Private equity firms face a fundamental question when expanding portfolios: Should we build or buy? For industries like car washes and flex industrial space, the answer often comes down to balancing speed, risk, and long-term upside.
A recent Wall Street Journal article, “BlackRock Acquires ElmTree Funds as It Continues Private-Markets Push”, highlights why both development and acquisitions are critical tools in the private equity playbook. BlackRock’s purchase of ElmTree, a fund specializing in build-to-suit industrial properties and net-lease portfolios, underscores how institutional investors are blending strategies to achieve growth and resilience.
Why Development?
Development offers full control over the design, location, and technology of new assets. In both car washes and flex space, this can translate into premium rents and optimized operational efficiency.
- Car Washes: Ground-up builds allow for the latest automation, tailored traffic flow, and prime site selection, which can drive higher subscription revenue and longer-term value.
- Flex Space: Build-to-suit facilities let investors meet specific tenant needs, like e-commerce-ready clear heights or specialized electrical capacity, commanding higher rents.
With falling Treasury yields lowering borrowing costs, development projects that once seemed marginal are now more financially viable.
Why Acquisitions?
Acquisitions remain a fast track to scale, especially when capital needs to be deployed quickly.
- Car Washes: Buying an existing chain or single-site operator offers immediate cash flow, established memberships, and proven customer loyalty.
- Flex Space: Existing properties with stabilized tenants provide predictable income and quicker returns, particularly when cap-rate compression boosts valuations.
The WSJ article emphasizes how BlackRock’s acquisition of ElmTree delivers instant access to a $7.3 billion portfolio of income-generating properties, an example of how acquisitions can rapidly expand a platform’s footprint.
The Hybrid Advantage
The BlackRock–ElmTree deal highlights the power of combining acquisition with development:
- Acquisitions deliver stability and scale, while
- Development drives customization and higher margins over time.
For QC Capital, we employ both strategies to diversify risk and maximize returns—whether building next-generation AquaShine Express Car Wash locations or targeting flex industrial properties with strong tenant demand.
Key Takeaways for Investors
- Acquisition = Immediate Income
Buying proven assets offers quick cash flow and reduced execution risk. - Development = Long-Term Upside
Building from scratch allows for differentiation and control, potentially increasing IRR when executed well. - Market Tailwinds Favor Both
Lower debt costs improve returns on both acquisitions and development projects. - Diversification Wins
A blended approach can provide stability (via acquisitions) and growth (via development).
The private equity landscape is evolving. As seen with BlackRock’s strategic move, the most successful investors aren’t choosing between development and acquisitions, they’re leveraging both. In car washes and flex space, this dual strategy provides resilient cash flow today and value creation for the future.
Want to learn more about how QC Capital is leveraging both strategies across alternative asset classes?
Contact our team at [email protected] to explore current investment opportunities.