Auto Dealers | July 2025 Dealers build for tomorrow: The latest in dealership design and construction

Auto retail designs must accommodate a range of land availability and environmental demands in large metro and smaller regional markets.

Vertical construction has become a defining trend in major urban areas, where land availability is limited or prohibitively expensive. "Dealerships are being built on compact sites with underground service bays and multi-level parking structures," says Stancill. "Even in markets like Texas, where land is more plentiful, strict flood control and retention regulations are driving dealers toward vertical formats, such as service shops built above underground retention systems,” adds Walters.

Meanwhile, smaller markets are seeing a surge in dealership construction. Walters says, “These lower-cost areas offer easier entry points for both growing dealer groups and managers looking to buy their first location. Some of this activity reflects a ‘hub-and-spoke' expansion model, where groups with a flagship store in a metro area establish satellite locations in surrounding smaller towns.”

While earlier interest in mixed-use dealership sites combining retail and multifamily housing has cooled, primarily due to complexity in project structuring and requirements for more sophisticated financing, a few dealers are exploring alternative investments. Jason W. Smith says, “We’ve recently seen a dealer who successfully partnered with a commercial real estate developer who brought real estate expertise, sweat equity, and cash to invest in an income-producing project.” These ventures remain rare but may signal a longer-term diversification strategy for dealer groups looking to invest surplus capital.

The shift toward digital retailing and buying has impacted space allocation. "Digital shopping hasn't drastically overhauled building design. The fundamentals of the business haven't really changed," says Stancill. "But we are seeing less space dedicated to more-expensive-to-build showrooms in favor of focus on business development center functions and back-office operations." Consolidation also affects space allocation, offering more opportunities to share back-office functions across stores.

The absolute priority remains fixed operations. “The money’s made in parts and service,” Stancill emphasized. “You have to be prepared to handle high service demand, especially when customers are holding onto their vehicles longer as they are under today’s economic conditions.”

The service experience for a customer is a prime focus. “We’re seeing a lot more energy focused on the customer journey in service—from the minute they drive onto the lot for drop-off, through the lounge experience, and on to pick-up,” said Stancill. “Dealers want that process to be as simple, transparent, and fast as possible.

“We’re seeing wider drive lanes, a return to stationing advisors on the drive, and more interactive check-in processes,” added Walters. “Often, RFID technology recognizes the customer’s car when they arrive. Ideally, there’s someone right there to greet them. It’s no longer a waiting game.”

Used car sales have become a focal point of dealership strategy, reshaping dealership design. “You used to see isolated used car buildings or towers," says Walters. "Now, the blended model is dominant. Whether a customer is buying used or new, they're coming through the same facility.”

Stancill added: “We’re seeing blended new and used functions in recent designs. This gives sales teams the same access to support functions, while used car customers get a step up in experience that’s more in line with the new car buyer.”  “More and more, legacy, isolated buildings are being repurposed for a specialized sales experience, like Stellantis’s Jeep initiative, or for another support operation,” said Walters.

The enthusiasm for sustainability has cooled. “The interest from clients on environmental or energy issues is very low,” Stancill noted. “There are some geographical differences based on energy cost or available tax credits. In California, we have more projects using solar.”

Walters adds, “With dealers doing everything they can to hold down construction costs, energy-focused investments need a demonstrable return to make their way into a project.”

The energy codes for today's buildings dictate minimum standards for energy efficiency. "The energy codes have actually evolved so much that many modern buildings are, by default, close to what used to be LEED standard," Stancill explained. To follow those codes, the design and engineering teams make prudent energy efficiency choices during mechanical and electrical engineering work. Without being explicitly designed as a "green" building, the resulting facilities have a measure of energy efficiency baked in.

OEM facility image programs are other key influences on dealership aesthetics and layouts. “There’s flexibility in most of the brand image programs if you know what to ask for. Most OEMs will work with dealers and their design and construction teams to offer alternates and secondary solutions that can save a dealer half a million to a million dollars on a ground-up store,” Walters noted.

The good news for dealers is that most programs are getting more flexible, but timing matters. "When a new image program launches, that's when requirements are often pushed by the OEM teams without being fully fleshed out. Understanding what's required, getting feedback from construction partners about costs and complexity, and hammering out adjustments with the OEM team adds design time and frustration," Stancill said. "Over time, programs evolve and become more flexible. If you're the first dealer in, expect challenges as you work through the early development of a new program."

Permitting delays remain among the biggest hurdles to getting dealership projects off the ground. "In some markets, like parts of Florida or California, it can take two years to get a site permit if your design and construction parties aren't on top of their game," Stancill warned. Walters added, "In Austin, Texas, 58 weeks for a site development permit is what's advertised. That's the published timeline."

Smith, Stancill, and Walters outline four best practices to develop the building project you want:

1. Build a comprehensive team. “One of the best things an owner can do is pull together the full team from day one—designer, engineer, contractor—all of them,” Stancill said. “It reduces uncertainty and helps owners make informed decisions.”
2. Make communication a top priority. Start by investing in in-person screening interviews with design and construction partners. Then, take the time to meet with the design and construction teams bimonthly, or more often as needed. Everyone, including the dealership leadership, has a role to play. Walters adds, “If you drop the ball on just one item, like the simple CO2 removal system in the shop, you can set yourself up for extra costs in rework, delays, and last-minute scrambling.”
3. Prepare to learn. “A dealer might know automotive well, but they don’t do construction projects every day. Absorb the building education your design and construction partners can provide to avoid a lot of headaches.” Stancill adds, “As design partners, we know that the more we can reduce the unknowns for owners, the better positioned they are to make smart investments.”
4. Engage in early strategic dialogue with your banking partners to develop the financial modeling and capital structure needed for your commercial real estate plans. Starting third-party due diligence early—surveys, titles, appraisals, and environmental reviews—will keep your project on schedule.