As the auto industry shrinks due to weak sales, ailing dealerships may find it even harder to sell vacant locations if they leave the business.
Recent announcements by General Motors and Chrysler to end relationships with hundreds of dealers nationwide will lead to more closings in metro Atlanta, adding to acres of already abandoned property. A number of independent dealers have shut their doors, along with large dealerships such as Bill Heard Chevrolet, which closed all 14 of its locations last September.
"I think we're nearing the peak of the amount of available dealerships," in the Atlanta area, said Nelson Kramer, vice president of CB Richard Ellis, which lists about a dozen automotive properties in its inventory and has sold five dealership properties in the last year.
Most dealerships are on lots of three to eight acres and are ideal for other dealerships, retail, mixed used and office space, Kramer said. Kramer just listed a former Bill Heard Chevrolet dealership in Union City, which is on more than 23 acres.
The good news, he said, is dealerships "are in excellent locations" — highly visible, flat properties in highly traveled areas.
The bad news is there may be few takers in what has been called the worst commercial real estate market in decades.
Most new car dealerships are built fairly use specific with showrooms and service areas. Brokers have to look for a business that could adapt the space to its own use.
But most businesses are reluctant to make capital investments in a recession. For example, of five dealership properties sold by CB Richard Ellis in the last year, three were to used car dealers, one was to a new car dealer and one was for a use yet to be determined, Kramer said.
It's not clear how many GM dealers will close, but Chrysler sent notices earlier this month to five metro Atlanta dealerships. Industry leaders hope the worse is over.
"It's the worst I've seen, but there are indications that in the second half of the year things are going to start to come out alright," said Bill Morie, president of the Georgia Automobile Dealers Association. He said the association, which represents domestic and import franchise dealers, has lost about 30 members in the last 12 months. It has about 570 members.
Richard Rainwater, executive director of the Georgia Independent Automobile Dealers Association, said independent dealers have been "suffering the same distress as everyone else, because we're depending on our customers to be able to purchase."
Rainwater said there are about 4,500 licensed independent dealers in Georgia.
"It's not like it's all downhill," he said. "We still have a good many people now who want to be used car dealers and are applying and studying for licenses. But the churn is more negative than positive — with a net loss of about 15 percent."
About the Author
Keep Reading
The Latest
Featured
