Empty car lots could be converted to serve other business

Automobile sales are picking up locally and nationally, but not enough to rescue rows of empty car lots along Sahara Avenue, Boulder Highway and Centennial Center Boulevard.

There's United Hyundai, Pat Clark Pontiac, Bill Heard Chevrolet, United Jeep Chrysler, Signature Lincoln Mercury, Dodgeland USA -- all shells left from the Great Recession.

Wayne Frediana, executive director of Nevada Franchised Automobile Dealers Association, said the number of dealers is down 20 percent, to about 96 statewide and 65 in Las Vegas.

"I don't see the Vegas market turning for a while," he said.

That means more than 20 new and used automobile dealerships have closed in the Las Vegas Valley in the last four years, though some have been reopened by new owners under different brands.

The rest are probably going to remain vacant -- sprouting weeds through cracks in the asphalt and providing a canvas for graffiti artists -- until someone figures out a higher and better use for them, Las Vegas commercial broker Tim Shaw said.

"I can see a lot of these properties being redeveloped into live-work projects with office and retail on the ground floor and residential units on top," he said.

While projects such as Juhl and Urban Lofts in downtown Las Vegas advertised live-work units, none were converted from former car dealerships.

Las Vegas automobile dealer Tom Saitta said a lot can be done with vacant dealerships like converting them to service centers or collision repair shops.

He said he had inquiries from the Ultimate Fighting Championship group and a furniture retailer about buying his former Dodge dealership at Las Vegas Beltway and Rainbow Boulevard, but rather than being converted it sold to Gaudin Ford for more than $20 million.

No opening date for Gaudin Ford has been announced.

Automobile dealers were hammered by the large number of job losses and home foreclosures in Las Vegas, said Tyler Corder, chief financial officer of Findlay Automotive Group.

Findlay closed Saturn of Henderson in 2010 and turned it into a Lincoln Mercury dealership.

Chrysler canceled franchise agreements with 800 underperforming dealerships nationwide in 2009, including United Jeep Chrysler, Jim Marsh Jeep and United Dodge in Las Vegas. Integrity Chrysler was on the list, but had already closed due to poor sales.

Saitta, who owns a Chrysler Jeep Dodge dealership in Pahrump, said his dealerships remained profitable because he was able to control debt.

"It's the economy, that's what it is," Saitta said. "Those stores that are closed were heavily in debt when the recession hit and they couldn't pay their debt. The Dodge dealership on (U.S. Highway) 95 and Ann Road and the store on Sahara were repossessed because they were leveraged to the hilt."

The Nevada Franchised Auto Dealers Association reported 115,000 new- and used-vehicle sales in 2010, an 8.7 percent increase over the prior year but about half the peak volume of 227,000 in 2007.

New-car and new-truck sales in the United States, which dipped to 10 million in 2008, are also projected to rebound to nearly 13 million this year.

Saitta said people are still buying new cars and business is picking up significantly, though it's not where it was before the recession. GM, Chrysler and Ford product sales are "on fire," he said.

There's also a little more life in the used dealership market.

Grant Traub, senior vice president of land and investments for Colliers International in Las Vegas, said seven of 19 vacant dealerships that were on the market in 2010 have either been leased or sold in the last nine months and five more are in escrow or in negotiations.

Before these deals, nothing had moved in 18 months, he said.

Salt Lake City-based Low Book Sales, Utah's largest used-car retailer, is expected to close escrow on a Sahara Avenue dealership next month. Drive Time paid $2 million for a 4.5-acre lot at 3030 E. Sahara Ave., and J.D. Byrider is leasing the former Kia store on West Sahara Avenue.

Las Vegas automobile dealerships have changed ownership in the past through acquisitions such as AutoNation and Sonic Automotive coming into the market, but seldom did they sit empty for months or years at a time. Some of the newly built showrooms now available were barely used before they were shuttered.

Traub sees a dichotomy in dealership pricing. Two of the transactions will trade for more than $15 million and seven will trade for under $5 million, he said.

"So we clearly have hit an inflection point in the absorption of these facilities," Traub said. "We're seeing used-car dealers gravitating toward upgrading their location and others now entering the market. Used cars that were on Boulder Highway are moving to East Sahara and West Sahara."

Used-car dealers may also be feeling a little more flush than before. Consumers looking for less expensive options have driven used-car prices to record highs, up 20 percent since January after falling for much of 2009 and 2010, according to Kelley Blue Book, the most recognized source for used-car valuation.

With significantly lower price points for real estate, used-car dealers can take the risk of opening a new location at a much lower capital outlay, Traub said. A couple of the car lots went for about $2 million, he said.

But not all will bounce back.

"Eventually, I think a lot of these will get reopened, but not as car dealerships because there's a limited number of franchises," Corder said.

Ryndee Carney, manager of brand communications for General Motors Co., echoed Corder's assessment.

"We don't have any plans to open new dealerships in Las Vegas at this time," Carney said. "We feel we have the right number of dealers in the right locations to take care of our customers."

Car dealerships are mostly single-use facilities with about five times as much parking as a retail building of the same size would have. Some also would need to be rezoned for something other than an auto-related use.

Traub is listing Findlay's former Luxury Motors store next to Carmax in the Valley Auto Mall for $6 million. With an 18,000-square-foot building and 500 parking spaces, or 20-to-1 parking ratio, on seven acres, it would be a perfect fit for an educational or religious facility, he said.

The military has also found a new use for a former Dodge dealership in the Centennial area. It's been leased to the U.S. Army Reserve for a training facility, he said.

"There will be adaptive reuse on some of these, and we have seen it in other parts of the country," Traub said. "They might have an industrial use or marshalling or fleet yard. The problem is, zoning does not allow for industrial use."

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.

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Comments

Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background.

1. Mr. Vegas Dec. 24, 2011 | 3:06 p.m. Report Abuse

   Integrity Chrysler did not close due to poor sales. It closed because the owners went broke and couldn't handle the floorplan. Bad management is not the same as poor sales.

2. Renee.Lang Dec. 23, 2011 | 9:06 a.m. Report Abuse

   Las Vegas - the New Detroit - Thanks to Obama, Reid and the lefts liberal "utopian" big government policies.

3. VegasDude2010 May 31, 2011 | 8:16 p.m. Report Abuse

   I'm shocked people like T Corder still have jobs, even though they know nothing about the car business.

4. Bob_Realist May 31, 2011 | 7:59 p.m. Report Abuse

   Move all the Section 8 folks in there in a communal type system and let them WORK their way into TEMPORARY housing. Supply them with all the rice and powdered milk they need to sustain life and make them show a willingness to get off their butts. The only people in town who get a cost of living increase based on the fact they are allowed to vote. Think of the millions of dollars that can be saved and earned by making these people work and possibly cut down on the baby making, I mean check producing, way of life. If they produce a child, cut their rations.Pretty simple eh? The property will be destroyed but then again, take a look at the condition of most Section 8 housing that the tax payer is paying for. If you owned a rental house, would you let the TEMPORARY residents destroy it?

5. William924 May 31, 2011 | 6:52 p.m. Report Abuse

   Can we also rent out the empty space between a politicians ears thats not being used?

6. Alvinjh May 31, 2011 | 1:29 p.m. Report Abuse

   Museums! Make them into museums for the children to come.
   
   Show them pictures of cars that went further than golf-carts, houses with grass and play recorded music made from string, reed and air instruments.
   
   Show them just how far we've come...

7. Hardball May 31, 2011 | 9:38 a.m. Report Abuse

   Or... convert them all into Collectivist Re-Education Camps... teaching the masses about the evils of capitalism, how to use class envy as a tool of guilt transfer, and the auto service bays can be coverted into holding cells for those "rightwingers" who don't agree with the Central Party.
   
   "No socialist system can be established without a political police. They would have to fall back on some form of Gestapo, no doubt very humanely directed in the first instance." -- Winston Churchill's 1945 campaign speech

8. Big Julie May 31, 2011 | 9:37 a.m. Report Abuse

   Sounds like a good setup for bullfighting. Might as well start catering to your new market

9. 40 oz May 31, 2011 | 8:03 a.m. Report Abuse

   They could sell motor scooters, live chickens, pigs, tacos from a hand cart and set up a few more car washes mounted on pickup trucks. Add deafing bass music and Welcome to the third world Amigo.

10. nevadaandy May 31, 2011 | 7:19 a.m. Report Abuse

    Why not convert one of them into a fueling station for new electric vehicles? Valley auto mall's location is a perfect spot for a refueling station, especially as people come in from or head out of Las Vegas.

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