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Chipotle Chipotlane drive-thru location

Single-Tenant QSR Cap Rates Compress as Drive-Thru Demand Surges

National asking cap rates in the single-tenant quick service restaurant (QSR) sector decreased to a new historic low of 5.26% in the second quarter, according to The Boulder Group’s 2021 Net Lease QSR Market Report. This represented a 39-basis-point decrease from a year ago. 

“Cap rates for corporate leased QSR properties declined by 20 bps to 5.00% while QSR properties leased to franchisees declined by 43 bps to 5.40%,” says Randy Blankstein, president, The Boulder Group. “The primary contributing factor to the decline in cap rates is related to the increased investor demand for net lease properties with a drive-thru component.” 

Demand for net lease QSR properties outpaced the overall net lease sector in the past 12 months. The premium associated with net lease QSR properties was 76 bps in Q2 compared to the prior year’s 60 bps. 

“Following the loosening of in-person dining restrictions related to COVID-19, properties with drive-thru still continue to command significant investor demand,” said Jimmy Goodman, partner, The Boulder Group. 

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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