When many people shifted to working from home last spring, offices weren’t the only place they stopped going. Gas stations across the country saw business plummet as millions of commutes instantly disappeared.
“Stores that depend upon commuters struggled the most, with gas demand off 13.4% last year,” says Jeff Lenard, vice president of strategic industry initiatives at the National Association of Convenience Stores. Demand, he says, “is not expected to get back to 2019 levels for a few years, if ever.”
The uncertainty of the pandemic and its transformation of the way people work has disrupted the gas station business. Cue a real estate boom.
According to new data from the commercial real estate marketplace Crexi, listings for and interest in gas stations have skyrocketed. In February 2021, compared to data before the onset of the pandemic, listings for gas stations were up 124%, and buyer interest was up 167%.
The changes are happening fast. Compared to just one month before, new gas station listings on the platform in February jumped by nearly 24%.
The growth in listings and interest is likely a by-product of the struggles the industry is facing, according to Eli Randel, chief strategy officer at Crexi. “I think the operators are suffering from, in some instances, cash flow problems. However, the value of the assets tends to still be high,” he says. “There are plenty of buyers who believe they can acquire these assets and wait out the storm. Maybe they get a small discount for current conditions, too.”
The storm of the pandemic seems to be proving too much for many in the industry, which is dominated by small retailers and franchisees. Of the roughly 150,000 convenience stores in the United States, about 92,000 are single-store operators, according to Lenard, and 80% of them also sell gas. Though he notes that during the pandemic convenience store sales have been strong for food and pantry items—particularly beer—the drop-off in gas sales is putting many smaller operators in a bind.
Others are noticing. There is a growing mergers-and-acquisitions trend in the convenience store and gas station industry, according to NACS’s Lenard. “The big want to get bigger and that makes the offers more attractive,” he says.
Some experts suggest more of the acquisitions will center on smaller chains or owners with only a handful of outlets. But there are also some big moves on the larger end of the spectrum, with 7-Eleven expected to make a $21 billion acquisition of convenience store competitor Speedway.
Randel says there’s no specific brand of gas station that’s being listed more on Crexi’s marketplace, and that those struggling the most are likely more affected by geographic conditions than their brand. Lenard says there are some region-specific trends that show how the industry is being affected. “California is a very difficult market to be in with the various regulations related to both fueling and retailing,” he says. “Others, like Florida and Texas, seem to continue to grow because of their growing populations, nice weather, and year-round outdoor activities.”
Buyer interest in gas stations suggests that the increase in vaccinations has many expecting drivers and commuters to get back in their cars soon. Though the long-term future of gas stations is an open question, with alternative fuel sources growing and some cities banning the construction of new gas stations, the short-term reality is that people will continue to drive and most will need gas to do it.