The Car Wash Niche Is Growing in L.A.

Car wash properties are a rapidly growing investment niche in Southern California. While investors are finding a lot of benefits in car wash properties, but financing can be difficult to secure for those that don’t understand the asset. Ben Townsend and Matt Marlin from the SRS debt and equity team, however, have become experts in navigating the investment and finance market of this growing commercial real estate niche

“We started to see an increase in car wash development a couple of years ago and at the same time, saw investors running into issues with their financing,” Townsend, tells GlobeSt.com. “Lenders offered unfavorable loan terms, re-traded borrowers at the closing table, or refused to provide financing all together. We realized that these were not bad investments; lenders just did not fully understand the new business model. Car washes built today are well-oiled machines that are essentially e-commerce resistant. Lenders had been used to the mom-and-pop car washes that frequently went out of business or had environmental issues. These new car washes preform extremely well and are strategically located in high traffic count locations.”

By educating lenders on the evolution of the car wash model and the benefits, especially when stacked up against ecommerce, Townsend and Marlin have a built a roster of capital sources for car wash deals. “We have now identified a number of lenders and capital sources that are comfortable with the product type and understand the fundamentals,” Townsend adds. “Our capital sources have the capacity to work with investors, developers, and funds and are interested in both construction and acquisition financing.”