HOUSTON -- Recent acquisitions between major players such as Speedway, Hess, Sunoco and Susser have fueled speculation about where growth--both through M&A and new-builds--will occur in the coming months.
CSP Daily News spent some time with c-store development and site-assessment consultant Jim Fisher of IMST Corp., Houston, to see where he thought the investment dollars were flowing.
Here's part of that discussion:
Q: In CSP magazine earlier this year [CSP—April '14, p.63], we ran a story on rising multiples. Along with it was a list of top markets for growth that you had a dispute with. Can you tell us where you're coming from?
A: No one would argue anyplace in Texas is popular--1,200 people a day are moving to the state, so there's no area that isn't significant. But when you start talking about Los Angeles, San Francisco or Seattle, try building [a store] and see how available those areas are and how long it's going to take you to do it. They're tough. With permitting and approvals, [new sites are] few and far between in those markets, as it is in the Northeast corridor. New York City and Boston are not growing.
Q: Well, there are certain established players in the Northeast who are developing.
A: Yes, but not in metro Boston and not in metro New York. For the vast majority of chains that are growing, they simply wouldn't endure what you have to go through [in those markets], especially if you can easily develop 30 stores somewhere else.
Q: So it's not about a where there's demand; it's about the red tape.
A: You can go back historically when [Tulsa, Okla.-based] QuikTrip first started building stores in St. Louis and Atlanta. The markets were underserved then. But starting in the same time frame, they were able to build 30 in Atlanta and only two in St. Louis. The different counties and incorporated areas … everyone had their own zoning and ordinances. In St. Louis, you go a mile and it's a different city who you have to get approvals from.
Q: So where do you see growth happening?
A: The Gulf Coast is exciting, the Dakotas. Parts of Indiana because of growth in Ohio. Phoenix is just now coming back. It was overbuilt when the bottom fell out. Denver is very welcoming to business. Salt Lake, Nashville, Charlotte and Raleigh. Columbia, S.C.--we're seeing amazing growth there.
Q: You sound optimistic and pessimistic at the same time.
A: Look at the economy, then look at our customer base. The economy sucks, but business is great. Within our industry, this is true. Because interest rates are low and margins are good for the most part. When that's the case, there's interest in investment.
For more on the latest industry acquisitions, including the Energy Transfer Partners purchase of Susser Holdings and the recent Speedway-Hess deal, look to the June issue of CSPmagazine.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.