Starbucks Real Estate Requirement: All You Need to Know About Investing in Starbucks NNN Properties
Triple net or NNN real estate is perfect for investors looking for a moderately low-risk investment with almost no involvement from you as a landlord while providing predictable, solid returns in the long run.
NNN properties tied to renowned brands like Starbucks are best sellers in NNN lease real estate for many reasons. First, they’re a recognizable brand, possess the potential for growing returns for the property owner, and have premium locations.
Presently, Starbucks is the leading specialty coffee brand with approximately 31,795 stores in nearly 80 global markets. The good news is that Starbucks stores are available to corporate real estate (CRE) investors as exclusive NNN properties with corporate-backed, long-term leases in great locations.
The following are Starbucks real estate requirements to know before investing.
Things to Consider Before Buying a Starbucks NNN Property for Sale
Suppose you’re interested in investing in a Starbucks real estate for sale, the following are three critical things to consider:
Triple Net Lease Rent and Terms
In an NNN lease, your tenant is responsible for almost the entire building operational expenses, including insurance, maintenance, and taxes. Nevertheless, every triple net lease deal is special, and the terms vary greatly depending on the property.
There are specific negotiation terms for each lease, so ensure to understand these terms beforehand to avoid finding yourself with little profit due to unforeseen expenses that might occur, which you didn’t know are under your obligation in the lease.
For instance, some deals may outline that the landlord will be responsible for maintaining some parts of the building, like the roof and structure, while some might require that you handle the insurance.
Knowing in advance your financial responsibilities as the landlord will ensure you don’t get any surprises down the line while also enabling you to determine your investment’s profitability.
A primary Starbucks real estate requirement to consider before buying one is the location. As with other real estate investment types, location is a vital factor in triple net investments.
The physical and geographical location of the triple net property will determine your investment’s longevity and success and that of your tenant.
Highly populated areas experiencing substantial economic growth and increasing population are perfect locations for triple net lease properties for sale.
If people relocate to an area, causing a rapid population growth, the local economy will witness a significant lift. Although NNN investments are low-touch, it’d be best to consider the neighborhood business’ longevity.
You’d want a business that isn’t prone to economic or technological shifts. Ensure the company sells items people readily need.
A Starbucks property for sale in a thriving, booming economy and city is an ideal NNN investment with a renowned brand and high number of loyal customers. However, these properties are difficult to come by, so you’ll probably be up against some competition from other interested investors and pay premium rates for them.
Proximity to High Traffic Areas
A necessary Starbucks real estate requirement to consider is the property’s proximity to high traffic areas and its accessibility for customers.
Ensure the property is close to other established companies to help draw customers to your business as well. Corner locations are the best, seeing as they’re easily accessible and make the site more prominent.
About Starbucks Coffee Company
Almost 50 years ago, Starbuck’s first store was opened in Pike Place Market, Seattle, Washington, DC. Presently, They have about 6,300 licensed and 9,000 company-operated stores in the US, with innumerable stores opening every month and Starbucks branded products sold in various leading retail outlets.
Starbucks has expanded over the years by acquiring Evolution Fresh, Seattle’s Best Coffee, Teavana, Ethos, and La Boulange. They’re also in a Global Coffee partnership with Nestlé.
Why Starbucks is a Great NNN Investment
As a major coffee retailer, Starbuck’s growth and unprecedented market dominance can be attributed mainly to its ability to use great real estate locations for its business.
While trying not to downplay the Starbucks experience and its unique coffee, a business’ location plays a vital role in its success. Thus, besides being the leading specialty coffee retailer, Starbuck’s NNN lease for sale has become a highly sought-after investment.
Starbucks operates a ten-year net lease that often varies between triple net (NNN) and double net (NN) leases with a five-year rental increase. With over 13,000 branches scattered all over the country, Starbucks can be found in suburban and urban areas. These branches and franchises are usually positioned in areas with high traffic while also taking advantage of other established businesses to generate traffic.
While Starbucks store size varies based on the location, the new free-standing locations size ranges from 1,500 to 2,000 square feet on 0.50 to 1.00 acres. The model store prototype has a drive-thru window with a configuration adaptable to various alternative uses.
An average Starbucks store is usually sold for 1 to 3 million dollars, making it feasible for new investors to buy. However, not all Starbucks stores are absolute NNN properties. Some are modified triple net leases requiring the landlord to handle a small maintenance aspect, such as structure and roof. Thus, it’s easy to own a Starbucks in any location of your choice regardless of where you live.
As a strong brand in premier locations and stable finances, Starbucks is a desirable option for NNN investors. What’s more? It’s also in line with our recommendation to invest only in an investment-grade and creditworthy tenant with high growth potential and financial stability.
Starbucks is still adding hundreds of branches and franchises annually with a relatively low price point. These net-lease stores present a perfect opportunity for both seasoned CRE investors and first-time buyers.
Starbucks stores are high-performing, low maintenance, and lucrative, offering annual tax opportunities without touching your capital and regular monthly income. However, you’ll need to follow the Starbucks real estate requirements mentioned above when investing.
If buying Starbucks stores is what you’d like to do, contact a seasoned triple net lease advisor from Buy NNN Properties to help you review the net lease market, find off-market Starbucks stores for you and guide you through the entire investment process so you can start enjoying passive income. Contact us today to get started!