Real Estate Blog – Electric Forecourts – The Retail of the Future? Part 3
An Alternative Asset Class?
In our final article on electric forecourts, we look at some of the factors that may influence whether electric forecourts are to become a new real estate asset class, different to that which has existed with traditional petrol forecourts.
If Government aspirations in terms of the green energy agenda are to be met, then the likelihood is that over the next decade, electric forecourts will become a new real estate asset class that will ultimately replace the traditional petrol forecourt. However, there will be differences, not least because electric forecourts typically require bigger sites than their existing petrol counterparts, many of which (particularly in larger cities such as London) are located on small sites adjoining very busy roads. Such sites would simply not be able to facilitate the type of offering required to fund the business model of an electric forecourt.
To allow this asset class to thrive, operators need to be able to create viable business models incorporating a variety of uses that make forecourts attractive as destinations, rather than one-stop shops. In order to secure funding, these developments also need to be attractive to investors, by providing secure income from long leases. Whilst investors may ordinarily expect many of the traditional safeguards associated with institutional leases, the likelihood is that they will have to take a more flexible approach than may traditionally have been the case in relation to typical leases on retail and business parks.
The emergence of electric cars and the associated infrastructure represents both a challenge and an opportunity for the real estate industry. It also provides significant changes and challenges to Central Government, not least because the tax that it receives in respect of petrol sales will inevitably diminish as more of us make the switch to electric vehicles. Traditionally such taxes have been used to fund essential infrastructure, particularly in relation to roads and highway schemes. At a time when Government will be battling against the largest deficits seen since the Second World War, this loss of revenue poses the question as to how roads will be funded in the future. Amongst the options available are increases in vehicle tax, but there is also the likelihood that more roads will become toll roads, as they are in much of Europe.
As we emerge into whatever the brave new world the future holds once the pandemic has been brought under control, one thing looks fairly certain. The future may no longer be orange, but it is increasingly likely to be electric.
If you missed them, take a read of our previous blogs in this series, which looked at the first bespoke electric forecourt in the United Kingdom, which was opened at the beginning of December at Braintree in Essex, by Gridserve and the second blog looks at the key considerations for those looking to get involved in the development of such schemes.
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