Gas stations are an atypical sub-sector of the retail market, as the improvements obviously are highly specialized and not suited to other potential uses. However, gas station properties almost always also include ancillary revenue-generating improvements, which often include convenience stores, quick-serve restaurants, car washes, and/or auto repair facilities. The subject property includes a gas station and a small convenience store.
I have appraised numerous gas station properties over the last 15 years and would like to share some of my findings.
A typical gas station in the greater Bay Area (near my hometown) has gas sales, a convenience store (c-store), and a small repair garage. A typical model for gas stations in the greater Bay Area is for the operator to manage the fuel and c-store business while a separate party operates the auto repair garage (usually with a lease or rental agreement in place).
The history of gasoline stations has been marked by several distinct trends. The first seven decades of the twentieth century (between 1900 and 1970) saw an evolution of gasoline service stations that corresponded to consistent increases in the number of automobiles and disposable income, and generally cheap oil prices. The subsequent three decades revolutionized the industry through successive waves of automation and streamlining in an era of generally rising oil prices. The number of gas stations in the U.S. peaked in the early-1980s and has been consistently declining since that time.
The mass production of the automobile spurred mass construction of gasoline servicing facilities. Small, family-run franchises were typical and remained the model of choice in remote locations into the 1970s. Until the 1970s, the typical gas station was a labor-intensive business with several attendants in uniform to service every customer. Most gas stations included auto repair facilities on-site.
During the 1970s, self-service islands became a rapidly growing trend in the industry. In 1975, only 22% of the gasoline market share went to self-service facilities. With the exception of states where state law mandates full-service gas stations, self-service gas stations are now the norm as a result of the fact that consumers prefer lower prices as opposed to paying for a full-service attendant pumping their gas.
Comments