Convenience stores continue to broaden their appeal to meet changing consumer needs. By transitioning from quick stops for snacks and fuel to destinations for quick-service food and grocery alternatives, the C-Store segment is becoming a more attractive asset class for CRE investors, especially in the net-lease market, according to a report from Coldwell Banker Commercial.
“With smaller households, more urban locations, and evolving food preferences, the sector is undergoing significant transformation,” said Dan Spiegel, SVP and managing director at Coldwell Banker Commercial. “Given their frequent visits, convenience stores must stay closely connected to shifting consumer lifestyles to remain competitive in the retail market.”
The study noted that sales of prepared food have increased 12.2% year-over-year, and more than half (56%) of consumers consider C-stores a viable substitute for fast-food chains. In addition, the demand for convenient, affordable, and healthier food options has added to the sector’s stability. Profit margins remain in the 5% to 7% range, but high product turnover and steady consumer visits compensate for these tight margins, the report said.
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This shift in product mix has altered the real estate needs of C-stores, said Coldwell. Chains, including QuickTrip, Casey’s General Stores, RaceTrac, and Wawa, are investing in larger store formats to accommodate food preparation areas. Many operators are revisiting urban centers and exploring nontraditional spaces, including downtown locations and college campuses. This provides new opportunities for real estate investors, according to the firm.
Meanwhile, the sector is experiencing significant consolidation with major players like 7-Eleven and regional chains such as Wawa, Sheetz and Buc-ee’s expanding into new markets in the United States and Canada. Consolidation creates opportunities for investors to acquire properties with strong tenant profiles and predictable cash flows, said the report.
The sector’s traditionally long leases and low vacancy rates also support its attractive position for net-lease investors.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
