BlueScope Steel warehouse sells for $11.5m

A big 4800sqm warehouse purpose-built for ASX-listed steel producer BlueScope has attracted one of the tightest yields for an industrial property in Townsville.

The Forge Crt, Bohle, property has been sold at auction in Brisbane through Burgess Rawson and Colliers Townsville for $11.5m, showing a yield of 6.25 per cent.

The buyer is understood to be a private family company out of Melbourne.

Colliers associate director Angelo Castorina said the result was something of a record for industrial property in Townsville.

“The yield of 6.25 per cent for an industrial property is up there as a very tight yield for Townsville. I can’t think of another industrial property which has sold on that yield,” Mr Castorina said.

From an investor’s viewpoint, Mr Castorina said, the attraction was in the quality of the tenant in BlueScope Steel.

The outlook for development in and around Townsville would have also been a factor. “Given the amount of development now happening in Townsville, and in the pipeline for Townsville, BlueScope would have a lot of confidence in its own business for the region. That’s of attraction to investors,” Mr Castorina said.

Burgess Rawson agent Craig Chapman said the sale also showed the strength of the regional market.

Investors were drawn to the tenant and the better value in a regional centre, he said.

“A 6.25 per cent return is definitely better than having money in the bank,” Mr Chapman said.

The 1.5ha holding is all under concrete hardstand used for storage and access to supply steel across northern Queensland.

It is leased to BlueScope for a 15-year term plus options until 2037, with the tenant paying 100 per cent of outgoings. The net annual income is $718,754 plus GST.

Burgess Rawson will stage another auction in Brisbane on December 16.

The one Townsville property on offer is the recently developed Taco Bell drive-through in Currajong, leased to Collins Foods and showing an estimated annual net income of $173,973.

According to Colliers’ latest Townsville snapshot report, the industrial sector is leading a booming property market.

It says industrial property has led the way with total sales jumping 50 per cent to $101.7m in 2020-21.

Record low interest rates are driving the market but industrial property is also favoured because of less impact from Covid-19 and strong demand driven by residential building, mining and major projects.