April 19, 2017 – 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 a brand-new construction single-tenant corporate Starbucks with a drive-thru located in Bakersfield, Calif. The purchase price of $2.65 million represented a cap rate of 4.09 percent and $1,432 psf. According to CoStar, this sale achieved a record low cap rate for a single-tenant Starbucks in Bakersfield and a record high price per square foot in the city.
Hanley Investment Group Executive Vice President Bill Asher and Associate Jeff Lefko and represented the seller, Evergreen Development. Spanning the last 42 years, Evergreen is a national retail and multi-family development company with heavy emphasis on developing projects in California, Colorado, Arizona and now Utah. The buyer, a private investor from Los Angeles, was represented by Joe Bolognese of Major Properties Real Estate in Los Angeles.
Built in 2017, the 1,850-square-foot building is situated in the southeast quadrant of Colony Street and Panama Lane in Bakersfield on .81 acres. The property is in close proximity to the 99 Freeway Panama Lane on/off ramp, benefitting from more than 128,000 cars per day and nearby national and regional credit tenants including Walmart Supercenter, Albertsons, Aldi, AutoZone, Carl’s Jr., Family Dollar, In-N-Out, Jack in the Box, Lowe’s, O’Reilly Auto Parts, McDonald’s, Pizza Hut, Sleep Train, Vallarta Supermarkets and Walgreens. Traffic is also driven to the area by the nearby Bakersfield Auto Mall, made up of 21 different major auto dealerships. Additionally, there are multiple new housing developments from builders Lennar, CalAtlantic and Legacy Homes in the surrounding area.
Lefko adds that there are approximately 223,000 people with an average household income of nearly $62,000 within a five-mile radius of the property.
“WE UTILIZED OUR EXTENSIVE DATABASE TO PROCURE AN ALL-CASH 1031 EXCHANGE BUYER PRIOR TO FORMALLY MARKETING THE PROPERTY,” SAID ASHER. “ADDITIONALLY, WE FACILITATED A SUCCESSFUL PRE-SALE STRATEGY AND CLOSED ESCROW APPROXIMATELY ONE MONTH PRIOR TO STARBUCKS FORMALLY OPENING FOR BUSINESS AND PAYING RENT.”
According to Asher, “Starbucks was originally located at the northeast corner of Panama Lane and Colony Street since September 2004, without a drive-thru. The new location (with a drive-thru) is scheduled to formally open at the end of April and will draw from an established customer base in the trade area for over 12 years.”
Asher commented, “Average store sales are significantly greater in Starbucks locations that have a drive-thru, which has created a goal for Starbucks to have drive-thrus in half of its stores by 2020. By 2019, Starbucks expects to grow from $16 billion to $30 billion in revenue, with 60 percent of all new locations including a drive-thru.”
“Single-tenant Starbucks properties continue to be one of the most sought-after triple-net investments from private investors across the country,” said Asher. ”Corporate Starbucks sites typically offer strong underlying real estate fundamentals combined with a long-term corporate guaranteed lease and rental escalations, providing investors with a secure income stream and rental escalations as a hedge against inflation.”