B+E Market Report: C-Stores
B+E takes a look at current net lease C-Store market activity:
- Historical & on market sale prices
- On market cap rates
- Lease terms & more!
Q4 Market Summary
Convenience stores have continued to be among the most desirable investments within the net lease retail asset class. C-stores have experienced a continued trend of expanded offerings, allowing customers to have a one-stop shopping experience. Customers can expect to purchase items like fresh coffee, made-to-order food, snacks, drinks, specialty items, and even produce. Consumer demand for high-quality, made-to-order meals has grown, and c-stores have been able to capitalize on this demand. The excellent location and high traffic count of many c-stores allow them to be strong candidates for the inclusion of quick service restaurants within their footprint. This symbiotic relationship garners a higher level of store visits for both the c-store and the quick service restaurant.
Some of the largest c-store operators have built a strong reputation of serving their own high-quality meals, most notably Wawa, which has a diverse and rotating made-to-order menu. Beyond having just gas station pairings, there has been a high adoption of electric vehicle charging stations at c-store locations across the country. A prominent example of this is Tesla, which has been growing its network of Superchargers at a variety of c-store brands.
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C-stores are garnering a positive perception from both private and institutional investors due to their strong tenant credits, strong profit margins, and large variety of concepts. This variety encourages customers to spend more time at the location and, in turn, spend more money. Overall, convenience stores have shifted towards larger, cleaner, and costlier facilities, which customers value. Smaller and lesser-known operators with older buildings are massively outperformed by their Class-A counterparts.
Cap rates continue to remain low for quality net lease c-store assets, with an average on-market cap of 5.00% and a 2022 year-to-date sale cap of 5.26%. Currently, the operators with the highest number of on-market listings are 7-Eleven, Shell, Circle K, and Wawa.