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April 13, 2021
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New Sacramento-Area Starbucks Trades at 4.14% Cap Rate

3/01/21

A new construction, single-tenant Starbucks Drive-Thru at Zinfandel Village, a grocery-anchored shopping center located at the on/off-ramp to U.S. Route 50 (Lincoln Highway) in Rancho Cordova, traded hands for $2.55 mil. The deal came in at a 4.14% cap rate, what we’re told is a record-low cap rate for a new single-tenant 10-year lease Starbucks in the Sacramento metro area in the last four years.

The Starbucks occupies a 2.2k sf, freestanding building with a drive-thru on a 0.85-acre parcel at 2875 Zinfandel Dr within Zinfandel Village, a Grocery Outlet-anchored shopping center in Rancho Cordova. Tenants include Pizza Hut, Burger King and Popeyes, all three with drive-thrus. Inline tenants at Zinfandel Village include Lumber Liquidators, Little Caesars, Skechers and Sourdough & Co. National tenants in the immediate area include Target, Marshalls, Michaels, PetSmart, Ross Dress for Less, Safeway, ULTA Beauty, Walgreens, PetSmart, Boot Barn, 99 Cents Store and Walmart Supercenter.

Bill Asher and Kevin Fryman with Hanley Investment Group Real Estate Advisors represented the seller, Pacific Castle Management, out of Irvine. Eric Reuveni of Los Angeles Commercial Real Estate Group of Encino repped the buyer, a private investor based in Orange County.

“We successfully executed a pre-sale strategy and obtained record pricing for a single-tenant Starbucks Drive-Thru in the greater Sacramento area,” said Asher. “We procured a California-based 1031 exchange buyer within the first two weeks of marketing and closed escrow at pre-COVID pricing, approximately three weeks prior to Starbucks formally opening for business and paying rent.”

“The Starbucks-occupied investment offered the buyer all the fundamentals for a secure and stable investment with a new, long-term, corporate lease, a strong retail location, and new construction building with a sought-after, internationally known, credit tenant,” said Fryman. “With a shortage of high-quality, single-tenant net lease retail assets priced under $3 mil in California, buyer demand continues to be very strong, especially for national credit tenants with drive-thrus that have successfully adapted to the ‘new normal.’”

“Starbucks relocated from its established inline location directly across the street to take advantage of the increased sales due to having a drive-thru,” said Asher. “Approximately 70% of business for all quick-service restaurants come through a drive-thru and the average Starbucks store sales are approximately 50% greater in locations that have a drive-thru. Starbucks has announced plans to focus on the development of stores with a drive-thru and expand its drive-thru only concept.”

Located 10 miles from the city of Sacramento, the city of Rancho Cordova is the fastest growing city in Sacramento County and is considered the second largest office hub and employment center in the region. There are 55,000 jobs and 3,000 businesses located in the city with 11.4 msf of office space and 18 msf of industrial space. Fortune 500 companies with regional facilities in the city include Cisco Systems, Centene, Anthem Blue Cross, Teledyne Technologies, and Franklin Templeton. Companies headquartered in the city include Vision Service Plan Global, Health Net Federal Services and AMPAC Fine Chemicals. There are also 30,000 residential units proposed, planned or under construction. There are 212,000 people with an average household income of $96,000 within a 5-mile radius of the shopping center.





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