Understanding Circle K Ground Lease and Cap Rates Trends in the Current Market
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Circle K Ground Leases: Key Trends and Investment Insights (2023-2025)
As one of the largest convenience store chains in the country, Circle K continues to be a dominant player in the commercial real estate market. With demand for essential retail remaining strong, ground-leased Circle K properties offer investors and developers an attractive, stable asset class. Understanding the latest trends in Circle K ground leases—including rental rates, lot sizes, and cap rate movements—is crucial for making informed investment decisions.
Key Market Insights (2023-2025)
Over the past three years, Circle K ground leases have shown clear trends in rent per acre and cap rates, highlighting the evolving dynamics of the convenience store market. These leases, typically 15-20 years in length and corporately guaranteed, provide long-term security for landlords while ensuring high visibility locations for the tenant.
Rent Per Acre Trends:
2023: Average rent per acre was $99,000.
2024: Rent per acre declined to $75,000, driven by an increase in average lot size.
2025: Rent per acre rebounded slightly to $84,000.
Overall Average: Across all comps, rent per acre averaged $83,000.
Lot Size and Rent Per Acre Correlation:
A strong inverse relationship was observed between lot size and rent per acre—larger parcels tend to have lower rent per acre, while smaller lots command higher rents.
In 2024, the average lot size increased from 1.7 acres to 2.7 acres, explaining the temporary dip in rent per acre.
Across all comps, the average lot size for Circle K sites was 2.39 acres.
Cap Rate Trends and Investment Sales (2023-2025)
For investors evaluating Circle K ground leases as a passive income vehicle, cap rate movements provide critical insights into pricing and market expectations.
Cap Rate Trends:
2023: Asking cap rate was 5.00%, while sold cap rates averaged 6.00%, creating a 1.00% spread.
2024: Asking cap rate rose slightly to 5.12%, with sold cap rates averaging 5.41% (0.34% spread).
2025: Asking cap rate is 5.00%, while sold cap rates so far average 5.24% (0.24% spread).
Current On-Market Cap Rates: Average 4.93%, with listings ranging between 4.75%-5.00%.
Impact of Lease Term on Cap Rates:
15-Year Leases: Sold at an average cap rate of 5.57%, with a 0.57% spread between asking and sold prices.
20-Year Leases: Sold at 5.27%, with a much smaller 0.14% spread.
Investment Takeaways
Current listings may be mispriced. The spread between asking and executed cap rates suggests on-market properties should be priced closer to 5.00%-5.25%, with 20-year leases slightly lower around 4.85%-5.10%.
Lot size impacts rental rates. Investors and developers should focus on efficiently sized parcels to maximize rent per acre while maintaining strong site selection criteria.
Cap rates have stabilized. The market for Circle K ground leases remains strong, with corporate-backed leases and essential retail demand providing a stable investment environment.
Conclusion
Circle K ground lease trends from 2023 to 2025 highlight the importance of strategic lot sizing, accurate market pricing, and lease term structures. With cap rates stabilizing and on-market listings potentially mispriced, investors and developers should carefully analyze trends to maximize their returns.
As the demand for high-quality, essential retail assets remains strong, Circle K ground leases continue to present a compelling opportunity for commercial real estate investors. Understanding these market shifts will be crucial in navigating pricing, cap rates, and lease structures in the evolving retail landscape.
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