Auto parts stores don't usually make the top of the list when investors are looking for “flashy” retail opportunities. But as far as net-lease investments go, these chains are reliable performers providing consistently favorable returns. Let's look at the industry's three largest retailers, AutoZone, Advance Auto Parts, and O'Reilly Auto Parts and see how they stack up.
AutoZone is the largest of the auto parts chain with nearly 5,300 stores in the nation having opened 71 stores this year. Advance Auto Parts has just fewer than 5,100 locations of its namesake units. O'Reilly operates approximately 4,660 units which include 209 new stores in 2015. Another 210 O'Reilly locations are set to open in the calendar year 2016.
When it comes down to specific properties, Advance Auto Parts locations trade at a 6.04% capitalization rate over a 12-month period with 10+ year lease term. The average store is about 7,000 square feet and changes hands for just over $1.9 million. AutoZone, meanwhile, generally trade with a 5.49% cap rate, and its stores are also around 7,000 square feet with the transaction price hovering around $1.7 million. O'Reilly Auto Parts also has low cap rates, averaging 5.70%. The company's stores are usually 6,000 square feet to 10,000 square feet and are bought for just more than $1.8 million.
Below are the top three auto parts store ratings.
Auto parts stores are bound to do well in this uncertain economic environment, as people are more willing to do a little maintenance work on their vehicles to increase their auto's life span. Investors overlooking the automotive sector of the net lease market should stop and pay attention, at least to these top three performers.
Auto parts stores don't usually make the top of the list when investors are looking for “flashy” retail opportunities. But as far as net-lease investments go, these chains are reliable performers providing consistently favorable returns. Let's look at the industry's three largest retailers, AutoZone,
AutoZone is the largest of the auto parts chain with nearly 5,300 stores in the nation having opened 71 stores this year.
When it comes down to specific properties,
Below are the top three auto parts store ratings.
Auto parts stores are bound to do well in this uncertain economic environment, as people are more willing to do a little maintenance work on their vehicles to increase their auto's life span. Investors overlooking the automotive sector of the net lease market should stop and pay attention, at least to these top three performers.
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Jonathan Hipp
Jonathan Hipp began his career in real estate over 25 years ago. In his early years as a broker, he ventured into the net lease industry and quickly began leading the US net lease market, closing over $3 billion in transactions. In 2005, Jon founded Calkain Companies, a company focused solely on net lease investment services. As President and CEO, he has been instrumental in building the firm into one of the leading Net Lease real estate companies, transacting over $12 billion of net lease deal volume over the past 13 years. He has expanded Calkain’s services to include brokerage, advisory, asset management, capital markets, and industry research. He has become a well-known resource, panelist, and speaker at various Net Lease and Industry conferences and is a regular contributor to GlobeSt.com on real estate trends. In June 2015, Jon’s passion for the real estate business was again recognized as he was nominated for the Top Real Estate Player in the DC area by SmartCEO magazine.
