterior sheet, wood, or metal covering Minimally or poorly finished, inexpensive floor covering, wall finish, and heat 35+ years, older or very obvious deferred maintenance and/or functional obsolescence, deterioration much worse than normal, several major components need repair or replacement, substandard utility, unappealing Larger structures tend to have lower rents per SF if all else is equal (Restaurant 5,000sf +) Low ceiling height Limited to no off, may be gravel NOTE: Properties usually have extensive food service, are freestanding structures, and may have a separate drinking lounge area. Some lounge areas may need to be valued using bar. Lack of cooking facilities, wiring, plumbing - consider retail for highest and best use. If property is located in a retail strip, use retail Industry standard median freestanding restaurant size is approximately 3,050 square feet with average size approximately 3,200 square feet - 4,000 square feet. Countywide freestanding median restaurants size is 3,995 square feet with average size of 4,428 square feet. Countywide median freestanding bar size is approximately 2,766 square feet. Average freestanding bar size is approximately 2,747 square feet. Restaurants have 6-8 of square feet in dining rooms, 2-4 in kitchens, preparation, and storage areas. Bars have significantly less or lack a kitchen area.
Tax Year: 2018 Property Type: Eating & Drinking Neighborhood: 8401101, 8401102, 8401104 Bar Rest Not Used Club Class A 16.90 24.89 16.90 8.25 8.25 8.25 Class B 15.21 15.77 15.21 8.250 8.250 8.250 Class C 10.25 10.98 10.25 9.00 9.00 9.00 Class D 5.92 6.64 5.92 10.00 10.00 10.00 Class E 5.40 6.33 5.40 11.00 11.50 11.00 Income Mode 302017
Local Income Survey for Eating & Drinking - Bar PGI per Unit Vacancy EGI per Unit Expense % $18.75 $18.75 $1 $1 $8.70 $8.69 $6.91 10 $0.00 NOI per Unit $18.75 $1 $8.69 $0.00 Printed: 6/5/2017
Local Income Survey for Eating & Drinking - Restaurant PGI per Unit Vacancy EGI per Unit Expense % $33.42 $33.42 9% $26.88 $26.88 25% $25.45 $25.45 $24.09 $24.09 $22.91 $22.91 $22.71 $22.71 $20.51 $20.51 2 $19.23 $19.23 27% $18.72 $18.72 $18.02 $18.02 $17.85 $17.85 $17.50 $17.50 $17.38 $17.38 $17.18 $17.18 $17.14 $17.14 $14.98 1 $13.48 32% $14.65 $14.65 28% $13.82 $13.82 $13.51 $13.50 $12.53 $12.53 $12.36 $12.36 $12.07 $12.07 $11.94 5% $11.34 $11.85 $11.85 17% $9.07 $9.07 $9.04 $9.04 $8.57 $8.57 $8.50 $8.50 $6.56 $6.56 $6.48 $6.48 $6.15 $6.15 NOI per Unit $30.31 $20.16 $25.45 $24.09 $22.91 $22.71 $16.24 $14.04 $18.72 $18.02 $17.67 $17.50 $17.20 $17.18 $17.14 $9.17 $10.55 $13.68 $13.50 $12.40 $12.36 $12.07 $11.34 $9.84 $9.07 $9.03 $8.57 $8.50 $6.56 $6.48 $6.15 Printed: 6/5/2017
KITSAP COUNTY ASSESSOR Tax Year 2018 Countywide Sales for Eating and Drinking - Restaurant and Bar 01/01/2013-12/31/2016 No. Nbrhd Parcel No. Project Name #Units Excise# VC Sales Date Sale Price Assessed Value Ratio 1 8100501 132401-3-146-2001 701 Pacific - Cafe 1,270 2013EX01412 V 6-Mar-2013 $ 90,000 $ 101,880 113% 2 8401508 352501-1-112-2008 Outback Steakhouse Restaurant 6,224 2013EX08882 V 27-Dec-2013 $ 1,200,000 $ 1,096,560 9 3 8100502 3806-005-016-0001 104 N Callow - Gyo Gyo Restaurant 2,400 2014EX00527 V 27-Jan-2014 $ 300,000 $ 192,530 64% 4 8402306 4027-003-001-0004 Beach Side Grill and Bar 4,082 2014EX02511 V 29-Apr-2014 $ 210,000 $ 229,220 109% 5 8401101 172501-1-053-2001 Olive Garden & Red Lobster 17,456 2014EX05099 V 28-Jul-2014 $ 7,069,325 $ 4,603,900 65% 6 8100506 012401-2-126-2001 4120 Wheaton Way - Los Cabos 3,024 2015EX01731 V 20-Mar-2015 $ 310,000 $ 344,910 11 7 8100510 3806-005-016-0001 104 N Callow - Pho Tai Restaurant 2,400 2015EX02964 V 22-Apr-2015 $ 385,000 $ 192,530 5 8 8100502 3765-000-014-0201 The Garage Bar & MF 013 & 014 7,718 2016EX00267 D 14-Jan-2016 $ 800,000 $ 660,700 83% 9 8402306 4028-002-004-0002 Hiro Sushi Restaurant 936 2016EX01631 V 23-Feb-2016 $ 165,000 $ 159,780 97% 10 8100506 3913-008-001-0002 Restaurant Manette 604 2016EX03268 V 17-May-2016 $ 274,000 $ 131,460 48% 11 8100501 3718-008-017-0001 The Curry Indian Cuisine & Lounge 2,940 2016EX04139 V 16-May-2016 $ 160,000 $ 235,860 147% No. Comments VC Validity Code Count 11 1 Bank sale. D Not economic unit Low 48% 11 Bank sale. V Valid High 147% M Other Median 9 E Estate Mean 89% W With other property AAD 0.24 U Change of use COD 26.66 Removed Sales No. Nbrhd Parcel No. Project Name #Units Excise# VC Sales Date Sale Price 1 8402307 312402-1-055-2001 INVALID - Rb's Fish & Chips - Mill Hill Dr. 2,392 2015EX06242 M 26-Aug-2015 $ 410,000 2 8100506 122401-2-030-2003 2822 Wheaton Way - Pizza Time 2,021 2013EX02698 U 26-Apr-2013 $ 265,000 3 8100502 162401-4-014-2005 Denny's Kitsap Way 6,504 2015EX04211 M 22-Jun-2015 $ 1,000,000 4 8402308 322401-1-128-2004 INVALID-Toy's Topless 3,624 2013EX06455 E 12-Sep-2013 $ 74,000 5 8402308 4539-000-001-0001 Auto Repair, Jimmy D's Diner 7,228 2015EX05444 V 27-Jul-2015 $ 600,000 6 8401104 082401-2-147-2009 Horse and Cow Bar & Grill 5,091 2015EX08753 W 2-Dec-2015 $ 185,000 No. Comments Nbrhd Neighborhood 1 Tenant buyout, owner financing. 8100501 Downtown Bremerton 2 Purchased for change of use 8100502 West Bremerton 3 Tenant buyout. 8100506 Wheaton Way 4 Estate sale. 8100510 Callow 5 Mixed used property. 8401101 Silverdale 6 Purchased for change of use 8401104 Central Kitsap 8401508 Highway 303 East Bremerton 8402306 Port Orchard UGA Downtown 8402307 South Kitsap UGA 8402308 Gorst