Rare SA Bunnings set to test retail market

The Bunnings Warehouse at Modbury in South Australia.
The Bunnings Warehouse at Modbury in South Australia.

The strength of Bunnings Warehouses as commercial property investments is set to be tested like never before, with an Adelaide store offered up in the midst of the coronavirus.

With Bunnings stores currently experiencing unprecedented demand as COVID-19 restrictions are ramped up, the outlet at Modbury in the city’s north-east presents one of the year’s rarest opportunities under never-before-seen conditions.

Bunnings-leased properties are considered among the strongest and most sought-after in the industry due to their long and lucrative tenancies, Wesfarmers backing and the fact that they are traditionally very tightly held.

The Modbury property at 933-945 North East Rd features an 8055sqm store on a 14,840sqm site, 100% leased to Bunnings Group Limited and currently generating a net passing income of $1.432 million per annum.

The current 12-year lease runs until 2025 and includes fixed 3% annual increases.

JLL’s Ben Parkinston and Jamie Guerra have been tapped to sell the asset, with expressions of interest closing on Wednesday, April 8.

The Bunnings at Modbury occupies a site spanning more than 14,000sqm.

Parkinson says the best commercial property assets will continue to find active buyers, and particularly in South Australia where stamp duty has been abolished on commercial property.

“Investors are still actively considering secure, well leased retail opportunities in South Australia and this is reflected by strong yields offered by our market coupled with no stamp duty on commercial transactions, leading to strong engagement from private investors and syndicators,” Parkinson says.

“Freestanding retail stores have historically been tightly held, but some owners are now selectively divesting assets to capitalise on the strong demand for defensive assets.”

Guerra says the Modbury is perfectly located for investment.

“Modbury is a well-established retail and commercial precinct, approximately 15km from the Adelaide CBD. The area is an intensely developed regional precinct with a range of showroom, service industry and shopping centre type developments in the locality,” he says.