All asset classes run in cycles and certainly car dealerships are no exception, however these sites present unique challenges and opportunities for both buyers and sellers. Our real estate clients are uniquely positioned to redefine the car dealership model into one of a hub and spoke with retail sales in the high-traffic areas in desirable, but perhaps undersized locations selling many brands, with the traditional service areas located farther away in areas where land is less expensive.

Chrysler is closing 789 dealerships nationwide and GM is closing approximately 1200. Combine that with the absence of new dealerships and consolidations of existing dealerships to sell multiple brands, and there is no shortage of real estate available for other uses. Many national brokerages have formed groups to market these special assets and allow some dealers to "trade up" to locations they've always coveted and also allow retail and office use for those sites which are deemed less desirable as dealerships (car dealership consolidation).

The opportunity for consultants is certainly available on the due diligence side, however, many of these dealerships are family-owned and have had the same insurance company for many years. There may be an opportunity for these sellers to make claims which are retroactive to the early 1980s or before which will allow them to have cleanup costs (if required) covered for things like hydraulic lifts, oil/water separators, old tanks, and degreasing operations to allow them to maximize their return when they sell the property (dealership closure and environmental claims). It is a chance for the consultant to suggest to the potential buyer (your client) that there may be insurance coverage available to the current owner if they make a claim which may alleviate or minimize the need for a large escrow and/or indemnity (insurance archeology services).

Car dealerships present a unique opportunity for environmental consultants to show their value in a transaction and the valuable advice we give our clients (be it buyer, broker, seller, attorney or insurance company) is the key to future work. If anyone has had experience with a closed dealership and is willing to share what the future use will be, please post a comment! What is your opinion on the best future use for former car dealerships?