Go to chart: LI gas stations shutter
If you’re a Manhattan resident who’s considered dealing with the diminishing number of gas stations — and the increase in the price of gas — by trekking to Long Island, think again.
It’s been well established that gas stations are disappearing in Manhattan and the outer boroughs, but now they are even abandoning the suburbs east of Manhattan.
The development could lead to a rude awakening for those looking to fill their tanks. The reduction of gas stations typically means increased prices at the remaining gas retailers due to less competition, experts said.
According to the New York State Department of Agriculture and Markets, Nassau and Suffolk counties had 1,377 gas stations in 1998. By 2007, the most recent data on record, the two counties had lost 151 gas stations, a drop of 11 percent. That doesn’t include the two New York City boroughs of Brooklyn and Queens, which are technically on Long Island, though still part of the city. From 2003 to 2007, a slightly shorter period, those boroughs went from 1,165 gas stations to 1,053, a loss of 9.6 percent, according to the New York Fire Department.
Some commercial real estate brokers believe the loss of gas stations on Long Island, which can be partially attributed to the consolidation of gasoline companies, is simply a reflection of what’s happening nationwide.
“This is probably true for most parts of the country, where gas stations are diminishing for various reasons,” said Gregg Carlin, a senior vice president with the Woodbury office of the commercial brokerage CB Richard Ellis.
Throughout the nation, there is a push on the part of gasoline companies to maximize profits by opening larger gas stations with multiple pumps and convenience stores on at least an acre or more of land, he said. But in some areas, especially New York City or Nassau County, it can be hard to find a piece of real estate that large.
“These older properties — some plots are as small as 10,000 to 15,000 feet — make it a little difficult to get enough pumps to do these large convenience stores on the property,” Carlin said. “And when you do a convenience store, you also need to have spots for people to park their cars. So the gas companies seem to want at least an acre to an acre-and-a-half of land.”
Marie Zere, president of Zere Real Estate Services, based in Ronkonkoma, Long Island, said that especially in Nassau County there is a lack of sites large enough to put in new gas stations. “There are no sites in Nassau County,” she said. “Any growth area has been in Suffolk County. In Nassau, you have little sites that are like one-quarter of an acre with a gas station on it.
“You could never do a gas station there anymore because the regulations demand something like 1.5 to two acres,” she said.
Zere said that, though she has brokered some gas station land sales, like many commercial brokers, she doesn’t typically like to work on gas station sites as there’s little money in those deals. Thus, it can be hard to determine if some former gas station lots have fetched higher prices as development parcels than if they’d remained gas stations.
“All the gas station companies, the Hess Corporations, have their own scouts that look for sites,” she said. “So there are very few brokers that specialize in this.”
Cory Zelnik, president and CEO of the commercial brokerage Zelnik & Company Real Estate, based in Manhattan, said he has leased some sites to gas station operators in the past. But now, the value of land on Long Island is making it more advantageous for gasoline companies to sell off sites they had previously leased to gas station operators.
“The gas stations for many years held prime positions, on corners, etc., and now the big oil companies — the Exxons, the Mobils — have contracts or leases with operators that are coming due,” Zelnik said. “So they look to reposition the asset, like any other real estate person would.
“They’re finding it more opportunistic to just sell these things; it adds funding to their bottom line,” he added.
With the proliferation of bank branches in the tristate region (a trend that may be ebbing in light of financial institutions’ troubles), along with the continual growth of pharmacies on Long Island, there are plenty of companies that can afford to pay top dollar for well-located former gas station sites, he said.
Carlin agreed, saying the land is available, especially in Suffolk County, yet it can be difficult to secure an affordable site. “It’s very competitive to get these properties,” he said. “The drugstores are after these corners, as well as the financial institutions and the fast-food operators.”
Zere said that 1.5-acre corner lots in Suffolk are being scooped up by drugstores and other retailers for $2 to $4 million or more. In Nassau County, the land is being snapped up at $2 to $2.5 million an acre.
“When it comes to gasoline stations, it’s not a supply-and-demand issue,” she said. “It has to do with the incredible value — the value is greater for other uses.”
But one critical attribute of former gas station sites — which are typically appealing if only because their one-story structure makes them easily convertible — can make them unattractive for new users: potential contamination.
Ordinances regarding the operation of gas stations in Suffolk County, regulating their discharge and limiting gas storage, have made it harder for gas station operators to turn a profit, Zere said. That may have driven some out of business or prevented new gas stations from opening.
“I sold a gas station in Lake Grove about seven years ago, and the buyer still hasn’t opened his doors,” she said. “He fixed it up, put in pumps, and he still hasn’t opened it.”
There was also a precipitous drop in the number of gas stations on Long Island after December 1999, when the U.S. Environmental Protection Agency passed new guidelines on underground tanks that made it harder for smaller gas stations to comply with expensive regulations, said Jessica Chittenden, a spokeswoman for the state Department of Agriculture and Markets.
The climbing value of land on Long Island may not yet have surpassed what is needed to clean up certain contaminated sites, Zere said. Oftentimes, the cleanup of a former gas station site becomes a negotiating point in sales transactions. “Sometimes, a buyer will come along and say, ‘I love this corner. I want this corner. I know you’ve got contamination,'” Zere said. “‘You spend the first $100,000 to clean it up, and I’ll spend anything over that.'”
But many developers will not buy a site unless it has been cleaned up by the seller, or at least a site assessment has been paid for by the seller. But that can take some time.
“I have a gas station I worked on seven or eight years ago in the Hampton Bays area, and it went in for remediation,” Zere said. “It’s still contaminated and the cleanup bill is huge.”