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Automobile Dealership Trends Expected in 2024

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Introduction

2024 is poised to mark a period of stabilization and cautious optimism within the automobile dealership sector, following the tumultuous years prompted by the pandemic.

Cox Automotive has issued an economic report for 2024, with insights from their Chief Economist, Jonathan Smoke, who foresees a tempered growth outlook due to the impact of high interest rates and gradually receding inflation levels, which are expected to restrain consumer spending. Nevertheless, a transition toward a buyer’s market is on the horizon, characterized by the resurgence of incentives and heightened competition among dealerships, marking a departure from the seller-dominant environment of recent years.

Challenges

In response to the challenges ahead, dealerships are proactively seeking cost-saving measures to uphold profitability. While used car sales and service departments are anticipated to thrive, new car sales face hurdles attributed to escalating manufacturer prices (MSRPs) and dealer costs (invoices), potentially squeezing profit margins amid consumer price sensitivity. Furthermore, the uptick in interest rates and the imperative to invest in electric vehicle (EV) infrastructure pose additional financial strains for dealerships. Consequently, many dealerships are adopting a cautiously optimistic approach towards sales, prioritizing strategies to navigate economic headwinds and secure long-term viability.

Although electric vehicle (EV) sales are projected to continue their upward trajectory, the pace may be slower than initially forecasted, influenced by factors such as fluctuating demand, affordability challenges, and inadequate charging infrastructure. Recent closures of EV plants underscore a recalibration within the industry, revealing that consumer adoption of new EV models in the U.S. market hinges heavily on subsidies or financing incentives.

Trends

The trend towards online vehicle purchasing has gained momentum in recent years, necessitating dealerships to bolster their digital retailing capabilities and enhance online sales and customer service platforms. While physical presence remains integral to dealership success, effective online marketing and management strategies are pivotal in distinguishing between thriving and struggling dealerships. Cox Automotive anticipates a return to equilibrium in the U.S. auto market in 2024, heralding improved prospects for American consumers and fleet buyers who can expect a wider array of choices, enhanced deals, and greater accessibility to online purchasing tools.

Conclusion

Ferguson Appraisals has vast experience appraising automobile dealerships throughout Colorado, Wyoming and South Dakota. For current trends and insights, please contact us to assist with your investment needs. Other market insights can be sought from Cox Automotive at the link below.

Cox Automotive Insights

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Wyoming Hospitality Market Report 2024

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The Wyoming hotel market consists of approximately 475 properties, totaling approximately 29,000 rooms. Notably, the market is characterized by its small hotels, with an average of around 61 rooms per building—significantly below the U.S. average of 89 rooms per building.

Cost-effective accommodations are prevalent, with over 55% of the rooms falling into the Economy or Midscale categories. The trailing 12-month occupancy rate stands at 56.5%, below the national average of 63.0% for the same period. Although Wyoming initially experienced the impact of COVID-19 with an annualized occupancy drop to 42.3%, its recovery has been slower compared to other hospitality markets. However, RevPAR and ADR have increased drastically throughout much of the state over the last few years.

Market data is compiled by Ferguson Appraisals, LLC

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Black Hills Residential Real Estate Report 2024

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The residential real estate market in Rapid City, South Dakota, has seen strong activity, driven by both local and out-of-state buyers. Factors contributing to this trend include the city’s scenic location near the Black Hills National Forest, Mount Rushmore, Crazy Horse and Sylvan Lake.

The Black Hills area of South Dakota offers affordable cost of living, and strong job market. Over recent years, Rapid City has experienced a sharp rise in home prices, reflecting a nationwide trend of increasing demand and limited housing supply. New construction has been underway, but inventory remains relatively tight, making it a competitive market for buyers. This is especially true for entry-level home buyers.

The market has also seen a mix of single-family homes, townhomes, and rental properties, with a growing interest in suburban and rural areas just outside the city. Overall, Rapid City’s residential real estate market is expected to remain active, with steady demand driven by lifestyle preferences, employment opportunities, and the region’s appeal as a desirable place to live.

Key residential statistics indicated by the local MLS indicate the following: 2024 (YTD) sales indicate a change in year-over-year average sale price of 5%. The change in year-over-year median sale price is 2%. The median annual percentage change in sale price over the last four years is 9% per year. The total sales volume in 2023 was $773,278,397 compared to the previous year’s total sales volume of $916,768,663. The 2024 (YTD) quantity of residential sales equals 1239. The quantity of sales in 2023 equaled 1993. Median days on market have ranged from 5 days to 9 days, based on the MLS data. Please note that current year statistics are incomplete.

Prices increased drastically during 2020 with low interest rates and pent-up demand for housing. Sales of homes in the area are typically purchased with conventional, FHA or VA financing with limited negotiating. The most predominant exposure period is two months or less with the median sale price being 97% of the list price.

For more detailed insights, feel free to reach out to Dustin Ferguson for the latest trends. Attached is the latest trends report created by Ferguson Appraisals, LLC.

Read More at: Black Hills SD Residential Real Estate Trends Report

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Denver, CO Office Sector Trends in 2024

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In 2024, Denver is grappling with one of the highest vacancy rates, standing at 16.3%. The pervasive challenge of low office utilization, seen nationwide, is particularly pronounced in Denver. This susceptibility is attributed to the city’s significant reliance on the tech sector workforce, known for their prominent adoption of flexible workplace arrangements.

The prevailing high-interest rate environment has expedited this trend. Faced with economic uncertainties and slower growth, tech companies, in an effort to cut costs, are laying off workers and shedding office space. Much of this surplus office space is entering the sublease market, currently totaling around 6.0 million SF. While this represents a decrease from the peak observed earlier in the year at 7.9 million SF, it remains a substantial obstacle for landlords leasing direct space.

The CBD (Central Business District) is particularly impacted, with 5.8% of office space available for sublease—well above the 3.2% average across the entire Denver market. Notably, average asking rents for sublease listings in the CBD are 47% lower than direct listings. This is a significant shift from late 2019 when both direct and sublease listings were priced equally, reflecting the increased challenges in the current market.

Denver is anticipated to struggle with elevated office availability for an extended period, as leasing trends indicate companies are adjusting their footprints to reduce space-per-worker requirements upon lease expiration. Leases signed in the third quarter averaged around 3,400 SF, marking an improvement from the trough observed in early 2021 at 2,600 SF. Nevertheless, this still represents a roughly 40% decrease in average lease size since its peak in 2015.

Additional research is provided by CoStar in the link below.

Read More at: Denver Office Market Report

Market data is provided by CoStar Analytics. Ferguson Appraisals, LLC is a licensed user of CoStar Analytics and has received permission to share the published report.