Record-Low Cap Rates in the High Desert and Los Angeles County
COVINA & HESPERIA, Calif. – (RealEstateRama) — 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 brand-new construction single-tenant corporate Starbucks in separate transactions in Southern California.
In San Bernardino County in the city of Hesperia, Hanley Investment Group Executive Vice President Bill Asher and Associate Jeff Lefko represented the seller in the sale of a brand-new single-tenant Starbucks with a drive-thru for $3,190,000, representing a cap rate of 4.36 percent and $1,595 per square foot. 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 2,000-square-foot drive-thru property is located at 11412 Fashion Court in Hesperia, near the signalized intersection of the Ranchero Road Exit on Interstate 15. According to Asher, 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.
The buyer was a private investor based in Manhattan Beach, California, and was represented by Don Kustudia of Commercial Property Investments in Manhattan Beach. The seller, which was represented by Asher and Lefko, was National Development, Inc. from Hermosa Beach, California.
“We procured a 1031 exchange buyer that was very familiar with the High Desert trade area and structured a three-day escrow to help timely fulfillment of the buyer’s 1031 exchange requirement and achieve the seller’s sale goals,” said Lefko. “We successfully effectuated a mutually-beneficial transaction for both parties in a very short period of time.”
In Covina, located in Los Angeles County, Hanley Investment Group’s Asher and Lefko arranged the sale of a brand-new single-tenant Starbucks with a drive-thru for $2,700,000, representing a cap rate of 3.67 percent and $1,479 per square foot. According to CoStar, this sale achieved one of the lowest cap rates ever for a Starbucks in Los Angeles County.
Built in 2018 on .41 acres, the 1,825-square-foot property is located at 19505 E. Cypress Street in Covina with over 42,000 cars per day at the signalized intersection of Grand Avenue and Cypress Street. Starbucks opened in January 2018.
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 billion and retail sales of $800 million. There are more than 362,000 people with an average household income of over $90,000 within a five-mile radius of the property.
The buyer, a private investor based in Glendale, California, was represented by Han Widjaja Chen at Growth Investment Group. Asher and Lefko represented the seller, Fountainhead Delta, LP of Newport Beach, California.
According to Asher, “We procured an all-cash 1031 exchange buyer prior to formally marketing the property and structured a pre-sale transaction where the buyer closed escrow prior to Starbucks opening for business.”
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 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.”
“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.”
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.
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MONAGHAN COMMUNICATIONS, INC.