Why Private Equity Is Moving From Multifamily Into Car Washes and Flex Industrial

Written by:

Steve Marcinuk

Date:

05 Jun 2026

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After years of steady returns, multifamily real estate is losing its grip on private equity capital. New supply has flooded key markets, rents have flattened or declined in many metros, and interest rates remain elevated, compressing margins and extending hold periods. In response, a growing number of operators are redirecting investment toward asset classes that were once considered niche: car care facilities, flex industrial, and healthcare properties.

Chris Salerno, Founder and CEO of QC Capital Group, has been navigating this transition deliberately. With roughly $300 million in assets acquired across the Southeast and East Coast, his firm has moved away from multifamily and toward what he describes as necessity-based, operationally intensive businesses that generate strong cash flow and favorable tax treatment.

From Residential Brokerage to Private Equity

Salerno’s path into commercial real estate began on the residential side at Keller Williams, where he was already investing in property alongside his brokerage work. The pivot to private equity came down to tax efficiency and scale.

“You can only scale so much in the residential industry,” he explains. “In the commercial industry, you have a larger room to scale, and that also gives you the ability to help more people participate in these private offerings.”

Today, QC Capital operates exclusively through Reg D 506(c) offerings, a regulatory structure that limits participation to accredited investors. Registered investment advisors and broker-dealers have been increasingly active in the firm’s recent capital raises.

The Car Care Thesis

The most distinctive aspect of QC Capital’s current strategy is its focus on express car-wash tunnels and express oil-change facilities. Major private equity firms, including Warburg Pincus, KKR, and Leonard Green & Partners, have all built positions in the sector, signaling institutional confidence in the category.

The underlying thesis centers on consumer behavior driven by rising vehicle costs. Average monthly car payments in the United States have risen from roughly $483 in 2020 to over $775 today, according to Salerno. As ownership becomes more expensive, consumers hold onto their cars longer and spend more on maintenance.

“It is a necessity,” he says. “People want to take care of their vehicles, and they’re holding on to them a lot longer.”

A generational ownership dynamic creates additional opportunity. Many express car wash and oil change businesses were built by operators now in their 60s and 70s whose children have little interest in taking over. That fragmentation opens acquisition opportunities for consolidators like QC Capital to step in at reasonable valuations.

The unit economics reinforce the appeal. Salerno notes that running a car through an express tunnel costs approximately 78 cents, creating wide revenue margins on subscriptions and single washes alike. Membership models add stability through recurring monthly revenue, helping smooth out slower periods, including extended rainy seasons that have affected Southeast markets.

What Investors Often Underestimate

Despite growing institutional interest, Salerno is candid about the learning curve. The most common misconception is underestimating how operationally intensive the business actually is.

“I think they may think it’s as easy as washing a car, which it’s definitely not,” he says. For first-time investors considering the sector, his advice is straightforward: visit a local express car wash, observe the throughput, and think through the economics of what you’re watching.

Site selection is equally critical. Traffic count, median household income, and local demographics are the primary filters QC Capital applies before moving forward on any development or acquisition. A location that fails on those metrics is disqualifying, regardless of other factors.

Stepping Back from Multifamily

QC Capital’s exit from much of its multifamily exposure was a deliberate call made ahead of the interest rate cycle. The firm sold off roughly half of its multifamily portfolio before rates moved sharply higher, having identified weakening fundamentals early enough to act.

“We saw the fundamentals weren’t strong,” Salerno says. He views multifamily as a difficult environment for the next four to six years, citing elevated supply, flat or declining rents in many markets, and rate pressure that has yet to ease meaningfully.

He stops short of writing off the sector entirely. Berkshire Hathaway’s recent acquisition of Taylor Morrison, he notes, reflects genuine long-term demand for additional housing – particularly affordable housing. But the opportunity depends heavily on asset type and market geography. For QC Capital, other asset classes are currently generating better cash flow and more favorable tax outcomes for their investors.

Flex Industrial and the Broader Portfolio

Beyond car care, Flex Small-Bay Industrial has become a meaningful part of QC Capital’s portfolio. Salerno describes it as an area with significant growth potential, though he offers less detail on the specific thesis. Healthcare investments round out the current mix.

The common thread across these holdings is a preference for physical, operationally grounded businesses that serve real demand. That posture aligns with what Salerno says he is hearing from his investor base, including RIAs and broker-dealers who have been increasing their allocations to private real estate despite broader uncertainty.

“We’re actually seeing more allocation to the private sector compared to the public sector,” he says, describing the current mood among accredited investors as measured confidence rather than retreat.

AI as an Operational Tool

Salerno identifies artificial intelligence as a significant force likely to reshape private equity operations over the coming years. At QC Capital, AI is already being used to analyze portfolio data and improve internal systems. The firm has brought in third-party consultants to evaluate how it deploys the technology.

In car care specifically, he sees AI playing a role in site selection and development efficiency, helping operators make better location decisions with more data and less guesswork.

What Comes Next

The broader pattern QC Capital represents, moving away from multifamily toward necessity-driven, operationally intensive businesses, is not unique to one firm. But it reflects a specific moment in commercial real estate where the assumptions that made multifamily a default allocation no longer hold. Elevated supply pipelines, stubborn cap rate compression, and uncertain rent growth have forced operators to look elsewhere for yield.

For investors tracking how capital is being redeployed in this environment, the question is whether asset classes like car care and flex industrial can absorb institutional attention without repeating the same cycle of overbuilding and margin compression that now weighs on multifamily. The early economics are favorable, but the sector’s ability to maintain those returns as more capital enters remains unproven.

About the Expert: Chris Salerno is the Founder and CEO of QC Capital Group, a private equity real estate firm with approximately $300 million in assets acquired across the Southeast and East Coast. The firm operates exclusively through Reg D 506(c) offerings limited to accredited investors.

This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.