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Forecourt market remains buoyant, says Christie & Co

Merril Boulton ·
Steve Rodell, Christie & Co managing director, retail
Steve Rodell, Christie & Co managing director, retail
  (Photo:  )

The petrol filling station market remained robust in 2019, showing a strong ongoing interest in the sector among investors, according to the latest Business Outlook from property specialist Christie & Co.

The report said fuel margins had remained buoyant and there had been a general upwards gross profit margin trend to meet rising costs.

“The market continues to be very strong,” said Steve Rodell, Christie & Co managing director, retail. “When MFG bought MRH everyone thought a couple of big buyers had gone from the market, but there were a raft of people behind them wanting to buy sites. So while the market did feel a bit flat after that, the fundamentals of the business have remained strong. We have sold more petrol filling stations than we did last year, helped by sales such as the Cornwall Garage Group; and the numbers that we’re doing on the valuations are pretty strong as well.

“We supported Sewell Retail’s six site acquisition through 
our valuation of the portfolio for RBS. We have also worked extensively with other leading PFS operators such as MPK and its stakeholders, Stratford Capital and Penny Petroleum."

Rodell said the sale of dealer groups that have gone from the market such as Simon Smith and Symonds are indicative of the bigger operators' appetites to grow, particularly those that are private-equity backed such as MFG and MPK.

“Trading fundamentals for fuel are good and if you’ve got a good shop - convenience sales continue to power ahead, particularly food-to-go and coffee. If you’ve got those trading fundamentals in place, there’s no reason why your business shouldn’t continue to grow,” he said.

"In terms of what people are looking for, if you have an average fuel volume of 2.5mlpa, and are doing about £15-£20k in the shop, and it's all in good condition, you will get a good price."

He said another interesting market dynamic is around some of the oil companies coming back into play such as Jet and Gulf; while BP is looking for suitable sites for its joint M&S format. There are also closed sites being re-commissioned, which is being driven by the convenience opportunity, which wasn’t there when they originally closed. Depending on the location they have a better opportunity than traditional convenience stores, because of aspects such as parking.

However, developments in alternative fuel vehicles (AFVs) present a forthcoming challenge for the sector as the Government pushes on with its ‘Road to Zero’ strategy to cut CO2 emissions.

Rodell said the initiative brings with it many questions for the PFS market. However, recent reports of modest increases in electric vehicle (EV) sales (1% of the market in 2019) suggest petrol filling stations will remain relevant for the foreseeable future. The report quotes research showing that 49% of car users do not expect to buy an EV in the next 15 years.

“We will continue to monitor this aspect of the market closely through our initiation and involvement in regular cross-sector discussions,” said Rodell.

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Weekly retail fuel prices: 24 February 2020
RegionDieselLPGSuper ULUL
East Midlands127.70137.72124.65
North East125.92136.20122.89
North West126.8567.57135.95124.01
Northern Ireland124.76130.73121.98
South East128.6564.90139.38125.39
South West127.77135.04124.41
West Midlands127.58140.14124.60
Yorkshire & Humber126.87137.50123.73

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