Fifty-one per cent of retail stakeholders in the forecourt market are looking to acquire new sites this year, according to a survey by Christie & Co for its new Business Outlook 2025 report
And if you google ‘petrol station for sale’ the results are quite encouraging. One website that sells businesses, for instance, states that it has 21 petrol stations for sale in the UK. However, when you take a closer look, you find 11 of those results are for ‘self-employed retailer opportunities’ to work for Shell. After weeding out other so-called petrol stations – one ad was actually for a ‘profitable and thriving dog grooming business’ – there were only seven sites for sale. All looked to be quite small operations but perhaps they were ripe for investment.
This underlines the need to use a specialist agent when looking to buy – or sell your property. They know the market inside out and it’s that expertise you are paying for when you use their services.
Christie & Co advised on over 350 forecourts during 2024, and its new Business Outlook 2025 report reveals that each property sold received an average of five offers. To say demand is still strong is therefore something of an understatement.
Steve Rodell, managing director – retail and leisure at Christie & Co, says: “Last year, the petrol filling station (PFS) market remained robust, driven by the need to refuel and ‘refuel’ with food and drink. Demand for sites remained strong, with buyers continually outnumbering sellers, and by Q3 2024 Christie & Co had sold more sites than in all of 2023.
“The top operators have become more selective about what they are prepared to acquire or develop. Sites will only attract top pricing if they are large enough to accommodate future development or redevelopment of various income-driving aspects.”
Price is obviously the key consideration with any transaction and Rodell says the valuation of petrol stations is a highly specialist area: “It requires specialist market knowledge to identify buyer profiles and pricing methodologies for lenders and stakeholders across the UK.”
The property stories that hit the headlines in 2024 included MFG’s acquisition of 337 Morrisons forecourts for £2.5bn, and EG On The Move’s purchase of 34 Asda sites for £228m. And already this year Zuber Issa has hit the headlines with his intention to purchase nearly 100 Applegreen sites, giving him a greater presence in the south of England.
A Top 50 Indie deal that Christie & Co worked on in 2024 was the sale of 11 PFS sites across the Midlands, London and South West of England on behalf of Ascona Group, with the last deals completing in 2024. Rodell says that the sites sold did not fit with its future plans, but there was plenty of interest in them from smaller independent buyers.
Record-breaking volume
William Trott, managing director of WT Estates, says that 2024 was the busiest year for his business in terms of transactions completed.
“With a record-breaking volume of transactions and the average transaction value increasing from the previous year, this is a fantastic indicator of the strength this market has and the progress it’s made in the last 12 months.”
Trott says his company was involved in transactions across the UK, from the South West to the North East. “These included two group disposals for Top 50 Indies which we are unfortunately not able to discuss. We also dealt with a number of private clients assisting them in retirement, as well as a significant amount of portfolio management assisting owners placing funds in other areas of their business.”
Closed sites re-opening
Industry figures from last year revealed that there were 17 fewer petrol stations across the UK than in 2023.
However, Daniel Cook, head of automotive and roadside at Rapleys, says the actual picture is interesting as Rapleys is involved, in various stages, with new-to-industry or reopening of old sites that will at least equal this number of closed sites. “Of course, many of these are still at an early stage and planning or other issues may still stop them all proceeding but it does highlight how the market continues to expand.
Cook says 2024 saw relatively few sites come to market and those that did were snapped up quickly with many disappointed parties still looking for opportunities.
“The bigger operators have continued to consider new-build opportunities on new roads while larger developments are providing further potential to unlock. We are also seeing smaller operators looking at the possibility of re-opening long-closed sites. These sites might have been closed for many years and at the time of writing we are close to completing a deal to reopen a site that stopped selling to the public over 20 years ago.”
Investment sites
Rodell reports that occupational demand for leased PFSs in high-traffic locations remained robust during 2024, with several new-to-industry sites being developed. “However, wider demand for rental income producing real estate is subdued, with fewer transactions.
“Nevertheless, smaller forecourt investments with long unexpired lease terms are still popular with private investors and we expect that 2025 will provide larger investors with the opportunity to acquire long-term strategic ‘EV ready’ assets backed by strong national operator covenants.”
Cook at Rapleys says that with decreased interest rates, property investment is likely to continue to be attractive to the market: “We can foresee good returns for the right site, having marketed a number of petrol station investments in 2024.”
He adds that with a lack of opportunities in the market, he is seeing operators continue to look at how they can work their property assets by looking at other income streams. “These can range from a major development such as the excellent hotel scheme above Danny Ahmed’s site in Birmingham, to simply utilising some spare space for Amazon delivery boxes.”
Looking ahead
Rapleys expects that values will continue to remain strong this year and demand will outstrip supply as the availability of operational sites will continue to be low.
Cook says planning applications will continue on new-to-industry sites and an increasing quantity will include EV provision which, of course, is easier to put in on new sites than a costlier retrofit which takes away space for dwell spend.
Rodell says forecourt owners who are in the early stages of planning an exit may come to the market sooner rather than later to avoid any further increases in Capital Gains Tax (CGT) or Inheritance tax (IT), which will come into effect in April 2025 and beyond.
“As operating costs rise, we are likely to see divestment from corporate multiple retailers in 2025.
“Ongoing high demand for forecourts is likely to continue. However, buyers may become more cautious and account for increased future costs when making offers.”
Trott adds: “The incoming increases to National Insurance and the Minimum Wage are going to test forecourt businesses once again and will give business owners something else to think about as fuel prices and margin are still hot topics in the industry and press. It will be interesting to see how they affect the property market throughout the rest of the year.”
Finally, Trott’s advice to clients who are looking to purchase is to ensure that funding and a good quality legal representative are already in place. “Due to the large volume of purchasers in the market currently, organisation will be key.
“With regards to selling we are explaining to our current and prospective clients, that having good quality accounting information and management figures readily available will encourage a prompt response from the interested parties.”
