Market Analysis

Area analysis
Houston is the largest city in the state of Texas, and the fourth-largest city in the United States. According to the 2010 U.S. Census, the city had a population of 2.1 million people within an area of 579 square miles. Houston is the seat of Harris County and the economic center of Houston–Sugar Land Baytown, which is the sixth-largest metropolitan area in the U.S. of nearly 6 million people.


Property analysis
This is a Houston based Chick Fil A ground lease. This is one of the very few investment opportunities of its kind in the market. The offering is a 100% fee simple interest in a 15 year corporate guaranteed ground lease with scheduled increases in both the initial term and the option periods. The asset is also located in one of the prime retail areas of Houston.


Target market
Our target market is middle to lower income households. Specifically we are targeting households with children and students. We are also located by many schools in the vicinity allow easy access.

Basic Employers
Within our specific region the basic employers are the educational institutions such as University of Houston, Houston Community College, George Sanchez High School, They create business by bring other business that supplement the population.

Rent/purchase price comparables
The Chart below shows the trend since January 2006 and currently as of February 2012 of the Average per Dollar S.F. asking price for Retail property in Houston, TX. Comparable averager is available for the State of Texas, Metropolitan area, the County and The City of Houston



Competition
Our lessee is a fast food restaurant they face competition from other fast-food restaurant in the area they include Mcdonalds, Taco Cabana, Burger King, Jack in the Box, Subway, Fatisa, Wendy’s, Quiznos, IHOP, Sonic, and Chuck E Cheese’s. These competitors are spread throughout the region.

List of Comparable Properties

Jack In The Box (CORPORATE GROUND LEASE)

8601 W Belfort, Houston, TX 77031

 

• Price: $1,415,800
• Building Size: 3,060 SF
• Price/SF: $462.68
• Property Type: Retail
• Property Sub-type: Free Standing Bldg
• Property Use Type: Net Lease Investment with 4 years left on lease
• Commission Split: 2%
• Cap Rate: 6%
• Occupancy: 100%
• Tenancy: Single
• Lot Size: 0.46 AC

Raising Cane's

12201 Westheimer Road, Houston, TX 77077

• Price: $2,988,000
• Building Size: 3,500 SF
• Price/SF: $853.71
• Property Type: Retail
• Property Sub-type: Restaurant
• Property Use Type: Net Lease Investment with 8 years left on lease
• Cap Rate: 7.50%
• Occupancy: 100%
• No. Stories: 1
• Tenancy: Single
• Year Built: 2005
• Lot Size: 1.30 AC

Jack in the Box

607 FM 1960, Houston, TX 77073

• Price: $2,240,000
• Building Size: 2,495 SF
• Price/SF: $897.80
• Property Type: Retail
• Property Sub-type: Restaurant
• Additional Sub-types: Free Standing Bldg
• Street Retail Retail (Other)
• Property Use Type: Net Lease Investment with 10+ years left on lease
• Cap Rate: 5.75%
• Occupancy: 100%
• No. Stories: 1
• Tenancy: Single
• Lot Size: 0.54 AC

SWOT Analysis-Property’s Strengths, Weaknesses, Opportunities, and Threats

Strengths
Our property is a ground lease which means we do not have to pay cost for the building and utilities while we receive revenue from our client. The location of our property will be located on a major highway. This is ideal for our lessee and good for business. We also have a class A property because of our location and contracted lessee. We also have 100% of our property leased.

Weakness
A weakness of the property is that we only have one lessee. However our lessee is chick-fil-a and they signed for 15 years. This puts all the eggs in one basket, but in a very good basket that has minimal risk.

Opportunities
The location of our property is ideal for reaching large amounts of people and convenient. This gives us opportunities to have even better lessee willing to pay a higher rent. We are not saying our lessee is not good, but we are saying our property location is very attractive and it can allow us to work with more grade A lessees if Chick-fil-a decides to not extend their contract after the initial term.

Threats
In our surrounding area there are a variety of fast-food competitors. Our lessee, Chick-fil-a, will have to compete with these restaurants. The profitability of our lessee translates to a stable net income for us. 

Demographics

Economics
Our property is located where there is median household income of $31888-$46759 within a half mile radius
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Household Income
Our property is located where there is median household income of 5245-9164 people per square mile within a half mile radius.
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Percent ages 0-18 years
Our property is located where there is 27.8%-32% are between the ages 0-18 years within a half mile radius.
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Source:
Chick-Fil-A Property Listing
Google Maps
Latitude and Longitude
Arcgis Explorer Online