Norris Streetman: Time and time again carwash owners and prospective owners complain about the rising cost of land.
Everyone wants a good location, but the price usually reflects the supply and demand side of a land acquisition.
Simple economics — the most profitable stores pay the most for a tract of land. Why? Because they pick the land that everyone sees.
The important things to consider in choosing the best location for a carwash are not always the price of land; the other key elements in the success of a carwash are the economic trends in the area chosen.
- Are they going up or down?
- Staying flat?
- What are the stabilizing factors of the community?
- Is the economic environment up or down? Is crime on the rise in the area?
The whole economic picture is essential in knowing the competition.
Best bets
The best locations are not cheap and will continue to rise in price. So your essential questions are: can an owner make a good living with the location? What carwash will work best?
The competition will dictate how to improve the position or options concerning the carwash that the prospective owner has chosen. Competition doesn’t consist of only carwashes either, they can be:
- Fast food franchises;
- Convenience store chains;
- Grocery stores;
- Drug markets;
- Dry cleaners; and even
- Banks.
These are the competitors when it pertains to acquiring property. Price ranges will vary from per acre to per foot — will $5 per ft. work or will $22 per ft. work?
People places
One difficulty is when people build a carwash where there is no customer base. Yes, the price was great for the land, but the problem was no one washed their cars there.
Carwashes have to be where the people are and are going, not where they’ve been. To understand why anyone would want go there is a must.
Time and time again people build carwashes in unfavorable places.
Know the customers. Know why they would go to the plot of land that you are looking to build on, you know that since the carwash isn’t there yet, the patrons don’t go to this location for a wash, so why do they?
On the rise
Studies show that overall, land prices appear to be on the rise. The pricing structure based on a fair value, with the likes of some Fortune 500 company that looks on a return investment of real estate at a rate of 6 to 7 percent is hard to compete with.
This is the reality. What income can an owner deliver from his carwash? What type of consumer pricing is a wash going to attract? Is the wash looking for a $5 customer or $15 or $30?
What is a destination? The majority of people don’t just drive to a location to wash their car; the location is where they shop, get gas, eat and live.
They frequent places that are familiar, places where they need to visit daily. So that’s where the carwash needs to be.
Understanding all the dynamics of where people travel to in their day to day life dictates knowing where to buy. And don’t forget the economic trends of the area. All these factors help in the choosing of the carwash that will provide the greatest customer satisfaction and the highest profit return.
Norris Streetman is a broker in the real estate business at Streetman Realty LLC, and has over 19 years of experience in the carwash industry. Norris can be reached at norrisstreetman@carwashforsale.net.
