Hanley Investment Group Real Estate Advisors, a nationally recognized real estate brokerage and advisory firm specializing in retail property sales, announced today that the firm arranged the sale of a new construction, single-tenant property occupied by Fast5Xpress Car Wash in Ontario, Calif., adjacent to the Ontario Mills Mall, one of the top shopping and tourist destinations in California. The sale price was $3.5 million for the new 35-year absolute triple-net ground lease.
Hanley Investment Group’s Executive Vice Presidents Bill Asher and Jeff Lefko represented the seller and developer, Evergreen Development. Spanning the last 48 years, Evergreen is a national retail and multi-family development company with a heavy emphasis on developing projects in California, Colorado, Arizona and Utah. The buyer, a private investor from Orange County, California, was self-represented.
“We procured an all-cash, 1031-exchange buyer based in Southern California and achieved a premium cap rate and pricing due to the 35-year initial lease term and centralized location adjacent to Ontario Mills,” said Asher. “We secured the buyer prior to closing their downleg and closed escrow before the expiration of the buyer’s 1031 identification period.”
Fast5Xpress is one of the largest and fastest-growing express car wash companies in Southern California. The chain currently has 20 locations open and operating, with two more under development.
Built in 2021, Fast5Xpress Car Wash occupies a 4,446-square-foot building on 1.17 acres at 4392 East Ontario Mills Parkway in Ontario. The property is located at the signalized intersection of Ontario Mills Parkway (16,175 cars per day) and Inland Empire Boulevard, and across the street from the Ontario Mills Mall (28 million annual visitors). The property is also near the Interstate 10 Freeway (271,000+ cars per day) and Milliken Avenue.
“The Ontario Mills Mall area is an outstanding regional retail destination pulling consumers from all over the Inland Empire, providing a very strong customer base of people that benefit from a subscription-based express car wash service,” said Asher. “The average household in Ontario owns two or more vehicles with nearly 280,000 people with an average household income of $96,660 reside within a five-mile radius.”
Fast5Express is less than two miles from the Ontario International Airport (5.5 million passengers, 2019) and less than half a mile from the Toyota Arena (11,000+ capacity venue).
According to Asher, the U.S. car wash services market size is expected to reach $23.78 billion by 2030, expanding at a compound annual growth rate (CAGR) of 5.5%.
“The car wash industry is a service-based business, which makes it internet-resistant and poised for long-term growth,” said Asher. “Increased car counts nationwide have resulted in more daily washes. There is less overhead per location due to the growing express car wash model. Furthermore, customer lifetime value is expanding due to ‘unlimited wash’ monthly subscription programs.”
“Express car washes are one of the most profitable tenants in the net-lease sector, with margins between 50% to 60%. As a result, we expect this segment will continue to experience steady demand from investors in 2023," said Asher.
Hanley Investment Group has sold 67 express car washes in the last 36 months, plus has another seven single-tenant express car wash net-lease investments in escrow or on the market valued in excess of $29 million.
