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  Starbucks


Average Property & Lease

Average Sale Price$1,817,235
CAP Rate (12mo avg)5.74%
NOI$123,000
$/Square Foot$500 - $1,000
Building Size1,700 - 2,700 sf
Lot Size0.50 - 1.00 acres
Lease Term20 yrs (10 yr cancel opt.)
Escalations10% every five years
CREDIT RATING
Baa1
Moody's
A-
S&P
view credit rating chart
search calkain.com property listings for Starbucks  |  view all propery listings
Net Lease Advisor Overview

After a period of over-expansion and uncertainty, Starbucks balanced the ship delivering record-setting financial results in 2010 and entered 2011 focused on improving top line growth and international expansion. The Starbucks brand is very strong and the company continues to capture a larger market share as the premier retailer of specialty coffee. Celebrating their 40-year operating history in the Spring of 2011, Starbucks' management reaffirmed their growth plans, utilizing a global retail footprint.

From a net lease prospective, it is important to recognize that Starbucks' initial growth and market dominance can be contributed to Starbucks ability to find great real estate locations. As others have pointed out, the Starbucks concept and success is driven as much by real estate as it is by coffee and the Starbucks experience. As a result, Starbucks has not only become the premier retailer of specialty coffee, but Starbucks' retail locations have also become popular net lease investments.

Starbucks typically operates under a 10 or 20 year net lease (varies between NN and NNN) with rental increases every five years. With more than 11,000 location in the US, Starbucks locations can be found in both urban and suburban locations, and their locations take advantage of other traffic generators, typically being positioned on the commuting-side of traffic patterns. The average Starbucks store size varies depending on urban versus suburban location, but the newer free-standing locations range from 1,700 - 2,700 SF situated on 0.50 - 1.00+/- of land. The prototypical store model offers a drive-thru window and the configuration is adaptable to a variety of alternative uses.

The combination of a strong brand, stable financials, and premier locations makes Starbucks an appealing option for net lease investors.
 

Pros

Cons

  • National Tenant with a good credit rating
  • Located in high traffic suburban retail areas and increasingly more common and more preferable urban hub locations
  • Store configuration adaptable to a variety of alternative uses
  • Often sold as ground leases where purchaser takes possession of the building on termination of the lease
  • Uncertainty of future Starbucks contraction
  • Right to cancel option in the lease
Tenant Description

Starbucks Corporation is an international coffeehouse chain based in Seattle, Washington. Starbucks is the largest coffeehouse company in the world, with 17,009 stores in 50 countries, including over 11,000 in the United States, over 1,000 in Canada, and over 700 in the United Kingdom.

Founded in Seattle, Washington, on March 30, 1971, Starbucks only began to expand rapidly in 1987. At the time of its initial public offering on the stock market in 1992, Starbucks had grown to 165 outlets. During the height of its expansion in the 1990s, Starbucks was opening a new store every workday, a pace that continued into the 2000s.

Starbucks sells drip brewed coffee, espresso-based hot drinks, other hot and cold drinks, coffee beans, salads, hot and cold sandwiches and panini, pastries, snacks, and items such as mugs and tumblers. Through the Starbucks Entertainment division and Hear Music brand, the company also markets books, music, and film. Many of the company's products are seasonal or specific to the locality of the store.


STARBUCKS TREND
CAP Rate

2014 avg: 5.77%

2015 avg: 5.74%

RECENT SALES

Harlingen, TX

$1,100,000 | 6.91%

Kirkland, WA

$1,800,000 | 4.89%

MORE INFO
www.starbucks.com
Google Finance: SBUX
Google News: SBUX