Offering Memorandum THE PIKE BUILDING 1117 Pike Street Seattle, WA Exclusively offered by Paragon Real Estate Advisors 1
Offering Summary Paragon Real Estate Advisors is proud to exclusively offer for sale the Pike Building located just above downtown Seattle in an A+ Capitol Hill location. The Pike Building is a 1906 built, three story commercial building that will be on the market for sale for the first time in almost 40 years. This offers a Buyer the rare opportunity to purchase a pride-of-ownership property located only 3 blocks from downtown Seattle. The property offers endless potential for an investor to redevelop the property or maintain the existing use. Name The Pike Building Address 1117 Pike St, Seattle WA 98101 Built 1906 Square Feet 10,800 Total Net Rentable Price $2,150,000 Price Per Building Foot $199.07 Per Net Rentable Price Per Lot Foot $597.22 Per Lot Sq.Ft. Current GRM/CAP 22.1/3.3% (5% Vacancy) Market GRM/CAP 8.9/9.2% (5% Vacancy) Current Annual NOI $71,236 Market Annual NOI $197,699 Total Expense Per Year $21,218/Year Terms Cash Out Lot Size 3,600 Square Feet Zoning NC3P-85 THE PIKE BUILDING 2
Location Highlights First time on the market in almost 40 years 3 blocks to Downtown Seattle Potential for redevelopment Three story, wood-framed construction Secured access entry Walk Score of 91, Walker s Paradise and a transit score of 73. Conveniently situated a block away from the I-5 freeway on-ramp. Less than a five minute drive from Seattle CBD, Amazon Head Quarters, and South Lake Union Half mile from the main Capitol Hill drag on Broadway comprised of shops, restaurants, grocery stores, and bars full of nightlife. Seattle University is located within 10 blocks THE PIKE BUILDING Close to Virginal Mason, Swedish Medical Center and Harborview Meidcal Centers located on Capitol Hill Cal Anderson Park and Volunteer Park both to the Northeast. 3
Aerial Map CAPITOL HILL FIRST HILL THE PIKE BUILDING SEATTLE CBD SOUTH LAKE UNION BELLTOWN 4
Neighborhood Amenities - Capitol Hill Food/Drink Shopping/Services Parks/Schools 1 Jai Thai 2 Palomino 3 Julia s on Broadway 4 Ruth s Chris Steak House 5 Seattle University 6 The Cheesecake Factory 7 Starbucks Reserve Roastery 8 Captian Blacks 9 Crescent Lounge 10 Revolve Bar 11 Homegrown 12 Thomas Street Mini Park 13 Skillet Diner 14 Mio Sushi 15 Cactus 16 Portage Bay 17 QFC 18 Safeway 19 Rite Aid 20 Broadway Market 21 Miller Play Field and Park 22 Swedish Medical Center 23 Wells Fargo Bank 24 Harborview Medical Center 25 City Market 26 Cal Anderson Park 16 14 15 4 2 6 11 7 12 8 24 20 3 1 19 10 18 9 26 25 22 17 THE PIKE BUILDING 5 13 23 21 5
Capitol Hill Snapshot Population 45,253 Median household income $73,400 Owner Occupied Renters Walk Score Bike Score Transit Score 29% 71% 98 - Walker s Paradise 86 - Very Bikable 79 - Excellent Transit Median 1 Bd/1 Bth Rent $1,949 Median 2Bd/1 Bth Rent $2,694 Seattle Commute Times Bus: 14 minutes via Bus 2 and 13 Car: 3 minutes via E Union St Foot: 23 minutes via Seneca St Bike: 8 minutes via Seneca St Bellevue Commute Times Bus: 47 minutes via Bus 2 and 550 Car: 20 minutes via 23rd and I90 TOP JOB SECTORS: * Management: 11.9% Business 6.7% Computer: 11.1% Education 6.3% Engineering 3.3% Administrative: 10.8% Sales: 7.8% Service: 9.9% Healthcare: 6.1% Legal 3.1% Construction 1.2% Social Services: 2.5% * https://statisticalatlas.com/neighborhood/washington/seattle/capitol-hill/occupations 6
Capitol Hill Capitol Hill has a great location just minutes to the East of Seattle s CBD. The neighborhood is bound by I-5 to the West, beyond which is Eastlake and Downtown; to the North you can find Portage Bay and the Montlake neighborhoods; to the South is First Hill and the Central District; and to the East is the Madison Valley neighborhoods. Capitol Hill is known to many for being a fastpaced, hip neighborhood with countless avenues to explore. During the day, Capitol Hill is flooded with people taking advantage of the easy-to-walk neighborhood to explore the various coffeehouses, shops, and markets. At night, the neighborhood transforms into a thriving area of taverns and bars hosting live music boasting with nightlife and entertainment. With the neighborhoods central location, commuting to and from the area is easy with I-5 just to the west and the advanced transit system implemented over the past few years. The long planned Capitol Hill link light rail station located on Broadway opened in March of 2016. The transit line runs from the University of Washington to Angle Lake Station making 14 stops along the way including one at Sea-Tac Airport. In addition to the light rail, King County Metro has multiple transit bus lines with easy connections make for easy and hassle free routes. Routes 8, 10, 43, 49, and 60 all operate in the neighborhood and offer services to downtown with frequent trips scheduled daily. To the north is Capitol Hill s largest and most popular public park. The 48-acre park is home to the Seattle Asian Art Museum, tennis courts, picnic tables, conservatory, and water-tower observation deck. Leading into the Southern entrance of the park is Capitol Hill s famous Millionaire s Row on 14th Ave E. The rest of the neighborhood is comprised of a mixture of motel-like studio apartment buildings to some of the most historic mansions, with the two types sometimes shoulderto-shoulder. 7
Industry Cluster: Information and Communications Technology Jobs 165,950 Average Income $124,272 No. of Establishments 5,794 Principle Employers Top Competitive Regions Microsoft, Amazon, T-Mobile, Expedia, Zillow Silicon Valley, Austin, Boston, New York An Economy Steeped In Technology With such a strong base of businesses, it is no surprise that information technology is one of the largest employment clusters in the region, directly supporting over 100,000 jobs. Seattle has many strengths in the IT sector, including: software development and publishing, interactive media development and technologies, RFID, and wireless technologies and applications. A Key Region For Growth The rich pool of talent and nationally recognized educational institutions has led other major companies, such as Google and Facebook, to identify the region as a key location for future growth. It is also critical to helping the region establish an edge in new sectors in particular, the Puget Sound is increasingly recognized as an international hub for interactive media sector. In 2013, the region had more than 330 interactive media companies, contributing to an economic impact of more than $36 billion. *Data Sources: Washington State Employment Security Department, 2015; Washington State Department of Revenue, 2015; Washington Military Alliance; Washington Aerospace Economic Impacts 2016 Update; US International Trade Administration, 2014. 8
Industry Cluster: Financial and Business Services Jobs 51,968 Average Income $101,423 No. of Establishments 4,632 Principle Employers Top Competitive Regions Bank of America, Wells Fargo, JP Morgan New York, San Fransisco, Denver, Dallas QUICK STATS >There > are 8,500 public and private financial services entities statewide that provide 131,800 direct jobs >The > financial services sector supports nearly 314,500 jobs and generates approximately $27 billion in revenue >Thanks > to technology, more and more financial services companies are enjoying the freedom to base operations where it best suits their needs. >Seattle/King > County is increasingly becoming a hub of major financial players who want their headquarters far from the negativity conjured up by Wall Street. As a center for innovative industries such as Technology, Aerospace, and Life Science, the Seattle area is home to thousands of startups and educated, up-and-coming professionals. In addition, the region offers one of the best lifestyles in the country, making it an attractive option for employees. In addition to offering a broad base of potential customers, this region is great for attracting and keeping top talent. *Data Sources: Washington State Employment Security Department, 2015; Washington State Department of Revenue, 2015; Washington Military Alliance; Washington Aerospace Economic Impacts 2016 Update; US International Trade Administration, 2014. 9
Industry Cluster: Life Sciences and Health Jobs 19,664 in Life Sciences, 118,120 in Healthcare Average Income $97,392 in Life Sciences, 65,237 in Healthcare No. of Establishments 5,860 Principle Employers Top Competitive Regions Emerging Opportunities Fred Hutch, Allen Institute, University of Washington, Northwest Clinical Laboratory, Institute for Systems Biology New York, San Fransisco, Boston Immunotherapy, healthcare IT, personalized medicine, wellness, natural medicine, global health QUICK STATS >The > Seattle region is among the top-five largest life science clusters in the country >King > County is home to 160 life sciences companies that employ more than 22,000 people >Annaul > sales of medical devices from Washington State total approximately $2.5 billion The Seattle region is a world-class center for Life Sciences. With a nationally ranked university medical research institution in UW Medicine and renowned organizations like the Fred Hutchison Cancer Research Center and the Bill and Melinda Gates Foundation, life sciences are a part of the local fabric. This expanding cluster has a wealth of talented people and incredible institutions while being unique in its collaborative nature and ability to attract and keep world-class talent. *Data Sources: Washington State Employment Security Department, 2015; Washington State Department of Revenue, 2015; Washington Military Alliance; Washington Aerospace Economic Impacts 2016 Update; US International Trade Administration, 2014. 10
Industry Cluster: Outdoor Recreation, Fashion and Apparel Jobs 20,057 Average Income $34,717 No. of Establishments 1,458 Principle Employers Top Competitive Regions Nordstrom, REI, Zulily, Eddie Bauer, Precor New York, Los Angeles, Vermont, Ohio QUICK STATS >Washington > State has an over $8.3 billion fashion and apparel industry >Outdoor > recreation in Washington State accounts for $21.6 billion in consumer spending and $7.1 billion in wages and salaries >Notable > apparel companies include Nordstrom, Tommy Bahama, Eddie Bauer, and Luly Yang 1,540 apparel companies and 3,100 selfemployed fashion designers provide 34,500 jobs in Washington State >King > County s top outdoor recreation companies include REI, Eddie Bauer, and Outdoor Research >The > Seattle area is the nation s largest consumer of sunglasses While the grunge rock boom made Seattle virtually synonymous with flannel, the region s fashion industry has stitched together an industry that some studies estimate supports over 45,000 jobs and $13 billion in revenue. And it s surely noticeable as more and more fashion and apparel startups join the ranks of home-grown notables such as Nordstrom, Eddie Bauer, and Tommy Bahama. *Data Sources: Washington State Employment Security Department, 2015; Washington State Department of Revenue, 2015; Washington Military Alliance; Washington Aerospace Economic Impacts 2016 Update; US International Trade Administration, 2014. 11
Why Choose Seattle-King County? A HIGHLY-SKILLED WORKFORCE The region s highly skilled and educated workforce provides a deep talent pool, with 47 percent of adults holding a bachelor s degree or higher. Top-tier talent is one of the key reasons out-of-state companies, such as Google, Facebook, Apple, Dropbox, Twitter, Alibaba, and SpaceX, are attracted to opening strategic locations in Seattle-King County. ESTABLISHED INDUSTRY CLUSTERS The success of the clusters has contributed to innovation for emerging industry segments such as biomedical devices, interactive media, e-commerce, clean energy, and space exploration. Small and medium-sized businesses provide a vital contribution to the cluster ecosystem, and in turn benefit from the collaborative climate for which the Seattle-King County region is known. CUTTING-EDGE RESEARCH The success of the clusters has contributed to innovation for emerging industry segments such as biomedical devices, interactive media, e-commerce, clean energy, and space exploration. Small and medium-sized businesses provide a vital contribution to the cluster ecosystem, and in turn benefit from the collaborative climate for which the Seattle-King County region is known. *Data Sources: Washington State Employment Security Department, 2015; Washington State Department of Revenue, 2015; Washington Military Alliance; Washington Aerospace Economic Impacts 2016 Update; US International Trade Administration, 2014. 12
Population, Education and Income King County had an estimated 872,411 households in 2016. This number is forecast to increase to more than 912,000 by the year 2021. The county currently has 18 cities with populations greater than 20,000. KING COUNTY HOUSEHOLD INCOME Seattle is one of the most educated cities in the United States. Over 57 percent of Seattle s adult residents have a Bachelor s degree or higher, nearly twice the national average. An educated city means an educated workforce a solid backbone for the innovative, knowledge based industries that drive Seattle s economy. King County also boasts high educational attainment, with 47 percent of residents over 25 having received a Bachelor s degree or higher. Roughly 28 percent of King County residents are in professional business/managerial positions. As a result, median household income in King County is well above the U.S. average. Cost of living is generally higher than the U.S. average, but it is in line with other metropolitan areas with similar income levels. TOP 10 KING COUNTY EMPLOYERS FT EMPLOYEES IN WA The Boeing Co 81,919 Microsoft Corp. 43,031 University of Washington 30,200 Amazon.com Inc 24,700 Starbucks Corp 13,400 Swedish Health Services 11,239 City of Seattle 10,758 Costco Wholesale Corp 10,080 Nordstrom 9,264 Group Health Cooperative 8,982 COST OF LIVING COMPARISON WITH COMPETITIVE US METRO AREAS *Source: U.S Census Bureau 13
King County Public Transportation PUBLIC TRANSPORTATION Public transportation within King County is provided by King County Metro, which has a fleet of 1,200 buses and the largest public vanpool fleet in the country, with over 700 vans. The agency is part of a three-county regional computerized ride match system that matches commuters for carpools and vanpools. The county and the Washington State Department of Transportation operate a system of free park and ride and park and carpool lots throughout the county, from which commuters can connect with buses or their pooling arrangements. King County Metro also has partnership grants available to businesses to help them reduce commute trips to their work sites. High Occupancy Vehicle (HOV) lanes are enforced 24 hours a day on major highways in the county. Sound Transit is overseeing a $3.9 billion project to provide a new system of 25 miles of electric light rail, 81 miles of commuter rail, more than 100 miles of HOV Expressway (with direct access on and off ramps), 20 new regional express bus routes, and region-wide coordination of schedules and fares among all local and regional transit services. The project encompasses major portions of King, Snohomish and Pierce counties. This ten-year project was initiated in 1996. Many commuters also rely on the Washington State Department of Transportation s ferry system. This system extends the state highways across Puget Sound, transporting over 10 million vehicles a year (3.3% commercial trucks or large motor homes). Walk-on commuters are also encouraged to use the system with low fare commuter books and ferry runs that meet transit connections. It is estimated that roughly 25.5 million passengers and vehicles used the ferry system each year. *Data Sources: Washington State Employment Security Department, 2015; Washington State Department of Revenue, 2015; Washington Military Alliance; Washington Aerospace Economic Impacts 2016 Update; US International Trade Administration, 2014. 14
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Operating Summary Year built 1906 Rentable Area 10,800 Sq.Ft. Down Payment $1,075,000 50% Loan Amount $1,075,000 50% Interest Rate 4.50% Amortization 25 Years Price $2,150,000 Per Square Foot $199.07 Current GRM 22.09 Current CAP 3.31% Market GRM 8.90 * Market CAP 9.20% * Current Market Type Size Rent Rent Pike Building 10,800 $6,550 $18,000 Lease Rates $7.28 NNN $20 NNN Total Monthly Income Monthly Scheduled Rent Modified Gross $6,550 NNN $18,000 CAM Reimbursements $1,560 $2,135 Parking Income $0 $0 Miscellaneous Income $0 $0 Total Monthly Income $8,110 $20,135 Annualized Operating Data Current Market Scheduled Gross Income $97,320 $241,620 Less Vacancy 5.0% $4,866 5.0% $12,081 Gross Operating Income $92,454 $229,539 Less Expenses $21,218 $31,840 Net Operating Income $71,236 $197,699 Annual Debt Service ($5,975/mo) $71,702 $71,702 Cash Flow Before Tax -0.04% ($466) 11.72% $125,997 Principal Reduction $23,815 $23,815 Total Return Before Tax 2.17% $23,348 13.94% $149,811 Annualized Operating Expenses Current Market Real Estate Taxes 2017 Actual $8,788 $17,200 Insurance Proforma $6,000 $6,000 Management (5%) Proforma $3,930 $5,400 Reserves (3%) Proforma $2,500 $3,240 Total Expenses $21,218 $31,840 Current Operations Expenses/Foot Percent of EGI $1.96 21.80% Market Operations Expenses/Foot Percent of EGI $2.95 13.18% * based on pre rehab cost 16
Sale Comparables SUBJECT - THE PIKE BUILDING 1117 Pike St, Seattle WA Year Built 1906 Bldg Size 10,800 Sq.Ft. Sales Price $2,150,000 Price/Foot $199.07 Lot Size Zoning Sales Date TBD 3,600 Sq.Ft. NC3P-85 1. GOOD ARTS BUILDING 110 Cherry St, Seattle WA Year Built 1903 Bldg Size Sales Price $4,525,000 Price/Foot $171.36 Lot Size Zoning 26,406 Sq.Ft. 7,200 Sq.Ft. PSM-100 Sales Date 12.15.2015 2. EITEL BUILDING 1501 2nd Ave, Seattle Year Built 1904 Bldg Size Sales Price $5,350,000 Price/Foot $152.84 Lot Size 35,003 Sq.Ft. 5,593 Sq.Ft. Zoning DMC 240-290 Sales Date 11.18.2015 3. METROPOLE BUILDING 417-423 2nd Ave Ext S, Seattle WA Year Built 1900 Bldg Size Sales Price $4,000,000 Price/Foot $144.69 Lot Size Zoning PSM-100 Sales Date 9.10.2015 27,645 Sq.Ft. 6,961 Sq.Ft. 4. HOWELL RETAIL BUILDING 1314 Howell St, Seattle WA Year Built 1962 Bldg Size Sales Price $1,200,000 Price/Foot $540.54 Lot Size 2,220 Sq.Ft. 2,962 Sq.Ft. Zoning DMC 240-290/400 Sales Date 5.20.2015 5. J&M BUILDING 201 1st Ave S, Seattle WA Year Built 1900 Bldg Size Sales Price $3,235,000 Price/Foot $127.11 Lot Size Zoning 25,450 Sq.Ft. 6,534 Sq.Ft. PSM-100 Sales Date 11.26.2014 17
Sales Comparables Map The Pike Building 1117 Pike St Seattle, WA 1. Good Arts Building 110 Cherry St Seattle, WA 2. Eitel Building 1501 2nd Ave Seattle, WA 4 3. Metropole Building 417-423 2nd Ave Ext S Seattle, WA 4. Howell Retail Building 1314 Howell St Seattle, WA 2 THE PIKE BUILDING 5. J&M Building 201 1st Ave S Seattle, WA 1 5 3 18
Paragon Real Estate Advisors ABOUT PARAGON Paragon Real Estate Advisors is the leading Seattle real estate investment firm for multifamily property sales in Washington State. We have accrued over $3.4 billion in sales and have closed over 1,700 successful real estate transactions. We are locally owned, client-focused and highly experienced. When it comes to apartments and investment real estate in the Puget Sound region, we are the smart choice to partner with. At Paragon, we build long-term partnerships that help our clients reach their long- and short-term real estate investment goals while maintaining maximum profitability for them. Our brokers have an in-depth knowledge of the Washington state real estate market, particularly in the greater Seattle area and the I-5 corridor, that comes from more than 23 years experience in the industry. Paragon s unique focus on sharing knowledge, teamwork and collaboration within the brokerage industry leverages our collective intellect for all our clients. Our brokers provide superior customer representation through our innovative and effective marketing campaigns, co-brokerage, skilled negotiations, and ongoing partnerships. The information found in this offering memorandum has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. 19