When it comes to the forecourt property market, it’s very much a matter of opinion as to whether 2013 was a busy year or not. Anthony Keohane, director of automotive and roadside at Colliers, says 2013 was "another busy year" with the supermarkets and oil company/supermarket joint ventures continuing their expansion trail. "BP, with M&S, has been particularly active and Sainsbury’s has now opened the first of a package of sites that it acquired from Rontec, in Horley.

"We have seen strong demand for sites where refurbishment and redevelopment of closed or poor-quality facilities can be undertaken to provide a wider range of facilities. Acting on behalf of the receiver, we sold a site on the A339 Kingsclere, between Newbury and Basingstoke, to the fast-growing independent Peregrine Retail, which is seeking planning permission for a full redevelopment. Demand for the site was strong with numerous bids received and a ’best and final offer’ scenario undertaken. The purchaser exchanged contracts within a week to ensure they secured the site."

Keohane says Colliers also sold, on behalf of First Urban Group, the former Weyhill Services site on the A303 at Andover, which has been empty since a fire razed the Little Chef building and Texaco vacated in the mid-2000s. "Euro Garages purchased the site with a view to redeveloping for their usual roadside offer, an indication perhaps that Euro Garages is moving further south?"

According to Peter Nicholas, partner for automobile and roadside at Rapleys, it’s quite a buoyant market: "Generally speaking there is demand from the larger independents and smaller groups, who are acquisitive. The investment market is fairly buoyant too."

He says there is also a growing trend where sellers don’t actually sell but lease their property back to a tenant. "This means that if you can’t get the value you want for your site, you can get an income on it. A lot of the smaller indies aren’t keen on this but people like Sainsbury’s and larger indies are."

Tom Rigg, senior surveyor, automotive and roadside at GVA, reports that it has been an exceptionally busy time in the motorway service area market. "GVA acquired nine motorway service area investments (including Oxford services) in March 2013 on behalf of retained clients. We also sold the Telford motorway services investment in October 2013 for above its asking price of £13m. We are marketing the Shardlow Trunk road service area investment at £11.25m and anticipate a sale above the asking price."

Meanwhile, David Collins, partner at Adlers, says: "We have found that the market has improved significantly over the past 12 months, which is to be expected with the improvement in the economy generally. The availability of funding seems to have improved and there has been a noticeable increase in the number of enquiries compared with previous years."

But, as you would expect, established fuel retailers with a track record are finding it easier to obtain funding than new entrants and smaller operators.

"Many of the deals have been carried out on an off-market basis without the property being offered on the open market. Providing potential buyers with a degree of exclusivity is a good marketing ploy particularly where agents can identify likely purchasers rather than exposing the property to the open market and risking breaches of confidentiality and enquiries from weaker parties. With strong demand in the market, and a limited supply of openly marketed sites, sale prices remain strong and look set to grow for the foreseeable future."

But Adam Wadlow, director at property adviser, Barber Wadlow, describes the market as "considerably quieter", but with a "number of high-profile transactions involving major operators that has ensured a fascinating trading period". He says Barber Wadlow has been instrumental in a number of these transactions.The firm’s market highlights for 2013 include:

BP continuing to acquire sites for M&S roll-out on a nationwide basis.

Shell entering into a lease on a ’new-to-industry’ site its first (excluding motorway sites) since 1998.

Morrisons and Asda continuing to add new sites Asda recently advertised plans to grow its standalone petrol filling station network to 100 sites by 2018.

Sainsbury’s opened its first standalone forecourt with c-store.

EuroGarages and MRH acquiring regional portfolios from Esso.

Petrogas doubling its network in 2013 adding 19 outlets.

Midland Co-Op acquiring Shaws Petroleum (five sites) and inheriting eight through its merger with Anglia Co-Op.

"This activity demonstrates the increasing focus among the major operators to secure the best sites," says Wadlow. "But transactional activity is not confined to the major players we have also seen a number of smaller independent retailers acquiring sites, with banks once again prepared to lend into the sector. But, make no mistake, banks are still fussy with real focus on quality of company management. The forecourt sector is certainly becoming increasingly ’corporatised’."

CBRE Petroleum and Automotive UK’s sources show that 185 sites closed in 2013 (24 company and 161 dealer sites). Sixty-one new-to-industry sites were established, of which 46 belong to hypermarkets. Forty sites were re-opened. In addition, 166 sites changed from oil company-owned to a dealer-owned operating model up from only 19 sites in the previous year. And 750 changed fuel supplier in comparison to a figure of 619 sites the previous year.

Simon Galway, CBRE petroleum and automotive executive director, says 2013 was marked by the emergence of supermarket standalone petrol stations: "Supermarket giants Asda and Sainsbury’s acquired standalone petrol filling stations, firmly establishing convenience retail operators as fuel volume market share contenders. CBRE forecasts that hypermarket standalone sites will also grow in number over the next five years."

He adds that transactional activity performed by CBRE’s UK petroleum and automotive team generated average net initial yields in the region of 5% for prime sites and 7.5% for secondary locations. "This is comparable with investment yields of service station investments in other strong European economies such as Germany, Switzerland and Norway."


Barber Wadlow’s Property Value Indices (in association with Experian Catalist see box right) has recorded a 14% increase in average values of forecourts in the past year.

This is the largest annual increase since 2006, but Adam Wadlow says although this growth is encouraging, values are still over 20% below their peak in 2007.

Colliers Keohane says values have generally held up well with strong demand for sites large enough to support a convenience store offer. "Land values for alternative use development within London and the South East, particularly from the residential market, will underpin values and this may well lead to further site closures particularly within the M25, where high-density flat developments mean that fuel retailing is not an economic alternative."

Christie’s head of retail, Steve Rodell, says the low-value (under £300,000) sale of decommissioned and marginal sites has resulted in sometimes "baffling" levels of interest from speculative residential and commercial developers, car wash operators and drive thru or restaurant retail.

"This, along with an increase in the number of Christie & Co website registrations by first-time buyers, are indications that the underlying property market is on the mend.

"Pricing, however, remains key and vendors must be realistic about aspirations in the face of the buyers.

"We have transacted many sites for continued use at all levels of the market. The demand for modest owner/operator businesses noticeably increased last year, interestingly from overseas buyers. At the other end of the scale, sites hoping to attract strong pricing from multiple operators needed to be well located, fitted with modern equipment and prove a strong trading performance through good quality trading data. Otherwise capital expenditure requirements had a negative impact on offers received."

For 2014, Colliers expects to see more of the same. "The oil companies will continue to divest their non-core network while looking at new opportunities, particularly where they have supermarket alliances," says Keohane.

"We believe that the larger retail groups will continue to expand with more mergers/acquisitions activity expected. Values should hold up particularly with more stability in the economy."

CBRE’s Galway agrees that oil companies will continue to dispose of assets and there will still be sustained demand from the independent sector to acquire service stations.

"We also expect that there will be more sale and leaseback activity in the market in the forthcoming year.

"As a result we do not expect the network to consolidate at the same pace that it has over the past five years.

"We expect independent operators will continue to improve their offer and provide better service stations focusing on advancing their convenience retail offer in order to remain competitive with the emerging power of the hypermarket retailer."

GVA’s Tom Rigg says: "We anticipate a strengthening property market in 2014, which is likely to have a positive effect on petrol forecourt property values (mainly in prime trading locations).

"Asda has announced the creation of standalone petrol sites, and logic would suggest that more supermarket groups will follow suit, although the value proposition of Asda is arguably the strongest in the market."

Finally, Christie’s Rodell says the most notable trend among high volume, high shop turnover sites is the increasing amount of sites being let to large multiples. "This is probably due to factors such as retiring operators with no succession and a lack of alternative investment opportunities able to provide similar returns to property investment.

"I believe there is a window of opportunity over the next few years to capitalise on the appetite for supermarkets and convenience multiples and take advantage of their aggressive expansion plans."

Interestingly, Rodell adds that as there is a lack of high quality sites coming to the market, dealers have become innovative and are bringing previously mothballed sites back into use.

Case study: Euro Garages

Hindley Lawrence has been working closely with Top 50 Indie, Euro Garages, as it has continued its rapid national expansion programme across the UK.
The firm negotiated the acquisition of Euro Garages’ two new-to-industry sites that opened in 2013 at Calder Park, Wakefield, which won the Forecourt Trader of the Year 2013 award, and Kettering Service Station at Rockingham Road, Kettering.
In line with Euro Garages consistent partner brand offer, both these sites have a 4,000sq ft Spar-branded convenience store incorporating a Subway with seating area and a separate 2,000sq ft drive-thru Starbucks.
Work has also recently started on another new-to-industry’ site just off Junction 29A of the M1 at Markham Vale, which is due to open early this year.
Hindley Lawrence director, Robin Lawrence, says: "It has taken over three years to finalise the planning and acquisition of the Markham Vale site, and it is good to see the scheme finally coming out of the ground. We are keen to secure other similar strategically located development sites and prospective locations for Euro Garages throughout the country and are actively pursuing a number of opportunities."
Previously, Hindley Lawrence had also worked with the Euro Garages senior management team to negotiate the acquisition of 18 former Little Chef properties and now, after significant investment and capital development, all are trading as Starbucks. Lawrence says these sites were taken on with new leases on "competitive terms".
As well as exploring new-to-industry locations, Euro Garages is looking to acquire and roll-out more roadside restaurant opportunities as well as smaller sites of around 0.5 acre for the development of stand-alone drive-thru Starbucks.
Says Lawrence: "The market for good quality strategically located, prominent roadside development sites is very competitive. Values can range from £300,000 to over £1m per acre dependent on location and site constraints. We are usually bidding against the major pub and hotel operators, restaurants, fast food operators McDonalds, KFC and other drive-thru users who tend to pay higher premiums in order to secure the ’prime’ positions. The roadside operators are now recognising that there is synergy and benefits in creating ’destination developments’ incorporating all of these uses and a petrol filling station to the benefit all occupiers."

barber wadlow Property Value Indices

Ahead of Barber Wadlow’s publication of its Forecourt Property Market Update for 2014, Forecourt Trader has been given an exclusive preview. Barber Wadlow’s research indicates that around 240 forecourts have been sold and let in the past 12 months, down from 1,100 in the previous year. In contrast, Barber Wadlow’s Property Value Indices* (in association with Experian Catalist) has recorded a 14% increase in average values, which is the largest annual increase since 2006. But Adam Wadlow says: "This growth is encouraging, but values are still over 20% below the peak of the market in 2007." He adds: "As ever, no two petrol filling stations are the same it is therefore nearly impossible to compare one transaction with another. To demonstrate this point, property values analysed on a pence per litre (ppl) basis range from 10ppl-60ppl (ie property price divided by annual fuel volume). The principal variable is shop sales, which now hugely influence what the market is prepared to pay for a site. Gone are the days of the £1 per gallon valuation yardstick it can now be closer to £3 for the extra special sites!"
Barber Wadlow’s Forecourt Property Market Update will be published later this month.
*Value of the average ’bottom quarter’ of oil company sites (in terms of trading performance), which is now the most representative trading profile of the sites that are coming to the market. No two forecourts’ trading performance is the same, making it virtually impossible to compare one transaction with another. Barber Wadlow, working with Experian Catalist, has devised an Indices based upon opinions of value since 2000. To overcome a number of sector valuation issues, Barber Wadlow has based value on a freehold site that is unencumbered, free from contamination and fully operational, with no investment required. This research should be considered as a guide only to market conditions.