Real estate Market and Investments in C-stores
C-store real estate in major metro areas isn’t like traditional retail real estate. C-stores are designed to fulfill the immediate needs of consumers in daily situations. Traditional brick-and-mortar stores are not struggling to compete with online shopping alternatives in the last few years.
So far, the convenience store industry has been spared the affliction experienced by the sister street-retail formats where online shopping, such as Amazon.com, is taking away a larger share of sales, especially clothing and home electronics. Our salvation is simply because online shopping does not compete with convenience retail which is excellent for us and our portfolio of c-store real estate.
For the convenience industry, pretax profits per store have been growing since 2009, and I believe we will continue to do so for the next ten years. I think the most significant contributor in the markets we serve is simply population growth. One of the fundamental economic drivers of demand for real estate is population growth. When population levels decline for a nation, region, or city, real estate prices fall. Just look at Detroit. Motor City’s population was 2 million in the 1950s. Now, it is less than half that, at 714,000. The brutal aftermath in the city is foreclosed and abandoned real estate. As more consumers move into local communities, the higher the demand for c-store experiences.
In many markets, the number of C-stores has grown too fast as store growth in the United States has outpaced population growth every year since 1995. However, this isn’t the case in major markets like Atlanta, Dallas, and Houston.
C-stores now operate more like QSRs (quick-service restaurants) than they do traditional c-stores. The days of selling Coke, some cigs, and beer are now replaced with products covering a whole line of products, including CBD, novelties, and most of all food.
A study by GasBuddy shows that 56% of Americans purchase meals from convenience stores at least one time per month. The majority of these c-store customers are younger people, making this a growing trend that’ll be around for a while. But to capitalize on it, stores need to provide the foods, beverages, and experiences customers desire. Shoppers want full coffee and hot beverage shops, healthy to-go meals (items like salads, wraps, sandwiches, hummus, and other plant-based foods), and convenient dine-in options.
Read more: C-stores in the future
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