Recreational Equipment Inc (REI) Kent Campus Marketed For Sale

As has been discussed previously on this blog, REI is in the process of moving from Kent to Bellevue.  The move was announced nearly a year ago in a letter from upper management, stating plans to relocate the corporate headquarters to a campus under development in the Spring District of Bellevue.  The new facility will not only be an expansion of REI’s footprint, but also positions the company well to take advantage of the I-90 trail that is part of the mountains-to-sound greenway.  There is also considerably more public transit access in the new location, offering employees more green options for commuting.  In management’s words, this move will better align the retailer with the outdoor enthusiast corporate culture it promotes.  Last week the Kent campus hit the MLS for sale as an unpriced sale-leaseback opportunity.  It will be telling of investor confidence to see where the numbers fall given how late in this business cycle it has been introduced.  The offering includes 166,641 square feet of office and industrial space in four buildings, sitting on just shy of 16 acres in the heart of the Kent Valley industrial market. The outdoor retailer is offering a leaseback until mid-2020, with an additional 12 month extension option.  This timeline is in-line with the schedule initially laid out last year when the plans were announced.   Such a short leaseback period makes for a tough sell as an investment though, with similar campus properties often sitting empty for years once vacated.  On the other hand, 3 years of leaseback is long enough that a logical owner/user may pass the opportunity up though.   REI outgrew the facility years ago and has been leasing overflow space in surrounding buildings, but the move to Bellevue still surprised many when it was announced.  The company has been the second largest employer in the Kent area for some time, though several other major companies have been increasing their footprints in Kent.  With luck, the change in the labor pool will be offset by new players entering the market.  For more information about the offering you can find Heartland LLC’s marketing material on Real Capital Markets here.


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