The net lease automotive sector spans a wide group of tenants ranging from auto part stores, including Advance Auto Parts, AutoZone, and O’Reilly Auto Parts, to service centers, such as Jiffy Lube, Caliber Collision, and Firestone.
The unifying factor is their relationship to the auto industry and both of these distinctive groups are well poised for the future. Auto part stores will continue to fill a need for any parts, fluids, spark plugs, etc. that are essential for keeping a car running no matter what the future holds in terms of electric or self-driving cars. Service centers will also hold their value well into the future, as professional maintenance will be required and in demand as a convenient option of repair.
The auto sector offers an attractive price point for private investors. Over the last 12 months, auto part stores have sold near the $1.6 million mark while the service centers have averaged just under $2 million.
Auto part stores and service centers offer investors differing styles of buildings. The auto part stores have layouts similar to most other retailers and are easy to retenant. Service centers have specialized buildings, with service bays and car lifts, which make it difficult to repurpose. The cost of installing the specialized equipment required for service centers leads to tenants staying for the long term. The service centers carry a minor environmental risk due to spilled or improperly discarded oil, but their relatively large plots of lands give the owner flexibility with the future use of the property if the structure is demolished.