Drive-Through Restaurant
For Sale
$865,000
725 Sterling Hwy, Homer, AK 99603
Bluff-top commercial site with highway frontage, bay views, and a lighthouse feature.
Property Size1,340 SF
Lot Size1.66 Acres
Price / SF$645.52
Days on Market10
Property Features for 725 Sterling Hwy
General Information
Standard status
Active
Size
1,340 SF
Lot size
1.66 Acres
Site & Location
Drive-Thru
Yes
Highway Access
Yes
Road Access
Yes
Building Details
Year Built
2014
Listing Agency:
Berkshire Hathaway HomeServices Alaska Realty
(907) 399-6183
Listed By:
Gina Pelaia · License #16355
Source:
Kachemakgrouprealestate
Added: Aug 19
Changed: Aug 28
Last Checked: Aug 28 at 8:57AM
Displayed information is deemed reliable but is not guaranteed and should be independently verified. All listing content including descriptions, pricing, images are the copyrighted material of Berkshire Hathaway HomeServices Alaska Realty
Investment Insights
Based on property information with market context.
This 1.66-acre bluff property includes a 1,340-square-foot commercial space built in 2014. The site was formerly operated as a restaurant and includes a drive-through configuration, with the existing space also suited to continued food service or retail use. A lighthouse feature adds a distinctive visual element to the property, while parking is available on site.
Located at 725 Sterling Hwy in Homer, the property fronts the Sterling Highway at the entrance to town. Its elevated position provides views across Kachemak Bay and the surrounding mountains, with additional views toward glaciers. The site combines highway exposure with a bluff setting and includes room for expansion or additional structures.
Located at 725 Sterling Hwy in Homer, the property fronts the Sterling Highway at the entrance to town. Its elevated position provides views across Kachemak Bay and the surrounding mountains, with additional views toward glaciers. The site combines highway exposure with a bluff setting and includes room for expansion or additional structures.
Key Highlights
- 1.66‑acre bluff‑top property at 725 Sterling Hwy, Homer, AK
- 1,340‑square‑foot commercial space built in 2014
- Former restaurant use with drive‑through configuration
Financial Insights
Estimated NOI and Cap Rate
NOI = area × lease_rate × (100 − vacancy) / 100 × (1 − expense_ratio). Net Operating Income — what the owner takes home each year before mortgage payments and income tax. Effective rent (asking rent minus vacancy losses) minus operating costs (taxes, insurance, maintenance, management).
NOI / Yr
$26,696
Cap rate = NOI / list price × 100. Capitalization rate — annual return on a fully cash purchase, before financing. NOI divided by price. Higher means more income per dollar invested, but usually also more risk or older condition. 5–8% is typical for stabilized commercial property; double digits often signal distressed deals.
Cap Rate
3.09%
Suggested Prices Based on Cap Rates
Cap rates vary significantly by property type, market, and asset quality.
Typical U.S. stable-market ranges:
Multifamily — 4.5% to 6.5% (Class A in primary markets often sub-5%; Class C in secondary markets 6%+)
Industrial / Logistics — 5.0% to 7.0% (compressed heavily in recent years due to e-commerce demand)
Office — 6.5% to 9%+ (wide spread post-2020; CBD Class A vs. suburban Class B varies dramatically)
Retail — 5.5% to 8.5% (grocery-anchored on the low end, unanchored strip centers higher)
Hospitality / Hotels — 7.5% to 10%+ (higher due to operational risk)
Self-Storage — 5.5% to 7.5%
Medical Office — 6.0% to 7.5%
Net Lease (single tenant, credit) — 5.0% to 7.0% depending on tenant credit and lease term
Rules of thumb:
Primary markets (NYC, SF, LA, Boston, DC) trade at lower cap rates than secondary/tertiary markets, often by 100–200 bps (bps, aka basis points; 1 bp = 0.01%).
Class A assets trade ~50–150 bps tighter than Class B, and Class B tighter than Class C.
Cap rates move inversely with price — a lower cap rate means a higher price for the same NOI.
Spread to the 10-year Treasury is a common benchmark; historically 200–400 bps over the 10-year.
Cap Rate 5%
$533,920
$533.9K
Cap Rate 7%
$381,371
$381.4K
Cap Rate 9%
$296,622
$296.6K
Market Conditions
NOI Build-Up for 1,340 SF
Vacancy — income lost from leasable area expected to sit empty during the year, subtracted from gross rent.
EGI (Effective Gross Income) — gross rent minus vacancy losses, the realistic income before paying operating costs.
OpEx (Operating Expenses) — recurring costs to operate the property (property tax, insurance, utilities, maintenance, management); excludes financing and capital improvements.
NOI (Net Operating Income) — income a property generates after operating costs but before financing and taxes.
Gross rent
$37.6K $28.08/SF
− Vacancy
−$2.0K −$1.52/SF
EGI
$35.6K $26.56/SF
− OpEx
−$8.9K −$6.64/SF
NOI
$26.7K $19.92/SF
Area
Kenai Peninsula County, AK
Vacancy
5.40%
Lease Rate
$28.08 /SF/Yr
Expense Ratio
25.00%
Simulate Cap Rate and NOI
Suggested Prices Based on Cap Rates
Cap rates vary significantly by property type, market, and asset quality.
Typical U.S. stable-market ranges:
Multifamily — 4.5% to 6.5% (Class A in primary markets often sub-5%; Class C in secondary markets 6%+)
Industrial / Logistics — 5.0% to 7.0% (compressed heavily in recent years due to e-commerce demand)
Office — 6.5% to 9%+ (wide spread post-2020; CBD Class A vs. suburban Class B varies dramatically)
Retail — 5.5% to 8.5% (grocery-anchored on the low end, unanchored strip centers higher)
Hospitality / Hotels — 7.5% to 10%+ (higher due to operational risk)
Self-Storage — 5.5% to 7.5%
Medical Office — 6.0% to 7.5%
Net Lease (single tenant, credit) — 5.0% to 7.0% depending on tenant credit and lease term
Rules of thumb:
Primary markets (NYC, SF, LA, Boston, DC) trade at lower cap rates than secondary/tertiary markets, often by 100–200 bps (bps, aka basis points; 1 bp = 0.01%).
Class A assets trade ~50–150 bps tighter than Class B, and Class B tighter than Class C.
Cap rates move inversely with price — a lower cap rate means a higher price for the same NOI.
Spread to the 10-year Treasury is a common benchmark; historically 200–400 bps over the 10-year.
Cap Rate 5%
$533,920
Cap Rate 7%
$381,371
Cap Rate 9%
$296,622
Alternative Uses
Best Use
Specialty Retail
$381.4K
$333.7K – $444.9K
NOI $26,696 @ 7.0% cap · market cap 3.09%
Second Best
—
—
no second resolved use
Theoretical Best
Multifamily LT 5
$9.29M
$8.13M – $10.84M
NOI $650,554 @ 7.0% cap · market cap 75.21%
Zoning and permitted uses should be independently verified with authorities.
Property Analytics
Property Profile
Current Use
Lease Details
Yes
Highway access
Yes
Paved road access
Location Intelligence
Demographics for 99603, AK
10,766
Population
6,251
Households
1.7
Avg Household Size
43
Median Age
39%
College-Educated
94%
High-School Grad
1,068.8 sq mi
ZIP Area
10
Density / Sq Mi
$76,368
Median Household Income
$41,530
Median Earnings
$1,236
Median Rent
$345,600
Median Home Value
Market
Vacancy Rate% for Retail in West region
Questions? Ask Rey
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Frequently Asked Questions
What type of property is this?
Drive through restaurant - Bluff-top commercial site with highway frontage, bay views, and a lighthouse feature.
Where is this drive through restaurant located?
The property is located at 725 Sterling Hwy Homer, AK.
What is the asking price?
The asking price for this property is $865,000.
What are key features of this property?
This property features: 1.66‑acre bluff‑top property at 725 Sterling Hwy, Homer, AK; 1,340‑square‑foot commercial space built in 2014; Former restaurant use with drive‑through configuration
