Federal tax policy is reshaping year-end investment activity in commercial real estate as 100% bonus depreciation returns to automotive-related properties, creating renewed buyer interest in car washes and quick-lube facilities beyond their operational performance metrics.
Brittany Megrath, CCIM and principal of M Square Commercial, reports that tax advantages are driving transaction urgency as 2025 closes, with completed single-tenant net lease assets attracting buyers seeking to maximize depreciation benefits for the current tax year.
“It’s all about taxes right now for the investment sales deal,” Megrath explains. “Any assets that we have completed, or our clients have completed, this is the great time for people to purchase.”
The depreciation provision had declined incrementally from 100% to 40% before recent federal legislation restored full benefit, concentrating investor focus on qualifying property categories including automotive service facilities.
Quick-Lube Facilities Combine Tax Benefits with Site Flexibility
Quick-Lube properties are emerging as favored investments within the automotive sector, offering bonus depreciation treatment alongside practical development advantages. The facilities typically require smaller footprints than traditional automotive uses, enabling development on constrained sites.
“I like the Quick-Lube asset class. I think it operates a little undercover,” Megrath notes. “They can fit into small spaces, and there are a lot of corporate tenants that are actively expanding in the quick lube space.”
Corporate expansion programs from established operators provide deal flow for developers focused on single-tenant net lease transactions. The combination of favorable tax treatment, tenant creditworthiness, and site flexibility positions quick-lube properties competitively in current market conditions.
Deal Execution Required Private Capital Solutions
Transaction completion in 2025 demanded greater effort compared to previous cycles, with developers increasingly relying on private lending sources when institutional capital proved too restrictive or slow-moving.
“2025 was a fairly slow moving year,” Megrath says. “A lot of deals took a lot of effort and massaging to get across the finish line. People had to turn to private lenders versus institutional lenders.”
The lending source selection carries implications extending beyond interest rates, determining project hold periods and exit strategies. Community banks maintain relationship-focused lending with geographic restrictions, while alternative lenders provide faster execution at different pricing structures.
“For the developer, the lending source really dictates the project,” Megrath explains. “How you put your financing together on any deal really dictates what you can do with the project.”
Timeline constraints can force developers toward higher-cost capital when institutional lenders cannot meet tenant commitment deadlines or construction schedules.
Interest Rate Environment Shapes 2026 Outlook
Market expectations for 2026 center on interest rate trajectory and its influence on single-tenant net lease investment appetite. As yields on certificates of deposit and Treasury securities decline, commercial real estate properties offering 6-7% returns may attract renewed capital.
“As interest rates continue to go down, we are going to see some people get a little bit more excited in investing,” Megrath says. “Things are going to pencil a little bit more as interest rates go down.”
The 100% bonus depreciation provision is expected to continue driving automotive asset class expansion, with car washes and quick-lube facilities benefiting from both tax treatment and corporate tenant growth programs.
Small-footprint tenants across beverage and quick-service categories maintain expansion commitments, adjusting capital strategies rather than growth targets. Banking sector re-engagement with commercial real estate lending will influence whether institutional capital returns to markets or private lenders continue filling financing gaps.
M Square Commercial projects facilitating 30-40 annual transactions across target Southeast and Mid-Atlantic markets, focusing on automotive, beverage, and quick-service retail properties in markets including New Jersey, Pennsylvania, Southern Louisiana and other southeastern markets.
M Square Commercial specializes in site selection and development advisory for single-tenant net lease properties across beverage, automotive, and quick-service retail categories.
Disclosure: Individuals or companies mentioned may have a commercial relationship with KeyCrew.
Disclosure: Individuals or companies mentioned may have a commercial relationship with KeyCrew.
