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July 17, 2018
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New Starbucks near USC Sells for over $2,000/sf

6/25/18

A newly built, single-tenant corporate Starbucks with a drive-thru located in Los Angeles has sold for $3.54 mil. The property, located less than one mile from the University of Southern California (USC) campus, traded at a cap rate of 3.82 percent.

Built in 2017, the 1.5k sf ($2,360/sf) Starbucks is situated on a .27-acre parcel at 1789 W. Jefferson Blvd, at the northeast corner with Western Ave in Los Angeles. The single-tenant corporate Starbucks has over 19 years remaining on the primary lease term on a rare 20-year absolute NNN lease with 10% rental increases every five years.

Bill Asher, Jeremy McChesney and Jeff Lefko with Hanley Investment Group represented the buyer, an all-cash 1031 exchange investor out of L.A., and the seller, a private developer based in Phoenix, AZ.

According to Asher, they located a very qualified local buyer within the first two weeks of formally marketing the asset and closed at 99.5% of the asking price. The deal had a 10-day due-diligence review and a 30-day escrow.

Located at the signalized intersection of Jefferson Blvd and Western Ave with an average daily traffic count of 50,000 cars per day, the property is approximately two miles from the I-10 (311,000 CPD) and I-110 (269,000 CPD) freeway on/off ramps and is the only drive-thru Starbucks in a two-mile radius. More than 1.3 million people reside within a five-mile radius of the property.

USC is home to more than 44,000 students with $562 mil spent in the local community from USC-related student expenses. USC is also the largest private employer in the city of Los Angeles with 42,315 Los Angeles County jobs, which generates $8 bil annually in economic impact for Los Angeles County and California.

“Over 60% of all store sales at a Starbucks now come through the drive-thru, which is why 80% of all new locations nationally for Starbucks include a drive-thru,” said Lefko. “It’s a significant reason why single-tenant Starbucks investments continue to be one of the more sought-after triple-net assets from private investors across the country. Corporate Starbucks sites typically offer strong underlying real estate fundamentals combined with a long-term corporate guaranteed lease and rental escalations, providing investors with a secure income stream and a hedge against inflation.”




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