Staff Reports | Business & Commerce
As national coffee brands continue expanding their footprint, coffee-occupied real estate is attracting interest from investors seeking single-tenant retail properties with established operators and recurring customer traffic.
Diversified Partners is marketing four coffee-related properties for sale and has more than 10 coffee locations in development, including two under construction. The company’s pipeline includes more than $20 million in coffee-related investment sales expected during the next 12 to 18 months, according to a press release.
Diversified Partners works with approximately 10 coffee brands and has been involved with more than 20 coffee-occupied properties. Current brands include Dutch Bros., Starbucks, Einstein Bros. Bagels and Black Rock Coffee Bar. Company officials said that experience provides insights into what coffee operators seek in development sites and what investors value in completed properties.
“Coffee has become an incredibly active part of retail real estate because these businesses are built around consistency and consumers’ daily routines,” said Walt Brown, CEO of Diversified Partners. “The brands know what makes a location work, and investors understand the value of quality real estate occupied by strong operators. Diversified Partners is involved throughout that process, which gives us a unique perspective on where the market is headed.”
Coffee-related properties continue to generate interest in the single-tenant net-lease market because of their long-term leases and recurring customer demand. Diversified Partners’ investment sales team said coffee-occupied assets typically feature lease terms ranging from 10 to 15 years.
“Coffee-related assets continue to be among the most sought-after assets in the STNL market they combine compelling real estate with durable consumer demand and long-term contractual cash flow,” said John K. Jackson, senior vice president of investment sales at Diversified Partners. “The high-frequency nature of the coffee business drives consistent repeat traffic and resilient store-level sales, giving investors strong conviction in both the underlying operations and the tenant’s ability to meet its rental obligations.”
Sales materials for the four coffee properties currently being marketed by Diversified Partners have been downloaded 765 times, the company reported.
Company officials said investment demand often begins with site selection. In addition to traffic counts and demographics, coffee operators evaluate whether a location fits into consumers’ daily routines and whether surrounding businesses can help generate consistent customer activity throughout the day.
“Coffee works because it’s part of people’s daily routine, including the morning commute, the school drop-off and the stop between meetings, so the best sites are the ones that naturally capture that consistent flow of traffic,” Mr. Jackson said.
Diversified Partners said the coffee sector also illustrates the connection between development, leasing and investment sales, with properties often transitioning into net-lease investment opportunities once developed and occupied.
The company’s investment sales division is led by Mr. Jackson, who has more than 20 years of experience in retail acquisitions, leasing and dispositions and has completed more than 1,000 transactions while managing more than $300 million in retail assets.
The investment sales team also includes Kristina R. Stamets, vice president; Colton Sanchez, investment analyst and associate broker; and Alexa Nunns, associate broker.
