More growth in site

Published on: 17/06/2019

Investors anxious for a big-box hardware outlet to come to market need wait no longer as new Bunnings Warehouse in Queensland is now up for sale.

Opened last week, the Kingaroy store is set to be sold in 2019, according to Burgess Rawson director Billy Holderhead.

Located about 155km northwest of Brisbane, it will be sold through an expressions of interest campaign ending on June 19 at 4pm.

The 24,200 sqm site includes nearly 3200 sqm of land for future expansion.

The building itself is 8014 sqm.

“It’s difficult to find Bunnings investments including land for them to expand into as their store matures, but here you’ve got a substantial piece of land that will future-proof the property for decades,” Mr Holderhead said.

“Only two of the last 14 freestanding Bunnings freeholds brought to market have included vacant land on the title for future expansion.”

The store is in a growth area, with the population of Kingaroy having increased by nearly 50 per cent in 10 years to over 10,000, according to the 2016 census.

It also has a relatively young population, with the median age being of 37.

Meanwhile, following the demerger of the Coles supermarket division last year, Bunnings is now the biggest earner for parent company Wesfarmers.

The hardware chain reported $7 billion of revenue in the last six months of 2018.

Wesfarmers has rolled out a pilot “click and collect” strategy to boost convenience for customers as it moved towards a full online model.

Wesfarmers has also committed to expanding its product range and upgrading store layouts.

Despite the general softening in consumption and housing downturn, the company said the hardware division had seen an almost 8 per cent improvement in earnings before tax in the December half.

The Kingaroy store is being offered with a 10-year lease plus eight six-year options, an income of $800,000 plus GST and outgoings a year, and 2.5 per cent annual increases to rent.

Burgess Rawson has sold nine of the last 22 Bunnings freehold properties bought to market since the start of 2016, with the combined value of the sales at $156 million.

This included the December sale of the chain’s Glenorchy store in Tasmania, which was on a 25-year ground lease.

“The Glenorchy deal traded on a record-breaking yield of 3.13 per cent, with the final bid being 53 per cent higher than the reserve.” Mr Holderhead said.

“With huge demand and a near critical lack of supply, average yields for freestanding Bunnings investments fell sharply from 5.79 per cent in 2017 to 4.79 per cent in 2018.

“The buyer profile for a freestanding Bunnings asset is heavily skewed towards the Victorian private market, and we are already seeing a major level of interest out of Melbourne that will translate to a very strong result for our vendor.”

The Kingaroy property is adjacent to other retailers, including Harvey Norman, BCF, Reece Plumbing, car dealers and Mitre 10.

“Demand for Bunnings-leased freehold investment property is at an all-time high for good reason,” Mr Holderhead said.

“Bunnings is arguably the best retailer in the country averaging an extraordinary annual sales growth of 15.5 per cent since 1995.”

Olga Galacho, Herald Sun


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