Why Convenience Stores Could Be the Smart Money Play of 2025

In the evolving landscape of commercial real estate, few asset classes have demonstrated the consistency, scalability and upside of convenience stores. Once overlooked as modest, necessity-based real estate, c-stores have emerged in 2025 as high-performing, tax-advantaged investments with widespread appeal for institutional and private capital alike.

A tax shield that supercharges returns

The reinstatement of 100 percent bonus depreciation under the One Big Beautiful Bill Act has reenergized investor interest in convenience store assets. Investors can now fully expense qualifying non-structural components—fuel equipment, refrigeration, signage and leasehold improvements—within the first year of ownership. This powerful tax incentive enhances after-tax yield and frontloads cash flow in ways few other asset types can replicate.

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To fully capture these benefits, a comprehensive cost segregation study is essential. Accelerated depreciation strategies that properly classify short-life assets in accordance with IRS guidelines can generate six- or seven-figure first-year deductions. Investors would be wise to engage tax advisers early to align this opportunity with broader portfolio goals.

Revenue diversity builds durability

One of the fundamental strengths of the convenience store sector is its ability to generate revenue through multiple channels, including fuel, in-store merchandise and ready-to-eat food service. This diversity makes c-stores uniquely resilient, particularly during economic slowdowns when consumer demand shifts toward value and accessibility.

Additionally, c-stores have successfully evolved into micro hubs for essential retail in both urban and rural markets. In underserved communities, they often fill the role of grocery stores and quick-service restaurants, capturing a larger share of everyday consumer spending. Operators are also increasingly competitive with traditional QSRs through expanded food programs, enhancing traffic and profitability.

Sublease potential unlocks additional income

Another underappreciated aspect of c-store investment is the opportunity to drive revenue through third-party subtenants. National brands like Subway, Dairy Queen and McDonald’s frequently occupy space within high-volume locations, subsidizing operating costs and boosting foot traffic.

Beyond food service, other sublease tenants—including tax service providers, nail salons and EV charging stations—help create mixed-use functionality without diluting the store’s core operations. For landlords, this creates a layered income stream and additional NOI upside.

Private capital loves operational scale

The convenience store model has become particularly attractive to private equity and family office investors because of its operational scalability. Compared to other retail formats, c-stores require modest startup capital and deliver strong margin potential. High-turnover merchandise, recurring fuel sales and low labor intensity all contribute to a model built for replication and scale.

Many operators leverage franchising structures, enabling fast, capital-light expansion. For investors seeking a balance of near-term yield and long-term portfolio growth, c-stores offer a compelling formula.

Tried-and-true performance in all markets

C-stores continue to thrive in a variety of market types. While urban locations remain active, rural and tertiary market stores have proven especially resilient. With limited competition and high customer loyalty, these properties frequently achieve outsize performance relative to their urban peers. Their focus on everyday essentials makes them recession-resistant, often outperforming more discretionary retail categories.

A tiered landscape for all risk profiles

The sector offers opportunities for investors across the risk-return spectrum:

• Tier 1 operators (e.g., 7-Eleven, Wawa) offer long-term security with strong credit backing. From January 2023 to June 2025, they averaged a 5.53 percent sold cap rate and 5.34 percent on-market.
• Tier 2 operators (e.g., Maverik, RaceTrac) provide a solid balance of yield and dependability, with a 5.82 percent average sold cap rate and 5.46 percent on-market.
• Tier 3 operators (e.g., Marathon, Shell franchisees) offer the highest returns—7.11 percent average sold cap rate and 6.48 percent on-market—but with greater operator-level risk and upside.

A resilient and scalable asset class

In 2025, the case for investing in convenience stores is more compelling than ever. With full bonus depreciation, diverse income streams and operational flexibility, these assets offer the rare combination of stability, scalability and tax efficiency. Whether targeting core holdings or value-add opportunities, convenience stores deserve a closer look from every serious investor in today’s commercial real estate market.

Amar Goli is a managing director and Sage Chaffin is an investment analyst at Northmarq.