It’s no secret that a lot of people love Starbucks coffee. But many investors find the Seattle-based chain’s real estate just as tasty, especially newly built standalone locations.
Starbucks real estate sits among the top performers in sales volume for new construction in the quick-service restaurant sector.
With a net lease, the tenant pays for most of the property’s operating expenses. For their part, landlords get monthly rent.
Through the first half of the year, the reports noted that private investors made up 80% of the buyers for quick-service restaurant real estate.
One of the biggest sales to a private investor this year involved a Starbucks that just opened in Buena Park, California. It sold in June for nearly $7.9 million and has a 4.09% capitalization rate, or potential annual return.
There are plenty of properties at lower prices, much lower in some cases, and that offer higher cap rates. They may be in smaller cities or have fewer years left on the lease. One factor in the pricing is whether Starbucks has an early termination clause in the lease, which means the chain can leave midway through a 10-year lease, for example.
Here’s a sample of what’s on the near our market:
991 Civic Center Drive, Vista, California: $2.7 million, 4.25% cap rate
Vista is north of San Diego. The 900-square-foot property is a three-year-old drive-thru-only Starbucks. It sits near Ronald Packard Parkway, which connects with Interstate 15 and Interstate 5, the main north-south highway through California. The property last sold in 2016 for $2.8 million.
460 S. Highway 160, Pahrump, Nevada: $2.66 million, 4.7% cap rate
Pahrump is about 60 miles west of Las Vegas at the border with California and about 48 miles from Death Valley. The only other Starbucks in the town is in the Albertson’s grocery store up the highway.
The Starbucks opened earlier this year, and the listing notes that there’s no early termination clause in the lease.