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8/21/18
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Two new construction, single-tenant, NNN-leased corporate Starbucks in Northern California have sold in separate transactions totaling over $5.4 mil.
In one of the deals, in the Central Valley city of Ripon, a new, 1.6k sf single-tenant Starbucks with a drive-thru sold for $2.75 mil ($1,773/sf), at a cap rate of 4.55%. Built in 2018, the property is located on 0.36 acres at 338 E. Main St, immediately adjacent to the State Route 99 freeway on/off ramps at Main Street in Ripon.
Hanley Investment Group Real Estate Advisors’ Bill Asher and Jeff Lefko represented the seller, a private developer based in Glendale, CA. The buyer, an all-cash 1031 exchange investor based in Northern California, was represented by Steve Zakula of Pacific Union International Inc in San Francisco.
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 other deal was in Paradise, located in the Sierra Nevada foothills above the northeastern Sacramento Valley. A brand-new, single-tenant Starbucks with a drive-thru sold for $2.7 mil, representing a cap rate of 4.80% and a price of $1,091/sf. The property closed at 99% 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, CA, was repped by Harry Dematatis of CBRE.
Built in 2018, the new 2.5k sf drive-thru property is located on 1.21 acres at 6344 Skyway Rd, 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% of all business for quick-service restaurants come through the drive-thru in today’s market and average Starbucks store sales are approximately 50% 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.”
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