For this Field Note, we wanted to share some thoughts on how we think about expanding into new asset types, including a few areas we are currently evaluating such as car wash development.
Since the founding of our company, our primary focus has been on self-storage, light industrial, and land-driven development in high-growth suburban markets. These asset classes have fit well with our approach because they allow us to control well-located sites, build at a reasonable basis, and benefit from long-term population growth rather than relying on short-term market timing.
At the same time, part of staying active through multiple real estate cycles is being willing to evaluate new opportunities when market conditions change. Rising construction costs, shifts in capital markets, and changing demand patterns can make certain asset types more attractive at different points in the cycle. Our goal is not to chase trends, but to look for businesses that share the same characteristics that have worked for us historically — strong underlying land value, simple operating models, and the ability to create value through development rather than relying solely on buying existing assets.
One area we have been studying recently is express car wash development. Similar to self-storage, car washes tend to perform well in growing suburban corridors where traffic counts increase alongside residential development. The operating model is relatively straightforward, the improvements are durable, and the business can benefit from both recurring customer use and strong visibility along major roads.
From a development perspective, car washes also fit our preference for projects where site selection is critical. In many cases, the difference between an average location and a strong one is significant, and we believe our experience identifying growth corridors can be an advantage when evaluating these opportunities.
We are still in the early stages of underwriting several potential sites and do not expect car washes to become a primary focus of the portfolio in the near term. However, we believe it is important to continually evaluate adjacent asset classes that may offer attractive risk-adjusted returns, particularly when they can be developed using the same land-driven approach we have applied to self-storage and industrial projects.
As with any new asset type, we will move carefully and expect to start with a small number of projects before deciding whether it makes sense to pursue the strategy more broadly.
One of the benefits of operating as a smaller, flexible platform is the ability to adapt when opportunities make sense, while still staying disciplined about the types of projects we take on.
