In a swift and decisive move, Hanley Investment Group Real Estate Advisors has facilitated the sale of two newly constructed, single-tenant properties leased to Quick Quack Car Wash in California. The transactions, valued at a combined $5.38 million, were secured within a mere 30 days, signaling a robust demand for net-lease investments in the car wash sector. This deal isn’t just about property exchange; it’s a vivid snapshot of the industry’s trajectory towards sustainable, service-based retail models.
At the heart of these deals lies a compelling blend of strategic location and robust lease agreements. The first property, nestled in Grand Terrace, San Bernardino County, was scooped up by a Pasadena-based private investor for $2.7 million. Situated on a 1.35-acre outparcel, it neighbours a bustling Stater Bros. Market-anchored shopping center, with a daily traffic volume exceeding 177,000 vehicles. The Stater Bros. Market alone attracts 1.1 million annual visits, positioning the car wash for significant foot traffic.
The transaction’s swiftness—a brisk 14-day escrow—underscores the allure of the triple-net ground lease, structured with 10% rental increases every five years and four five-year extension options. Bill Asher, Executive Vice President at Hanley Investment Group, attributes this expediency to a strong broker relationship that secured an all-cash, repeat buyer before formal marketing even began. Such agility in deal-making is emblematic of the current market dynamics, where well-positioned assets are swiftly matched with eager investors.
In Lodi, San Joaquin County, the narrative is similarly compelling. The second property, developed by MEE Capital Investments and AdVal Properties, Inc., was sold for $2.68 million. Located on a 1.0-acre outparcel adjacent to a Raley’s grocery-anchored shopping center, this Quick Quack Car Wash is primed for success. With nearby retailers including Walmart Supercenter, Lowe’s, and Target, the location is a retail hotspot. Lodi’s economic vibrancy, bolstered by its wine industry and major corporate residents like Kubota and Blue Shield of California, adds another layer of appeal.
Asher highlights the strategic prowess behind securing a 1031 exchange buyer before the tenant commenced construction. The transaction’s swift closure—21-day contingency and 35-day escrow—reflects the market’s appetite for well-structured net-lease investments. The lease mirrors the Grand Terrace agreement, with 10% rental bumps every five years and five 10-year options, ensuring a steady revenue stream for the investor.
The significance of these transactions extends beyond their monetary value. They underscore a burgeoning trend in the retail sector: the rise of service-based, internet-resistant businesses like car washes. Asher points out that the car wash industry’s growth is fueled by multiple factors, including the increasing number of cars on the road, the preference for professional wash services, and the evolution of subscription-based models that enhance customer lifetime value.
Moreover, the express car wash model reduces overhead per location, making it an attractive proposition for investors seeking resilient, high-margin tenants. With profit margins hovering between 50% and 60%, these businesses are well-positioned to weather economic fluctuations. Asher anticipates a surge in single-tenant net-lease car wash properties hitting the market over the next 18 months, driven by expansion efforts from operators like Quick Quack.
These deals also highlight the evolving role of car washes in retail landscapes. In certain markets, top-performing car washes are backfilling vacant pads and shop buildings, essentially becoming quasi-anchors to shopping centers. Their ability to draw tens of thousands of cars annually is a boon for co-tenants, injecting fresh vitality into retail spaces.
The environmental implications of these developments are noteworthy. Modern car washes employ water reclamation systems and eco-friendly detergents, substantially reducing their environmental footprint compared to traditional at-home washing. As sustainability becomes a pivotal consideration in urban planning, the growth of efficient, eco-friendly car washes dovetails with broader green initiatives.
In essence, these transactions are more than just property deals;