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 sale of a single-tenant Starbucks Drive-Thru at Lake Elsinore Marketplace, a 144,034-square-foot shopping center anchored by Costco, Lowe’s, Grocery Outlet, PetSmart and Dollar Tree.
The sale price was $3,765,000, representing a 4.25% cap rate. Hanley Investment Group has sold $375 million in retail properties in the Inland Empire in the last 36 months including $18.6 million in retail properties at Lake Elsinore Marketplace in the last 11 months.
Hanley Investment Group Executive Vice Presidents Kevin Fryman and Bill Asher represented the seller, Pacific Castle, based in Irvine, California. The buyer was a private investor from West Covina, California, represented by Tiffanie Wang of KW Premier Properties in Phillips Ranch, California.
Built in 2005 on 0.49 acres and renovated in 2020, the 3,200-square-foot pad building occupied by Starbucks is located at 29285 Central Avenue in Lake Elsinore.
This sale represents the seventh pad building Hanley Investment Group has sold in the last 11 months at Lake Elsinore Marketplace including single-tenant properties for a Wendy’s Drive-Thru, Del Taco Drive-Thru, Panda Express, Valvoline and Wells Fargo as well as a multi-tenant pad building occupied by Navy Federal Credit Union, iBrows Threading Salon, Submarina and Juice It Up!
“We facilitated a successful pre-sale strategy and opened escrow prior to Starbucks opening for business and formal rent commencement date,” said Fryman.
“Despite the transaction being initiated during the initial months of COVID-19 being declared a pandemic, we were able to structure a sale at pre-COVID pricing, during one of the most challenging macro-economic environments we’ve experienced in over a decade,” Fryman noted.
“Even with the uncertainty caused by the pandemic, demand for single-tenant net-leased investments with drive-thrus has remained steady, if not increased in the last six months,” said Fryman.
“Although drive-thrus have been a staple of QSR revenue for decades, representing 65% to 70% of a store’s sales, they are now more popular than ever in 2020 due to health concerns and the desire to socially distance,” Asher said.
Asher added, “Starbucks had been seeking a drive-thru location for many years in this immediate trade area. Their new location at Lake Elsinore Marketplace is well-positioned for long-term future success being situated within the dominant shopping center, ideally situated on Highway 74/Central Avenue, the main retail thoroughfare connecting Orange County to Riverside County.”
“With over 32,000 stores around the world (15,243 in the U.S. as of the third quarter), Starbucks is one of the most prominent and innovative retailers in today’s market,” said Asher.
In a letter to stakeholders, Starbucks president and CEO Kevin Johnson and Starbucks chief financial officer Pat Grismer shared more specifics in how the company is accelerating the transformation of the customer and partner experience. “With approximately 80% of Starbucks customer transactions in U.S. company-operated stores ’on-the-go‘ occasions, the Starbucks leadership team has reexamined the U.S. store footprint with a vision to evolve the Starbucks retail presence over time through targeted store renovations, relocations and new stores and creating a new, elevated experience for partners and customers.”
“As a net-leased passive investment, Starbucks provides investors with a secure and stable investment that requires little to no management. Furthermore, the stores are situated in high-traffic, fundamentally sound locations with long-term intrinsic value,” Asher noted.
Hanley Investment Group has sold 25 Starbucks assets in the last two years throughout the U.S., most at record pricing.