• Irving J. Diaz

Automotive Real Estate: Stable Asset Class for Investors

Updated: Apr 22

One the fastest growing sectors of Small-Bay Multi-Tenant Industrial Properties.

Much has changed in the last 12 months, having gone from what we considered regular every day to an unprecedented change in the way most of us lived our lives; thankfully, many parts of the Globe are now returning to more normalcy. During this recent journey, keywords like "Essential Businesses" have dominated the headlines and reaffirmed a variety of industries as being absolute necessities, such as healthcare and the food sectors to name a couple, however, the automotive services industry was nearly dismissed altogether. While the world seemed to bunker down at home without many places to visit because of the shut-down, our automotive needs seemed to have faded away, however, nothing could have been further from the truth. Fast forward a year after the pandemic began and the automotive industry is bustling, with limited inventory and demand superseding supply in both used car sales and new car leasing.

Renewed Demand in the Automotive Sector

“The return to work and school is driving up the demand for postponed automotive maintenance and repair, which in turn making automotive real estate a high demand niche' .”

The reopening of many travel destinations, coupled with the previously imposed flight restrictions, prompted folks to take to the roads. I for one can attest to having been on my fair share of road trips throughout my home state of Florida over the past several months. My family and I decided to visit areas that we would have never visited had it not been for limited air travel and opting to pack the car and go. Then there is the return to work and school outside the home, where we are now required to rely on our automobiles again.

Stable Cash Flow Potential

Regardless of what automotive needs we may have, the need to service and repair our rides is an essential part of vehicle ownership and society in general. As a result, automotive real estate has reaped the benefits of stable cash flow and value growth from essential business end-users that rely on automotive real estate to support the automobile industry. Another value preservation of automotive properties is their overall limited availability, due to their special use districts and zoning. The process of approving a site for automotive repair and servicing is sometimes so challenging that investors and end-users are oftentimes financially better off sourcing existing sites.

Favorable Demand Into the Future

Automotive Real Estate is here to stay with pent-up demand in the foreseeable future.”

As a final thought, the Automobile Industry is a stable sector of our economy with upward historical growth patterns. The need for automotive properties is part of the market's fabric to fulfill the industry's space demands. As the population continues to grow so will the demand for vehicles of all types, which will rely on automotive services vendors. Whether it is used car maintenance shops, vehicle customization specialists, or the next evolution of electric vehicle tech firms, automotive end-users are a stable source of cash flow for landlords fortunate enough to own automotive real estate.