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December 12, 2018
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Two New SoCal Starbucks Trade in Deals Totaling Near $6 Mil


We’ve got news of two brand-new construction, single-tenant corporate Starbucks in SoCal to sell in separate transactions totaling $5.89 mil. The properties are in Hesperia and Covina.

In Hesperia, a Manhattan Beach-based private investor paid $3.19 mil for a new, 2k sf Starbucks with a drive-thru. The deal had a cap rate of 4.36% and a price of $1,595/sf. According to CoStar, this sale achieved a record-low cap rate for a single-tenant Starbucks in the High Desert region and a record high price per square foot in the city of Hesperia for a single-tenant retail sale.

Built in 2017 on .81 acres, the property is located at 11412 Fashion Ct, near the signalized intersection of the Ranchero Rd Exit on I-15. The property benefits from excellent access, a (soon to be built) freeway-visible pylon sign and approximately 108,000 cars per day on Interstate 15. Starbucks opened in October 2017.

Bill Asher and Jeff Lefko with Hanley Investment Group represented the seller, National Development Inc from Hermosa Beach, in the deal. The buyer was repped by Don Kustudia of Commercial Property Investments in Manhattan Beach.

In the Covina deal, a private investor out of Glendale paid $2.7 mil for a new 1.8k sf Starbucks with a drive-thru. The transaction had a cap rate of 3.67% and a price of $1,479/sf. According to CoStar, this sale achieved one of the lowest cap rates ever for a Starbucks in Los Angeles County.
Built in 2018, the property sits on .41 acres at 19505 E. Cypress St. The location sees over 42,000 cars per day at the signalized intersection of Grand Ave and Cypress St.

The buyer was represented by Han Widjaja Chen at Growth Investment Group. In this transaction, Asher and Lefko also represented the seller, Fountainhead Delta LP of Newport Beach.

Asher commented that the buyer paid a premium for the property because of the dense San Gabriel Valley location and five-mile Covina trade area, a market of nearly half a million people with a total retail demand of $5.6 bil and retail sales of $800 mil. There are more than 362,000 people with an average household income of over $90,000 within a five-mile radius of the property.

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 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.”

“Starbucks continues to be one of the most sought-after single-tenant retail investments in today’s market,” said Asher. “These transactions are a prime example of the incredible demand for Starbucks and affirm the continued strong demand for corporate-backed single-tenant net investments in dense, supply-constrained markets like Covina as well as underserved markets like Hesperia.”

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