Bumpy road ahead for Beaurepaires commercial sites as tyre company deflates

It’s a name synonymous with tyres down under but now the future looks deflated for Beaurepaires after more than a century in business.

With its imminent closure expected, as many as 100 retail outlets could be shut down and as many as 700 workers could lose their jobs.

Hopes of saving one of the oldest and largest tyre retailers in Australia fell flat when conversations between Beaurepaires’ parent company, Goodyear Dunlop Tyres Australia – a subsidiary of the US Goodyear Tire and Rubber Company – and rival retailer Bob Jane Corporation collapsed.

As a result, the future of Beaurepaires’ commercial sites remains up in the air with one insider revealing to media outlets that despite a buyout of all locations being offered to Bob Jane, the one-time competitor has “chosen the select few that actually make money”.

The future of Beaurepaires’ commercial assets remain up in the air, although industrial assets remain in high demand nationwide. Picture: realcommercial.com.au

The closures come one year after the company announced it wanted to improve profitability in Australia and New Zealand, with news.com.au reporting some Beaurepaires stores were converted to Goodyear Autocare outlets in the past year.

The company was founded in 1922 in Melbourne by Sir Frank Beaurepaire, the self-made son of tram conductor, World War One hero, Olympic swimmer and Lord Mayor who was knighted in 1942.

By 1926, Beaurepaire began expanding the company beyond Melbourne and eventually spread out nationally.

As recently as 2019, Beaurepaires won the official naming rights to sponsor the Albert Park Supercars race but operations could now cease before the end of the year. That rumour, however, has been disputed by a human resources representative at Goodyear.

Prime real estate or investment risk?

The Beaurepaires website currently claims the company has “over 240 company-owned and operated stores,” with investors snapping up several sites in recent years with Beaurepaires outlets as tenants.

As recently as November 2023, a Beaurepaires site in the regional Victorian town of Echuca was sold as a tenanted investment on a 5+5+5 year lease.

In December 2020, an unnamed private investor paid $1.01 million for a fully leased service centre in Keysborough Melbourne. The 1671sq m property, on the corner of Cambria and Cheltenham Rds, sold at auction for about $100,000 above the reserve price. It came complete with a new five-year lease to Beaurepaires which at the time represented a 6.17% yield.

Several tenanted sites have sold in recent years, but investors may have no problems releasing the sites. Picture: realcommercial.com.au

Commercial buyer’s agent Robert Martin of Rethink Investing said industrial properties like Beaurepaires sites would be sought after in metropolitan areas and are unlikely to sit empty for long.

“If a company like that has decided to pull the pin, then they probably have a closure date in mind so owners could start pre-listing it to the market to avoid any significant vacancy,” he said.

But other locations could be facing a different story, he warned.

“I’d be a bit worried for those landlords in regional areas, especially those one-economy towns. They could be looking at vacancies of six months or more.”

The particular nature of the tyre business could also throw a spanner in the works, Mr Martin said.

“Every lease is very different but one thing you’d have to look out for with such sites is the fact it’s automotive. There can be issues around contamination because they deal with oils and other flammable fluids,” he said.

“That could be an issue when trying to quickly refill these leases, because not any type of business can go straight in.”

Automotive assets may pose contamination issues that require a large investment to repurpose. Picture: realcommercial.com.au

He added that due to the type of sites and the zoning, it was most likely other automotive companies, electrical supplies or manufacturing businesses would move in.

“Then you’ve got to consider how prominent those sites are too, the Beaurepaires branding is very unique so it wouldn’t be cheap to turn those back into blank canvases again.”

Industrial sites remain hot property

Even though several Beaurepaires sites could soon be coming to market for sale or lease, Mr Martin said when it comes to commercial real estate as an investment, industrial sites are “hot property”.

“It’s the absolute flavour of the moment. Since COVID we’ve seen retail moving more online so people are looking at industrial real estate as a low-risk option. There’s an absolute need for industrial right now and that can include some office layouts but also storage is huge. These big retailers who’ve moved online need places to store their stock,” he said.

Beaurepaires has a long, reliable tenancy history after more than a century in business. Picture: realcommercial.com.au

“Investors like industrial because a commercial tenant usually pays all the outgoings and unlike in residential where it’s a gross return, it’s a net return so it’s very attractive.

“But having said that, you still need to do your due diligence. Up until a few months ago, I would’ve looked at a Beaurepaires site – a company that’s been around for more than a century – and thought ‘What a great investment, they’re not going anywhere’.”

Read more: Industrial and tourism assets shine in 2023.