It’s been said that McDonald’s Corporation (NYSE:MCD) is really a real-estate holding company that just happens to hawk a few burgers on the side. Whether your local Mickey D’s is a franchise operation or a company-owned location, McDonald’s itself likely owns the building and the land it stands on. The company puts a ton of effort into finding top-notch locations with all the right demographics, traffic patterns, and long-term viability. Sites are chosen as much for long-term resale value as for immediate burger-selling prospects.
McDonald’s has crushed its peers in the Dow Jones Industrial Average index over the long haul, largely thanks to its acumen in land selection and development. Fellow Dow component Wal-Mart Stores, Inc. (NYSE:WMT) is also keen on reaping cash value from its enormous real-estate holdings, and it has beaten the Dow by a similarly large margin. Non-Dow retailer Walgreen Company (NYSE:WAG) happily pays a large premium for corner lots, knowing that easy access makes for spectacular returns on the investment — and yes, that’s another tremendous market-beater:
Google Inc (NASDAQ:GOOG) may not seem like an obvious copycat of this strategy, but Big G is indeed ripping that page right out of the McDonald’s playbook.
You may have noticed when Google sank $1.9 billion into a 15-story city block in the Manhattan borough of Chelsea. That property was bought in 2010, while property values were still reeling from the impact of the real-estate-powered financial crisis of 2008. Google Inc (NASDAQ:GOOG) has spruced the area up with free Wi-Fi access for all, and it hopes to cultivate the site into a seriously valuable property over time.