Tuesday, June 2, 2009

What to do with Marin's vacant car lots?

In the wake of GM's bankruptcy, the Marin IJ reports on the last of the remaining Detroit automaker dealerships in the county: Novato Chevrolet and Novato Ford. Sales at the Chevvy dealer are down 40%, but the owner is hopeful that they'll be able to stay in business. Sales at the Ford dealer are flat, indicating they've picked up some business from San Rafael Ford, which closed last year. In addition to San Rafael Ford, San Rafael Chevrolet closed in February this year, and the John Irish Chrysler dealer closed in 2007.

With the future outlook for auto sales looking bleak, what other uses might we see coming in to take over the vacant sites? Retail Traffic identifies a few options:
Approximately 25 percent to 30 percent of the dealership sites about to hit the market will likely be taken over by other car brands, estimates James Mitchell, director of the national automotive group with Marcus & Millichap Real Estate Services, an Encino, Calif.-based real estate brokerage firm. The rest of the sites, however, face an uncertain future. In the past, car dealerships were considered attractive acquisitions by developers of strip centers, small office buildings and hotels as many boast good frontage, are in high traffic locations on major thoroughfares and sit on parcels that have already been graded and require minimal site work.

And this CNBC pundit sees opportunity in the land vacated by car dealers.

But considering the rise in vacancies in commercial real estate over the last year, there are plenty of alternative sites available in Marin County, including office space vacated by Autodesk, and big box retail vacated by Circuit City, plus planned development sites that have now been abandoned. Developers are unlikely to go to the effort of permitting and developing a car dealer site when other easier alternatives are available.

So do not expect to see any new concepts opening anytime soon on the abandoned car lots. But smart operators with an eye on the long term might snatch up sites with good visibility and access for conversion to retail development when the good times come back.

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