May 3, 2019 – 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 arranged the sale of a two-tenant retail building occupied by a Starbucks with a drive-thru and T-Mobile at 360 W. 16th Street in Merced, Calif. The sale price for the two-tenant net-leased investment was $2,645,000, representing a record-low cap rate for a two-tenant retail property in Central California. The cap rate was 5.06 percent.
Hanley Investment Group’s Executive Vice President Bill Asher and Vice President Jeff Lefko, along with Senior Associate William Ito, represented the seller, a private investor based in Bakersfield, Calif. The buyer, Ares Commercial Properties, Inc. of Novato, Calif., was represented by Mort Rothman at Starboard Commercial Real Estate in San Francisco.
Built in 2016, the two-tenant, 3,700-square-foot pad building sits on .61 acres and features a 1,900-square-foot Starbucks with drive-thru and a 1,800-square-foot T-Mobile store. The property is located at a high-traffic intersection at the corner of Martin Luther King Jr. Way and 16th Street with 45,000 cars per day and is less than 1/4 miles away from Highway 99 with 52,000 cars per day.
According to Asher, Hanley Investment Group procured an all-cash, 1031 exchange buyer and obtained a record-breaking cap rate and price per square foot for a two-tenant net-leased investment in Central California.
Nearby national and regional tenants include Costco, The Home Depot, Dollar General Market, Smart & Final Extra!, Regal Cinemas, Dickey’s Barbecue Pit, Family Dollar, In-N-Out, Little Caesars, Subway, Taco Bell and Wendy’s.
The retail pad building is located within three miles from Merced College (15,400 students) and seven miles from University of California, Merced (10,000 students), which was the first research university built in the U.S.
“Starbucks relocated from an existing street-front location one block to the north that opened for business in 1999 that did not have a drive-thru,” said Asher. “The new location with a drive-thru draws from an established 19-year customer base in the trade area.”
Asher said, “Approximately 60 to 70 percent of all business for quick-service restaurants comes through the drive-thru with average Starbucks store sales approximately 50 percent greater in locations that have a drive-thru. Starbucks continues to seek new stand-alone drive-thru locations within a one-mile radius of older non-drive-thru stores in their continued efforts to take advantage of the increased business generated via the drive-thru.”
Last year, Hanley Investment Group arranged the sale of a single-tenant Starbucks in Merced, adjacent to the Merced Mall on Olive Avenue, and has now sold 12 Starbucks properties in the last 16 months in California.
According to Asher, “Starbucks has become one of the most prominent and innovative retailers in today’s market. As a net-leased passive investment, Starbucks provides investors with a high level of confidence and security that requires little to no maintenance. Further, the stores are situated in high-traffic locations with strong demographics. In fiscal 2018, Starbucks experienced double-digit growth in topline revenue of $24.7 billion, up 10 percent over the prior year.”