Bunnings, KFC and ‘pandemic-proof’ properties feature in $210m auction
A Bunnings, fast food stores like KFC and childcare centres feature in a $210 million commercial property auction as investors chase “pandemic-proof” essential services assets with long leases and big-name tenants.
The newly-opened Bunnings will headline Burgess Rawson’s largest portfolio auction when 57 properties go under the hammer over two days.
Burgess Rawson director Jamie Perlinger said the COVID-19 pandemic has increased demand for essential services investments with long-term leases and strong tenants.
“The majority of the properties that were selling during COVID and now into 2021 have been what you could call ‘pandemic proof’ – part of the essential service businesses that have traded through these trying times,” Mr Perlinger said.
“That’s what the buyers have focused on – anything from childcare to fuel to supermarkets to government and fast food, especially, have all been well sought-after in the marketplace.”
Essential services assets across fast food, fuel, childcare, medical, government, banking and retail will feature in Burgess Rawson’s Sydney auction on 22 June and Melbourne auction on 23 June, with Wednesday’s event linked to a Brisbane auction room.
The Melbourne portfolio features 31 properties totalling $150 million, while 26 properties worth about $60 million will be auctioned in Sydney.
Burgess Rawson associate director of sales Kieran Bourke said demand for solid commercial investments is at a record high.
“Investors are turning to commercial property for long-term and sturdy investment opportunities,” Mr Bourke said.
“With long leases, quality, big-name tenants and fixed annual rent increases, the assets heading to auction this month offer investors stability and we are expecting competitive bidding come auction day.”
Mr Perlinger said there has been a strong level of enquiry for the properties, with Melbourne’s lockdown not dampening interest in the large end-of-financial year auction.
“The market’s strong for well sought-after properties such as these essential service investments, but also the other side of it is buyers and sellers needing to either have their money invested prior to the end of the financial year or sold in this financial year,” he said.
Strong appetite for Bunnings and fast food assets
The new Bunnings in Plainland, in Queensland’s Lockyer Valley, is the most expensive commercial property on offer.
The warehouse, which opened earlier this month, is expected to sell for about $19 million in the Melbourne auction.
It is only the second freestanding Bunnings to be publicly marketed in Australia this year and is a rare opportunity to secure one of the popular investments for less than $25 million.
“There’s been huge amounts of enquiry on that,” Mr Perlinger said.
Investors have also been eager to secure an entry-level KFC investment in the NSW coastal town of Forster, with Burgess Rawson receiving almost 300 enquiries about the recently-refurbished store that is being offered below replacement value.
A state-of-the-art oyster processing facility in Batemans Bay on the NSW south coast is up for sale as investors search for industrial assets.
“This top-tier industrial food processing facility has been a hit with investors seeking the security of this asset class and the attractiveness of the burgeoning south coast region,” Burgess Rawson said.
With strong investor demand for supermarkets and neighbourhood shopping centres during the pandemic, the auction includes a fully-leased shopping centre in the Brisbane suburb of Sunnybank Hills and a retail centre in Brisbane’s Oxley.
High demand for childcare and other services
Burgess Rawson director and childcare specialist Adam Thomas said demand for childcare assets continues to grow.
“The childcare investment market has started the calendar year with record results and yield compression,” Mr Thomas said.
“While childcare investment had been traditionally seen as a specialist asset class, experienced commercial investors are increasingly looking at childcare, driving even more demand in the first quarter.”
The Victorian centres include an established facility in the inner Melbourne suburb of Glen Huntly and a childcare centre in the Geelong suburb of Belmont that has the added bonus of a drive-through coffee store.
Several service stations are on offer as fuel and retail convenience assets continue to be highly sought-after during COVID.
The essential services properties range in price from $750,000 to $19 million for the Melbourne portfolio and $650,000 to $9 million for the Sydney portfolio.