Hanley Investment Group Real Estate Advisors, a nationally recognized real estate brokerage and advisory firm specializing in retail property sales, announced that the firm arranged the sale of a single-tenant Starbucks café with a drive-thru in Los Angeles for $3.25 million, representing a 4.57% cap rate. The property is located approximately one mile from the University of Southern California (with over 49,000 students).
Hanley Investment Group’s Executive Vice Presidents Jeff Lefko and Bill Asher represented the seller, a private investor based in Los Angeles. The buyer, a private investor based in southern California, was represented by Ryan Sharpe of Kidder Mathews.
“From the initial marketing commencement date in October to the day of closing in December, we facilitated a successful sale in approximately 60 days,” says Lefko. “We quickly generated multiple offers in a short period of time and secured a local, all-cash 1031 exchange buyer and structured a quick due-diligence period to achieve a year-end closing.”
Lefko continues, “The single-tenant corporate Starbucks café and drive-thru had a rare absolute triple-net lease, representing no landlord responsibilities. Furthermore, the subject property is the only drive-thru Starbucks in a two-mile radius.”
Built in 2017 on a 0.27-acre parcel, the 1,486-square-foot, freestanding Starbucks-occupied building is situated at 1789 West Jefferson Boulevard, at the hard corner, signalized intersection of Western Avenue and Jefferson Boulevard (with 50,000 cars per day). The property is approximately two miles from Interstate 10 (356,000 cars per day) and Interstate 110 (277,000 cars per day) on/off ramps. More than 1.3 million people are within a five-mile radius of the property.
According to Lefko, 14 years remained on the original 20-year lease with three five-year options at 10% rental increases every five years. “This is a rare drive-thru location within an area of Los Angeles zoning with high barriers to entry for a newer city-approved drive-thru site,” reported Lefko.
“This particular single-tenant Starbucks sale represents one of only seven that sold in California in the second half of 2023 and one of the lowest cap rates for a Starbucks sale during that time period,” notes Asher.
“Investors continue to acquire Starbucks-leased investments as a flight to quality and security based on the company’s credit (S&P: BBB+), continued company innovation and site selection that typically targets the best-positioned real estate for maximum accessibility, identity and visibility,” Asher highlights. “Even with higher interest rates and slower overall transaction velocity, single-tenant investments leased to national credit tenants will continue to trade at premium historical pricing.”
Hanley Investment Group is a market leader in the sale of Starbucks investments in the U.S. and has sold 54 Starbucks properties in the U.S. in the last 48 months. In California, Hanley Investment Group has sold 44 Starbucks properties in the previous six years.
