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 record sale of a brand new single-tenant net lease Chick-fil-A Drive-Thru in Livermore, California. The sale price was $10.4 million.
Hanley Investment Group’s Executive Vice Presidents Bill Asher and Jeff Lefko represented the seller, Meridian, a full-service real estate developer and investor specializing in high-quality, brand-enhancing developments across the western United States. The buyer was a local 1031 exchange buyer based in Alameda County, California.
“The sale was a rare Chick-fil-A build-to-suit that featured a 20-year initial lease term and depreciation benefits of owning both the land and building,” says Asher. “We successfully executed a pre-sale marketing strategy and procured and secured a buyer approximately three months ahead of Chick-fil-A formally opening for business and timed the closing shortly after the grand opening.”
According to Asher, the sale represented the lowest all-time cap rate for a Chick-fil-A build-to-suit priced over $7 million in the U.S., the lowest cap rate for a single-tenant net lease Chick-fil-A priced over $10 million to sell this year (2022) in California, and the second-lowest cap rate nationwide all-time for a Chick-fil-A priced above $10 million.
The 4,821-square-foot Chick-fil-A-occupied property is located on 1.61 acres at 1754 N. Livermore Avenue. The property sits directly on the Livermore Avenue exit from Interstate 580, one of the most heavily trafficked commuter routes in the Bay Area (214,000 cars per day). Chick-fil-A is adjacent to Home Depot and Walmart in Arroyo Plaza and other major retail in the area including Kohl’s, Target, Ross Dress for Less, T.J. Maxx, Petco, JOANN and Lucky supermarket. There are over 117,500 people with an average household income of nearly $185,000 within a five-mile radius of the property.
“Chick-fil-A is one of the most sought-after single-tenant [quick-service restaurant] drive-thru investments across the country in today’s market, and for plenty of good reasons,” says Asher.
Per QSR’s 2022 QSR 50 report published in August 2022, Chick-fil-A’s 1,836 U.S. freestanding restaurants outside of malls (those open and operated for at least a full calendar year, from a total of 2,023), one operator pushed $17.16 million in sales, 34% between $7.2 and $9 million, and 31% above $9 million. Chick-fil-A’s AUV was also nearly 15% better than in 2020. Systemwide sales over the past three years increased from $12.2 to $13.7 to $16.7 billion.
Asher adds, “Although cap rates and pricing have started to adjust in past months due to rising interest rates, single-tenant fast-food drive-thru properties will remain in high demand, retain the best pricing, and represent a flight to security for net lease investors. The sale of the Chick-fil-A in Livermore is a prime example of pride of ownership, trophy acquisition featuring a secure and stable income stream the buyer can rely upon long-term,” said Asher.