Fuel and fast food key to leasing sector resilience

Published on: 08/07/2020

Australia’s commercial property leasing market is showing signs of two-paced performance, with fuel retail and quick service restaurants at the head of the field.

As most sectors begin the road to recovery after the height of the COVID-19 pandemic, Burgess Rawson senior leasing executive Arton Meka said some had weathered the challenges better than others.

Fuel and convenience retail and quick service restaurants (QSR) had proven remarkably resilient, Mr Meka said.

“As the COVID-19 pandemic evolves, we’re seeing it affect many industries in varying ways, however its implications aren’t affecting all retail sectors equally,” he said.

“At Burgess Rawson, we have seen strong and consistent demand in the retail fuel and drive-through QSR space.”

Mr Meka said while some industries had been downsized significantly due to a decline in patronage or coronavirus restrictions, in many cases fuel and fast food brands had seen opportunities to grow their national footprint.

“Fuel retail and drive-through QSR are still actively expanding their network plans and looking into the future despite the slowdown in the market. Like many retailers, sales may have been impacted during recent months, however people are still travelling and will always need to refuel with both fuel and food, marking these sectors as essential.”

Mr Meka said some landlords and developers had taken the chance to investigate potential new sites, restructure lease agreements or seek stronger-performing tenants to shore up their assets.

“We’ve been assisting in procuring fuel and QSR retailers to new greenfield developments, as well as negotiating new leases with existing assets,” said Mr Meka.

“For instance, Liberty replacing Caltex in Sydenham, Victoria and in Queensland, a Shell/ Coles Express in Eight Mile Plains. We have also replaced a Red Rooster with a brand new Taco Bell in Roxborough Park, Victoria.”

Mr Meka said that this assistance provides landlords with better structured agreements and increased tenure, in exchange for a nominal landlord contribution towards store refurbishment. This increases the value of their asset in the long term.

“In other cases, we have helped to replace a QSR tenant with a stronger, competing QSR retailer on substantially better lease terms, with minimal investment required on the landlord’s behalf.”

Tenants themselves have also adapted to strengthen their offering, with restaurants revising their food preparation and customer service techniques to minimise handling and provide contactless service, while major brands such as McDonald’s have sold household staples including milk and bread.

The continued consumer demand in these sectors should provide confidence for commercial property landlords and developers who are considering leasing their site to a fuel retail or QSR tenant, Mr Meka said.

“It’s evident that the industries that have been able to persevere or even grow during this period are key asset classes that should form a key part of any investment portfolio, as they have proven they can continue to trade strongly during a downturn.”

For leasing enquiries contact 03 9613 0400 or visit burgessrawson.com.au


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