The Biden administration recently announced an initiative to push the United States toward more electric vehicles, less powered by gasoline. Automotive News covered this in their article suggesting this push gives Detroit the cover they’ve needed and wanted to go electric. This begs a question pertinent to commercial real estate; if there are less gas stations needed, what becomes of existing gas station properties and vacant land where the highest and best use currently is for a gas station?
This question has floating about since well before Biden’s recent push. How electric, hybrid and driverless cars are forcing a revolution in how we fill ‘er up was discussed in a post by Rockland Trust bank; What will the gas station of the future look like? The renowned management consultancy McKinsey brought this up in a post in January 2019; ticket to ride: what will happen to roadside pit stops when cars go electric? Later that year, Real Asset Advisor addressed it in another post; electric vehicles and the end of gasoline stations. Finally, in the prior year, Inverse discussed it in their article; The End of the Gas Station: How Electric Cars Will Transform the Rest Stop.
MarketWatch then asked and answered this question in a post in February 2020; How Many Gas Stations Are In U.S.? How Many Will There Be In 10 Years? Their answer? “If the large car companies have their ways, a decade from now the number of gas stations could be cut by half.” Note that this is February 2020, a full year before Biden set his goal for EV.
Vacant land suitable for gas stations where the highest and best use would be for a gas station tends to be high visibility corner locations. These properties have other high value uses, just not as high value. Owners that have been holding on to such properties may soon find buyers less excited for their properties. Perhaps their is some use that will come along, but I’m at a loss as to what it would be. Some might argue that gas stations will just convert to fuel. Maybe that will be the case. But, isn’t it true that people can just plug in at home at night? And, for supercharger stations, what is to keep grocers, drugstore chains, and discount stores, each of which could seemingly better monetize a visit, from installing them on their lots? For these properties, the argument that an owner is likely to have substantially superior overall returns over time by selling such vacant land and reinvesting it into income producing property becomes even stronger.