Chipotle BTS Market Report

Click Here to Download Market Report

This report tracks cap rates and build-to-suit (BTS) rental rates for Chipotle from 2022 to 2024. Rising interest rates and construction costs have impacted developer and investor attitudes toward new Chipotle BTS projects.

Key Findings:

• Cap Rates: Increased by 100 basis points (bps) over three years. Cap rates rose slowly in 2022, but sharply increased by 79.71 bps from 2023 to 2024 due to higher interest rates.

• Lease Rates: Lease rates jumped significantly from $55/SF to $64/SF between 2022 and 2023, then stabilized at $65/SF in 2024.

Insights:

• Rising costs have cut into both Chipotle’s profit margins (through higher rents) and developers' profits (due to higher cap rates).

• Developers face diminishing returns on new Chipotle projects, making them less eager to build.

• For example, a Chipotle developed in 2022 at $55/SF could sell for $3.09M, but with 2024's cap rate and higher rent, that value drops to $2.94M despite higher NOI.

Conclusion: Chipotle may need to offer higher rents and longer leases or consider more ground leases to keep developers interested in the current challenging market.

Click Here to Download Market Report