Queensland Bunnings sells on record low yield

The Bunnings Warehouse at Lawnton.
The Bunnings Warehouse at Lawnton.

The white-hot market for Bunnings Warehouses has been stoked again, with ten investors waging a heated auction battle for a Queensland Bunnings that pushed its price to $18.68 million.

Billed as a rare chance to secure a Bunnings-leased property for less than $20 million, intense bidding from investors in three states saw the Lawnton asset flirt with that mark at Burgess Rawson’s latest Investment Portfolio Auction.

At the agency’s 130th Portfolio Auction campaign, Burgess Rawson sold nine of 11 properties on offer at the event at Crown Casino for a combined $41.116 million and at an 83% clearance rate.

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The price for the Bunnings represented a 4.69% yield – the lowest ever for a Queensland Bunnings put to market.

The 6784sqm store at 727 Gympie Rd, which was recently redeveloped and expanded by Bunnings and De Luca Constructions, featured a new 10-year lease to the home improvement market leader, and its sale comes as Bunnings’ become an increasingly rare and sought-after commodity on the market.

Bunnings Lawnton

The Bunnings at Lawnton was completely redesigned and redeveloped.

It was only the third Bunnings with a sub-$20 million price tag to sell Australia-wide in the past three years, and comes after a Bunnings at Glenorchy in Tasmania traded in December for $14.06 million on a record 3.13% yield.

Burgess Rawson director Billy Holderhead says the property generated a remarkable 290 enquiries and had huge interest on auction day.

“We had four or five buyers at $18 million and above. The auction process worked beautifully and gave the vendor a result well beyond what we would have expected to achieve if it had been sold via expressions of interest,” Holderhead says.

“It sold well beyond ours and the vendor’s expectations.”

Burgess Rawson Queensland director Pat Kelly says the result is a strong vote of confidence in the Queensland market.

“This is the first Bunnings to sell on-market in Queensland in more than two years, and is among the tightest yields ever achieved for a Bunnings anywhere in Australia.”

The Mount Barker childcare centre.

Among the other properties to sell were four that were snapped up prior to auction, including childcare centres at McDowall near Brisbane and Mount Barker near Adelaide, which sold for $4.545 million and $6.7 million, respectively.

An office leased to Kumon Education at Cranbourne in Melbourne’s south-east also sold for $500,000 on a 5.97% yield, while a major Bendigo office complex was secured for $3.95 million.

At the auction, a funeral parlour leased to Mackay’s largest funeral operator fetched $1.7 million, representing a 6.29% yield, and a StarTrack Express industrial facility in Bendigo sold for $2.271 million on a yield of 6.46%.

The Mackay Funerals property.

A Domino’s pizza outlet in Geraldton saw good interest before selling for $800,000, while another childcare centre at Walkerstone in Mackay reached $1.97 million on an 8.58% yield.

Holderhead says commercial property investors are surfacing in greater numbers and with renewed purpose in the new financial year.

“The bidding on almost every property was very hotly contested. They were flying out the door,” he says.

“As an example, the buyer for the Mackay funeral home was in Melbourne, but there were also two underbidders in Melbourne, two bidders on the phone in Sydney, two on the Gold Coast, another in Mackay, and even one on an outback cattle farm in Queensland.”

“Commercial property is clearly back in focus, and investors are pushing hard for the security of bricks and mortar real estate.”