Caffeinated Cap Rates Continue in California
RIPON & PARADISE, Calif. – Hanley Investment Group Real Estate Advisors, a nationally recognized real estate brokerage and advisory firm specializing in retail property sales, announced today that the firm has completed the sale of two new construction, single-tenant, triple-net-leased corporate Starbucks in separate transactions in Northern California.
In the city of Ripon in the middle of California’s Central Valley, Hanley Investment Group Executive Vice President Bill Asher and Vice President Jeff Lefko represented the seller in the sale of a brand-new single-tenant Starbucks with a drive-thru for $2,748,500, representing a cap rate of 4.55 percent and $1,773 per square foot.
Built in 2018, the new 1,550-square-foot drive-thru property is located on 0.36 acres at 338 E. Main Street, immediately adjacent to the State Route 99 freeway on/off ramps at Main Street in Ripon. According to Asher, the property benefits from excellent access, a freeway-visible 65-foot pylon sign and approximately 116,000 cars per day at SR-99 freeway’s Main Street exit. SR-99 is the major north/south arterial through California’s Central Valley.
“Over 80 percent of all Ripon commuters drive alone with an average commute time of approximately 28 minutes, making the new Starbucks drive-thru on Main Street and Highway 99 an ideal stop for area residents and daily commuters,” noted Asher. “The property also benefits from affluent demographics with an average household income of nearly $98,000 within a three-mile radius and its close proximity to Ripon City Hall, Ripon Public Library, Ripon High School (900 students), Ripon Christian School (640 students) and Ripon Elementary School (400 students).”
The seller, who was represented by Asher and Lefko, was a private developer based in Glendale, California. The buyer, a private investor based in Northern California, was represented by Steve Zakula of Pacific Union International Inc. in San Francisco.
According to Asher, Hanley Investment Group procured an all-cash 1031 exchange buyer and closed escrow at 99 percent of the list price.
In Paradise, California, located in the Sierra Nevada foothills above the northeastern Sacramento Valley, Hanley Investment Group’s Asher and Lefko arranged the sale of a brand-new single-tenant Starbucks with a drive-thru for $2,708,000, representing a cap rate of 4.80 percent and $1,091 per square foot. The property closed at 99 percent of the list price.
The seller, who was represented by Asher and Lefko, was a private investor based in Los Angeles. The buyer, a private investor based in Sonoma, California, was represented by Harry Dematatis of CBRE.
Built in 2018, the new 2,482-square-foot drive-thru property is located on 1.21 acres at 6344 Skyway Road, a major east/west thoroughfare in Paradise, the second largest city in the fast-growing and established Chico Metropolitan Statistical Area (MSA). The city of Paradise has a population of approximately 27,000 residents. The Chico MSA, which has a total population of over 229,000 people, has grown by more than 20 percent over the last 15 years.
“The site housed a coffee use for over 15 years before Starbucks entered the market,” said Asher. “The property is the only Starbucks in an 11-mile radius and is the first Starbucks to open in Paradise.”
Both of the Starbucks locations have a café with a drive-thru format, said Asher. “Approximately 60-70 percent of all business for quick-service restaurants come through the drive-thru in today’s market and average Starbucks store sales are approximately 50 percent greater in locations that have a drive-thru,” Asher noted. “It’s a significant selling point and characteristic for these types of properties and a major reason why single-tenant retail investors are paying premiums for single-tenant Starbucks investments.”
Lefko adds, “Starbucks continues to be one of the most sought-after single-tenant retail investments in today’s market because of their ‘A’ credit rating, corporate guaranteed lease and continued progressive business habits to attract and maintain their loyal customer base.”
Earlier this year, Asher and Lefko completed the sale of five other net-leased Starbucks, which were located in Covina, Hesperia, Los Angeles, Merced and San Jacinto. Asher and Lefko have sold more single-tenant Starbucks in California than any other brokerage company and have sold 12 single-tenant Starbucks in California in the last 18 months.
“All of the transactions are a prime example of the incredible demand for Starbucks and affirms the continued strong attraction for corporate-backed single-tenant net-leased investments in California,” Asher noted.
About Hanley Investment Group
Hanley Investment Group Real Estate Advisors is a retail investment advisory firm with a $6 billion transaction track record nationwide, who works closely with individual investors, lending institutions, developers, and institutional property owners in every facet of the transaction to ensure that the highest value is achieved. For more information, visit www.hanleyinvestment.com.