Service Stations
Service station investments can generate income from multiple streams, including fuel sales and retail operations, and often come with long-term leases. In recent years, they’ve gained attention for their resilience, even during economic downturns. But with electric vehicles (EVs) and shifting consumer habits, investors must consider the sector’s changing landscape.
What is the future for
service station investments?
The service station sector is undergoing a period of transformation. One significant trend is the expansion of services beyond fuel. Many service stations now generate revenue from attached convenience stores, fast-food outlets and even EV charging stations. These additional income streams diversify their profitability and can make them more resilient to shifts in consumer behaviour.
At the same time, demand for traditional fuel remains strong, especially in regional areas where alternatives like EVs are less prevalent. This means that quality service station investments in these locations are likely to continue generating stable returns.
Looking ahead, the rise of EVs will undoubtedly play a key role in shaping the future of this sector. As EV adoption grows, many service stations are expected to transition into multi-energy hubs, integrating charging facilities alongside their traditional offerings.
Meanwhile, investors should also be mindful of stricter environmental regulations, which will likely drive higher compliance and maintenance costs but also create opportunities for upgrading sites to meet sustainability standards.
While these changes pose challenges, they also open doors for innovative investors who can adapt to the evolving landscape. Locations near urban growth corridors and highways are likely to see increased demand as populations expand, offering long-term value for strategic buyers.
Why buy
service stations?
Service stations appeal to many investors due to their predictable income streams and long-term leases. Additionally, the mix of income from fuel sales and retail operations reduces reliance on any single revenue source.
However, as with any investment, there are risks to consider. Declining fuel demand over time could impact profitability, particularly for stations that don’t adapt to the EV transition. Environmental compliance is another challenge, as older sites may require costly remediation work.
To maximise returns, investors should look for sites with diversified income streams and high foot traffic. Working with an experienced buyer’s agent can also help identify properties with strong growth potential while mitigating risks.
Key considerations when
buying service stations
Buying a service station involves several factors that can significantly impact its profitability and long-term viability.
As with any property, the location of the station is key. Properties near busy roads, urban centres or highways typically see higher customer traffic, which can translate to better returns. Conversely, stations in less trafficked areas may struggle to generate consistent income.
Another factor to consider is the mode of operation. Franchise-operated stations, such as those branded by BP or Shell, benefit from established brand recognition and support but come with franchise fees and limited operational flexibility. Independently operated stations, on the other hand, offer greater flexibility but may require more hands-on management.
Environmental site assessments are a non-negotiable step in the buying process. Older service stations, in particular, may have site contamination issues or outdated infrastructure that could require costly remediation. Similarly, it’s essential to understand who owns the pumps and tanks as leased equipment can increase ongoing costs. Additionally, investors should also evaluate fuel supplier agreements, as these can affect profitability
Lease terms should also be scrutinised closely. Long-term leases with reputable tenants provide stability, but investors must also ensure that terms include provisions for rental increases and clarity around maintenance responsibilities.
Why buy with
Costi Cohen?
Investing in service stations can be highly rewarding, but the process is far from straightforward. Attempting to navigate this market without professional support risks overlooking key details, overpaying or investing in properties with hidden liabilities.
At Costi Cohen, we specialise in helping investors make confident, well-informed decisions. Our team conducts thorough due diligence, from evaluating environmental risks to analysing lease agreements, ensuring you invest wisely. With in-depth market knowledge and strong negotiation skills, we help secure competitive terms for your investment.
Our process is tailored to your needs, beginning with a detailed consultation to understand your goals. From there, we identify high-potential properties, handle negotiations and provide ongoing support. Partnering with us means you gain access to expert advice, peace of mind and a clear path to success.
How to finance the purchase of a
service station
Financing a service station typically involves a combination of lender support and personal equity. For newer properties with modern infrastructure, lenders may offer to finance up to 60% of the purchase price. Older properties, particularly those with environmental concerns, may secure less favourable terms, requiring investors to contribute more upfront.
Working with a specialist broker can help you secure competitive financing options tailored to your situation. They can also guide you through the lender’s requirements, such as environmental site assessments and financial documentation, ensuring a smooth application process.
Explore some of our
Service Station Purchases
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Costi Cohen — Australia’s premier commercial real estate consultants
Whether you’re a seasoned investor or new to the market, our expertise will pave the way for your success in commercial real estate. We’ve looked after more than 250 commercial properties and are prepared to help you discover your next investment opportunity.
No matter your timeline, budget or preferred location, the expert team at Costi Cohen can help you find a commercial property that aligns with your needs. We invite you to get in touch with our team for a consultation today.
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