One of Australia’s biggest Bunnings warehouses is up for sale

One of the largest Bunnings warehouses in Australia is for sale. Picture:
One of the largest Bunnings warehouses in Australia is for sale. Picture:

This story has been updated, click here to see the sale price for the Hoppers Crossing Bunnings.

Investors are keen to secure one of Australia’s largest Bunnings warehouses and its huge site, with an Amart Furniture store an added bonus in the sale.

The Bunnings and Amart site in Melbourne’s Hoppers Crossing is attracting strong interest from a range of potential buyers.

The 21,670sqm Bunnings sits on a massive 55,387sqm site in Victoria’s biggest large format retail (LFR) precinct.

The selling agents at Burgess Rawson describe it as the best Bunnings investment ever offered for sale publicly.

“Given the scale of the Bunnings store, the quality of its location, forecast growth in the trade catchment, size of the landholding and its robust lease structure, we’ve backed the property as the best Bunnings freehold ever offered on the open market,” Burgess Rawson partner Billy Holderhead said.

Overhead view of the huge Bunnings and Amart property in Melbourne's Hoppers Crossing

The huge Bunnings and Amart site is part of Victoria’s biggest large format retail precinct. Picture:

Mr Holderhead also described it as a “once in a lifetime” opportunity, expecting whoever bought the Bunnings site from the family that has owned the property for decades might “never let go of it”.

He expected strong competition for Bunnings Hoppers Crossing, despite some commercial property investors being a little cautious due to the current economic situation.

“Others are saying ‘this is probably never going to be sold again in my lifetime so regardless of what the market’s doing I’m going to have to have a really good look at it and compete pretty hard for it’.

“We’re experiencing that flight to quality. This property is feeding into that because they don’t come much better than this.”

Mr Holderhead said there has been very strong interest in the Bunnings and Amart site, with Burgess Rawson agents speaking to 146 groups about the property so far in the initial stages of the expressions of interest campaign.

The Hoppers Crossing warehouse is only the fifth Bunnings to be offered for sale publicly this year. A price estimate has not been disclosed.

Mr Holderhead expected commercial property investors who had not bought a Bunnings previously to be among those interested in the asset.

“What happens is, if a Bunnings goes to market, you find a lot of new potential buyers in the market every single time. It doesn’t matter what price point, it doesn’t matter where it is, you always discover a new buyer in the market that you would not have identified when you run a closed, quiet, off-market process.”

Burgess Rawson sold Bunnings Mount Isa, a newly-opened 5815sqm warehouse in Queensland, for $16.2 million in May to a private investor from New Zealand.

Mr Holderhead noted the underbidder for the Mount Isa warehouse was a private investor in commercial property who had not expressed an interest in a Bunnings previously.

“He and his family had never enquired with us on a Bunnings before. We knew them, we were talking to them about other matters, but they really liked the simplicity that comes with a Bunnings freehold investment and they were super competitive at auction.”

Bunnings investments are highly prized

Wesfarmers-owned Bunnings stores have become even more highly prized during the pandemic, with private buyers, funds, syndicates and institutional investors attracted to the blue chip covenant, long lease terms and annual rental review mechanism.

View from the car park of the front entrance of Bunnings Hoppers Crossing, with customers walking inside.

Bunnings warehouses have long been an investor favourite. Picture:

Bunnings Hoppers Crossing first opened in 2013 and the net lease runs until September 2028, with five further five-year options. Mr Holderhead said it is a unique lease structure with fixed 3% annual rent increases.

Backing up the statement about the best ever Bunnings offered publicly, he pointed to the size of the store, the land size, the warehouse and car parking being all on the ground level, the strong lease terms and the site’s dedicated traffic lights.

“It’s one of their biggest stores, their customers have easy access via the traffic lights and 568 car spaces on site. The way the buyers are looking at it, Bunnings will be there for quite some time.”

Mr Holderhead said the average overall site area for Bunnings sold since May 2019 is 26,640sqm and the Hoppers Crossing property is double that size.

“A lot of the larger Bunnings transactions in recent years have been multilevel stores – South Nowra, Preston and Eastgardens for example. Customers and property investors are the same; if they have the choice, they prefer on-grade car parking and much larger landholdings… this has that.”

Bunnings provides 74% of the rent for property, which has a projected total net income of $4.27 million as of October based on the Amart’s next rent review tied to the consumer price index.

View from the car park of customers and cars outside the Amart Furniture store in Hoppers Crossing

Amart Furniture has renewed its lease at the Hoppers Crossing site for a new 10-year term. Picture:

Amart Furniture has renewed the lease for the 4809sqm store, which opened in 2014, and Mr Holderhead said the retailer plans to upgrade the fit-out.

“Feedback has been positive about the brand new 10-year lease and exposure to CPI in that component of the income stream,” he said.

Wyndham City has been Australia’s fastest-growing local government area over the last 20 years, according to property economics consultancy Deep End Services, and Mr Holderhead noted further growth is expected.

The Hoppers Crossing LFR precinct has the largest concentration of LFR in Victoria, with 114,000sqm of floor space, and the third largest in Australia. Deep End has forecast the annual LFR spending market in the precinct’s trade catchment will grow by 90% to $2.46 billion by 2036.

The biggest Bunnings sale so far this year is Charter Hall’s $65.3 million off-market purchase of Bunnings Nowra, a 17,982sqm warehouse with undercroft parking on a 29,350sqm site on the NSW South Coast.