Q4

2018
THE NET LEASE AUTO PARTS REPORT

AUTO PARTS STORE PROPERTIES

MARKET OVERVIEW
MEDIAN ASKING CAP RATES
Q4 2017 Q4 2018 Basis Point Cap rates for the single tenant net leased auto parts store sector
Tenant (Previous) (Current) Change increased by 7 basis points from the fourth quarter of 2017 to the fourth
Advance Auto Parts 6.75% 6.75% 0 quarter of 2018 to 6.26%. The auto parts sector, for the purpose of
this report, is defined as Advance Auto Parts, AutoZone and O’Reilly
AutoZone 5.62% 5.47% -15 Auto Parts as they account for the highest percentage of single tenant
O'Reilly Auto Parts 5.94% 5.80% -14
transactions of properties occupied by auto parts retailers. Despite the
increase in cap rates, the median lease term remaining for the net
leased auto parts sector increased by an additional year. The increase
AUTO PARTS STORE PROPERTIES in cap rates can be primarily attributed to the high concentration of
MEDIAN ASKING PRICE Advance Auto Parts properties on the market. The median asking
cap rate for Advance Auto Parts is significantly higher than its peers;
Median Median Price O’Reilly Auto Parts and AutoZone.
Tenant Asking Price Per Foot
The majority of the sector is comprised of Advance Auto Parts properties
Advance Auto Parts $1,351,250 $199
which experienced no change in their cap rates when compared to one
AutoZone $1,795,632 $263 year ago (6.75%). Conversely, cap rates for AutoZone and O’Reilly
Auto Parts properties compressed by 15 and 14 basis points to 5.47%
O'Reilly Auto Parts $1,879,000 $255 and 5.80% respectively. Transaction volume for the net leased auto
parts store sector declined by approximately 13% in 2018 when
compared to 2017. The decline in transaction volume can be attributed
PERCENTAGE OF AUTO PARTS STORES to investor concern that Amazon could impact brick and mortar auto
ON THE MARKET BY TENANT part locations. Inversely, the overall net lease market saw transaction
volume increase by approximately 4%.
Percentage
Tenant of Market As the current auto fleet in the United States continues to age, demand
for auto parts from consumers, garages and service stations should
Advance Auto Parts 56.3%
continue to grow. The 2018 Lang Aftermarket iReport, confirms that
AutoZone 24.1% the average age of vehicles on the road increased to 12 years.

O’Reilly Auto Parts 19.6% The low absolute price point of properties within the net lease auto
parts store sector make these investments attractive to investors.
Outside of dollar stores, there is a limited supply of net leased
AUTO PARTS STORES PROPERTIES VS. properties available under $2 million leased to investment grade rated
tenants. Furthermore, auto parts stores are typically located in primary
RETAIL NET LEASE MARKET
and secondary markets and their typical store footprint makes them
Q4 2017 Q4 2018 easier to re-tenant.
Tenant (Previous) (Current)
Transaction volume in the auto parts sector should remain similar to
Auto Parts 6.19% 6.26% 2018 as investors continue to seek properties with investment grade
tenants at lower price points. Auto parts store properties with shorter
Market 6.07% 6.25%
lease terms located in areas with strong real estate fundamentals also
Spread (bps) +12 +1 remain in high demand among buyers seeking higher yields.

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 Q4

2018
THE NET LEASE AUTO PARTS REPORT

AUTO PARTS STORES MEDIAN ASKING CAP RATES

5.30%

6.45%

6.41%

S T
E A
WEST H
R T
MIDWEST NO
MOUNTAIN

SOUTH

6.00%

6.22%

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 Q4

2018
THE NET LEASE AUTO PARTS REPORT

MEDIAN ASKING CAP RATES BY LEASE TERM

REMAINING

Years
Remaning Advance Auto Parts AutoZone O’Reilly Auto Parts

Under 5 7.75% 7.00% 7.05%

6-9 7.00% 6.28% 6.60%

10-14 6.22% 5.60% 6.08%

15-17 5.85% 5.35% 5.70%

18-20 N/A 5.25% 5.30%

SELECT SINGLE TENANT AUTO PARTS STORES SALES COMPARABLES

Lease Term
Sale Date Tenant City State Price Price S.F. Cap Rate Remaining

Nov-18 O'Reilly Auto Parts Tamarac FL $2,825,000 $379 5.47% 20

Aug-18 Advance Auto Parts Okatie SC $2,645,000 $379 5.75% 10

Dec-18 Advance Auto Parts Cary NC $2,200,000 $317 6.75% 5

Nov-18 O'Reilly Auto Parts Spanish Fort AL $2,155,500 $299 5.70% 20

Oct-18 AutoZone Chesterfield MI $1,819,000 $238 6.35% 10

Sep-18 Advance Auto Parts Austin TX $1,750,000 $250 7.68% 5

Sep-18 AutoZone Lakewood WA $1,600,000 $296 5.23% 10

Sep-18 Advanace Auto Parts Pueblo CO $1,480,000 $218 6.75% 11

Sep-18 Advanace Auto Parts Palmview TX $1,300,000 $186 10.80% 3

Oct-18 O'Reilly Auto Parts Defuniak Springs FL $1,125,000 $212 6.15% 13

Nov-18 O'Reilly Auto Parts Monahans TX $1,050,000 $164 6.28% 10

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 Q4

2018
THE NET LEASE AUTO PARTS REPORT

AUTO PARTS STORES COMPANY COMPARISONS

Advance Auto Parts AutoZone O’Reilly Auto Parts

Credit Rating BBB- (Stable) BBB (Stable) BBB+ (Stable)

Market Cap $13 billion $22.9 billion $27.7 billion

Revenue $9.37 billion $11.2 billion $8.98 billion

Number of Stores 5,200 6,000 5,147

Typical Lease Term 15 year primary term with 15 or 20 year primary term with 20 year primary term with
fifteen years of options twenty years of options twenty years of options

FOR MORE INFORMATION

AUTHOR CONTRIBUTORS
Randy Blankstein | President Jimmy Goodman | Partner
John Feeney
randy@bouldergroup.com jimmy@bouldergroup.com
Senior Vice President
john@bouldergroup.com Scott Harris | Senior Analyst Jeff Weil | Analyst
scott@bouldergroup.com jeff@bouldergroup.com

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