How has the rise of mixed-use development in major metro markets affected the way dealers approach the best use of their property? Smith: As urban sprawl extends to dealerships that were once on the outskirts, developers have started approaching dealers about their valuable real estate. Dealers often sit on large, contiguous pieces of land in densely populated areas. With vehicle inventory projected to remain at lower levels, this opens dealership space for redevelopment. For dealers with the population density and location attractiveness to support it, why not monetize the excess land and bring in more retail traffic, integrating the dealership into the community at the same time? Rethinking how much land you need and how that land can be used can point you to opportunities to unlock additional value, whether you develop the property yourself, partner with a developer, or sell a portion of your land. Stancill: We’re seeing a lot of mixeduse projects being discussed, and it’s often the municipality pushing dealers in that direction. We’ve studied several projects where a mixed-use component was a requirement for project approval. Mixed-use developments can bring resources and amenities closer together to create a more sustainable and walkable community. With these developments, dealerships can maintain a central presence in the community while blending residential, retail and commercial uses to fit site and local market needs. Also, if you want to put valuable land to its best and highest use, you might consider vertical development along with mixed-use instead of a freestanding, dealer-only facility. Pella: Given the increased density of their surrounding areas, dealerships can remake how they utilize their existing footprint by consolidating their dealer operations and creating available land to build commercial real estate. They’re sited next to existing infrastructure with roads, utilities and, in many cases, public transportation. As a dealer, you’ve got the opportunity to think about how your dealership can become part of today’s lifestyle while tying into the surrounding community. Consider experiential retail: people shopping, sitting outside, having a meal, enjoying live music — a place where things are happening. Experiential retail recognizes that the most successful mixed-use developments are fully activated spaces that provide a variety of amenities. Smith: As land gets more valuable and density becomes a requirement, Manhattan may be the place to look for models of what dealerships can look like. BRAM Group’s Toyota and Lexus of Manhattan have a high-rise presence with new cars on the fourth floor, used cars on the roof and a second lot in New Jersey to hold additional inventory. On the West Coast, Toyota of Hollywood has partnered with Houston-based Hines and announced its plans for a mixed-use project, including a high-rise residential tower, a residential village, an office building and a public plaza with green space along with retail and dining. What’s being done in dealership design today to address where the automotive marketplace is moving and ensure that dealers are best positioned to meet tomorrow’s needs? Smith: In major metro markets, vertical development is starting to take hold in auto retailing, and that helps counter high land prices. Dealers are also re-evaluating the space devoted to service versus sales. In select, densely populated, urban areas, we’re seeing lifts used to put service bays on the second, third and fourth floors, with mixeduse residential on top and parking somewhere in between. In coastal areas, parking decks can help protect against hurricanes, and in areas prone to hail damage, they can help you save on insurance costs. Stancill: Online sales, lower vehicle inventories and consolidation all make it easier for dealers to downsize their variable operations while building out their fixed operations. It costs less per square foot to build service and parts space than showroom space. In fact, a lot of dealers who’ve completed recent facility initiatives are ready to further expand their fixed operations — in some cases, more than doubling the size of a service department built just a few years ago. We’re being very thoughtful about putting infrastructure in place as we plan dealerships, thinking about the location of utilities and how the building components are set up to make future expansion easier and less expensive. Planning dealerships for service growth from the ground up is a smart approach. For example, we always try to work with the dealer to think about future parts and service expansion during the initial design to make tomorrow’s expansion as painless as possible. We’re also seeing a greater investment in technician spaces, such as larger and more comfortable locker rooms and break rooms. The goal is to look at anything that will help attract and retain top tech talent in a highly competitive labor market. There’s also a focus on designing parts and service departments to accommodate EVs, with particular attention to the safe storage and handling of EV batteries. The “skateboard” batteries in EVs are almost the size of a car. They’re 41 THE GENERATOR
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