Sunday, May 24, 2009

Where to Invest?

Or what to invest in? That was a question just posed to me by a new friend of mine. Big question if you think about it. It all started off by her asking me if I liked Pinkberry frozen yogurt as we were walking through Santana Row. Then the conversation went to the competitors in that marketplace - Red Mango and others. Good or bad for an investor? They are making a volume of sales for sure. Does that make for a good real estate investment? I would say in general no. Starbucks was the industry darling for quite a few years. Everyone wanted a strip center with Starbucks as a tenant. And those single tenant Starbucks and strip centers sold at a premium (lower) cap rate. Now, with Starbucks closing locations, this darling is no longer courted. And owners of these will not be able to sell at the same premium cap rates that they bought. Starbucks was a trend - it didn't seem so at the time - it seemed as if the world economy had shifted to have an endless demand for coffee. Pinkberry is also a trend and trends wane. I'm boring and conservative when it comes to real estate investments - I like unhealthy hamburger and boring drug stores over flash in the pan froyo and grande lattes. And then there is the thing about location...

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