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 arranged the “pre-opening” sale of a new construction, single-tenant Starbucks Drive-Thru at Zinfandel Village, a grocery-anchored shopping center located at the on/off-ramp to U.S. Route 50 (Lincoln Highway) in Rancho Cordova, California. The sale price was $2,550,000, representing a 4.14% cap rate, a record-low cap rate for a new single-tenant 10-year lease Starbucks in the Sacramento metro area in the last four years.
Hanley Investment Group’s Executive Vice Presidents Bill Asher and Kevin Fryman represented the seller, Pacific Castle Management in Irvine, California. Eric Reuveni of Los Angeles Commercial Real Estate Group of Encino, California, represented the buyer, a private investor based in Orange County, California.
“We successfully executed a pre-sale strategy and obtained record pricing for a single-tenant Starbucks Drive-Thru in the greater Sacramento area,” said Asher. “We procured a California-based 1031 exchange buyer within the first two weeks of marketing and closed escrow at pre-COVID pricing, approximately three weeks prior to Starbucks formally opening for business and paying rent.”
“The Starbucks-occupied investment offered the buyer all the fundamentals for a secure and stable investment with a new, long-term, corporate lease, a strong retail location, and new construction building with a sought-after, internationally known, credit tenant,” said Fryman. “With a shortage of high-quality, single-tenant net lease retail assets priced under $3 million in California, buyer demand continues to be very strong, especially for national credit tenants with drive-thrus that have successfully adapted to the ‘new normal.'”
Starbucks occupies a 2,200-square-foot, freestanding building with a drive-thru on a 0.85-acre parcel at 2875 Zinfandel Drive and Olson Drive as part of the Zinfandel Village, a Grocery Outlet-anchored shopping center in Rancho Cordova. Tenants include Pizza Hut, Burger King and Popeyes, all three with drive-thrus. Inline tenants at Zinfandel Village include Lumber Liquidators, Little Caesars, Skechers and Sourdough & Co. National tenants in the immediate area include Target, Marshalls, Michaels, PetSmart, Ross Dress for Less, Safeway, ULTA Beauty, Walgreens, PetSmart, Boot Barn, 99 Cents Store and Walmart Supercenter.
There are more than 42,000 cars per day at the signalized intersection of Zinfandel Drive and Olson Drive and 44,000 cars at the signalized intersection of Folsom Boulevard and Zinfandel Drive, the two intersections that encompass the length of the shopping center.
“Starbucks relocated from its established inline location directly across the street to take advantage of the increased sales due to having a drive-thru,” said Asher. “Approximately 70% of business for all quick-service restaurants come through a drive-thru and the average Starbucks store sales are approximately 50% greater in locations that have a drive-thru. Starbucks has announced plans to focus on the development of stores with a drive-thru and expand its drive-thru only concept.”
Starbucks reported it opened 278 net new stores in the first quarter of fiscal 2021, yielding 4% year-over-year unit growth, ending the period with 32,938 stores globally. The company forecasts approximately 850 new store openings and approximately 50 net new stores are planned in the Americas. Starbucks® Rewards loyalty program 90-day active members in the U.S. increased to 21.8 million, up 15% year-over-year. Fortune has consistently rated Starbucks as one of the World’s Most Admired Companies (2009-2020) and QSR Magazine ranked Starbucks as the #1 Most Valuable Restaurant Brand Worldwide (2020).
In October 2019, Hanley Investment Group arranged the sale of a 33,437-square-foot multi-tenant retail building on 2.69 acres at Zinfandel Village, a part of the same center as the new Starbucks drive-thru. Hanley Investment Group also executed a break-up strategy at the shopping center located directly across the street, Zinfandel Crossing. In multiple transactions in 2019, Hanley Investment Group sold the 99 Cents Only store and inline shop buildings plus retail pads totaling over 65,000 square feet at Zinfandel Crossing.
Located 10 miles from the city of Sacramento, the city of Rancho Cordova is the fastest growing city in Sacramento County and is considered the second largest office hub and employment center in the region. There are 55,000 jobs and 3,000 businesses located in the city with 11.4 million square feet of office space and 18 million square feet of industrial space. Fortune 500 companies with regional facilities in the city include Cisco Systems, Centene, Anthem Blue Cross, Teledyne Technologies, and Franklin Templeton. Companies headquartered in the city include Vision Service Plan Global, Health Net Federal Services and AMPAC Fine Chemicals. There are also 30,000 residential units proposed, planned or under construction. There are 212,000 people with an average household income of $96,000 within a 5-mile radius of the shopping center.
Hanley Investment Group has sold 33 Starbucks assets in the last two years, most at record pricing, including the sale of an 800-square-foot drive-thru-only Starbucks on 0.30 acres in the city of San Pedro, California, in August 2020. The sale price of $3,075,000 represented $3,844 price per square foot and a cap rate of 3.58%, the lowest cap rate for a Starbucks Drive-Thru Only in California in 2020.
