OC Chipotle-Anchored Retail Pad Building Fetches $1,188/sf

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RENTV

A 6.9k sf, Chipotle-anchored multi-tenant retail pad in Foothill Ranch sold for $8.2 mil, or $1,188/sf. The building is located on just under on acre at 26592 Towne Centre Drive and is part of Foothill Ranch Towne Centre, a regional power center anchored by Walmart Supercenter, Target, 99 Cents Only, Hobby Lobby, JOANN, Michaels, Old Navy, PetSmart and Regal Cinemas.

The building is 100%-leased to Chipotle with a drive-thru, Firehouse Subs and Guidepost Montessori. The property was built in 2004 and renovated in 2020. All three tenants are on brand-new, long-term leases.

The property sits at a signalized entrance along Towne Centre Dr, benefitting from proximity to State Route 241 Freeway. The shopping center serves prominent neighboring cities and communities including Coto de Caza, Dove Canyon, Irvine, Irvine Great Park, Mission Viejo, Portola Springs and Rancho Santa Margarita. Within a one-mile radius of the property, the average household income is more than $150,000 and there is a projected population growth of more than 31% in the next five years.

Bill Asher and Jeff Lefko with Hanley Investment Group Real Estate Advisors represented the seller, Thomas English Real Estate based in Indianapolis, Indiana. The buyer, a private investor from Glendale, CA, was repped by Jack Nersesian at DAUM Commercial Real Estate Services in Los Angeles.

The sale came in at a 4.58% cap rate, at what we’re told is a record-low cap rate and a record-high price per square foot for a multi-tenant pad (three tenants or more) in South Orange County. According to Asher, the listing generated multiple competitive and qualified offers that facilitated securing a Los Angeles-based 1031 exchange buyer at 98% of the asking price.

“Chipotle is one of the most sought-after retail tenants from investors in today’s market,” said Asher. “This particular Chipotle relocated from an established dine-in only location within Foothill Ranch Towne Centre to take advantage of increased sales with a new drive-thru. The ‘Chipotlane’ concept, whether a single-tenant or part of a multi-tenant investment, will continue to be highly desired by buyers as approximately 70% of business for quick-service restaurants come through the drive-thru.”