The drivers of demand
The growth in service station and fast-food site development is driven by three converging factors:
- Consumer Convenience: As lifestyles accelerate, consumers increasingly value accessible, on-the-go options.
- Institutional-Grade Leases: Many sites are anchored by blue-chip operators, offering long-term security and predictable rental growth.
- Infrastructure Growth: Locations along major highways and in growth corridors provide a reliable customer base, making these assets highly defensible.
These factors have contributed to rising valuations and competition, particularly among investors seeking defensive assets in uncertain markets.
The question of sustainability
While the market looks strong, its future is not without risk:
- Shifting Consumer Preferences: The increasing adoption of health-conscious diets and plant-based alternatives could challenge traditional fast-food business models.
- Energy Transition: The rise of electric vehicles (EVs) could redefine the traditional service station model. Future-proofing sites with EV charging infrastructure is becoming a priority for forward-looking operators.
- Zoning and Environmental Constraints: Local councils are imposing stricter regulations on development, particularly in suburban or environmentally sensitive areas.
Investors need to consider these shifts in consumer behaviour, environmental expectations, and technology adoption when assessing long-term viability.
Opportunities for strategic investors
The strongest opportunities will emerge for those who look beyond current trends and anticipate future infrastructure and mobility needs. Key strategies include:
- Targeting mixed-use developments that combine retail, convenience, and community services.
- Partnering with tenants who are investing in EV charging networks and low-emission supply chains.
- Selecting assets with long-term land value appreciation, especially in high-growth population corridors.
Alsaker’s perspective
At Alsaker, we see service station and QSR assets as a compelling part of a diversified portfolio, but only with a focus on future resilience. We advise investors to prioritise tenant quality, land value fundamentals, and adaptability to consumer and mobility changes. Those who take a forward-thinking approach now will be well-positioned to leverage both rental income stability and capital growth in the years to come.
