Chipotle BTS Market Report
This report tracks Chipotle cap rates rising 100 bps and lease rates increasing from $55/SF to $65/SF between 2022-2024. Rising interest rates and costs have tightened margins for developers, potentially challenging future build-to-suit projects.
Watch the video for this article
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.
Related
This is part of our net lease and ground lease work
We publish tenant-by-tenant research on cap rates and rents for the brands that occupy Southeast corners, and we use the same evidence when we price and sell a property. Read the report for your tenant first; the conversation is better when you have.
Jonathan Aceves, CCIM, MBA, CM&AP
Vice President, Associate Broker
Portfolio planning, commercial land and site selection, multifamily and downtown development.
John Eckley, CCIM, MBA
Vice President, Industrial Lead
Industrial warehouse and flex property across the Southeast, land, 1031 exchanges and sale-leasebacks.
Stephen Long, FMVA
Senior Investment Analyst
Underwriting, financial modeling and valuation behind every opinion of value and offering memorandum.
Currently available
