Issue: In a slow economy, is there still market demand for a vacant, out-of-date car wash facility located within a less-than-optimal parking lot of a declining shopping plaza? Is it feasible to repair it and resume the car wash business despite superior competition with road frontage? Or would it be better to convert that site for a fast-food drive-through or even to expand plaza parking?
Before tackling the specific property features, we address questions like these:
Approach: HMG looked at whether market demand was sufficient for the type of car wash facility and the location of the facility wholly within a shopping center. We gathered data from car wash investors/operators about the economics of construction and operation. We researched the existing competition (supply), how they fared with and without direct road frontage, and how their equipment compared. We addressed the feasibility of repairing car wash equipment. An economic rent study was undertaken, as well as a comparative study of sales and costs for various types of car wash properties. Finally, we concluded the property was worth less than the recent foreclosed sale price as well as its advertised listing price.