Strong demand for defensive QLD commercial properties amid COVID-19

Michael Collins • 23/07/2020

Private investment into defensive Queensland-based commercial property assets within essential service industries has remained robust during the COVID-19 era, as local and interstate high net worth investors continue to pursue yield.

Despite the market uncertainty following the onset of COVID-19 in March 2020, Cushman & Wakefield’s National Investment Sales team has witnessed significant demand for assets with long-term leases in place to high-quality tenants in the fast food, childcare and fuel and convenience retail segments.

The demand is evidenced by a range of transactions that have occurred since March, managed by Cushman & Wakefield’s Michael Collins and Tom Moreland, who said that there was pent up demand for these assets given the low availability of stock nationally.

These included:

  • The off-market sale of Hungry Jack’s in Kippa-Ring for $4.7m to a Sydney based investor who purchased the property sight unseen within 48 hours, on a 4.7% yield. The 2,565sqm freestanding drive-thru ‘pad site’ is leased to Hungry Jacks on a 12-year term to 2030 with options to extend to 2050
  •  The off-market sale of the Woolworths/EG Fuels service station in Kallangur for $1.775 million to a Sydneybased investors on a 4.94% yield, sight unseen. The 1,743 sqm site is leased to Woolworths/EG on a 15-year lease to 2030 with options to extend to 2050
  •  The sale of Woolworths /EG Fuels Gympie for $1.66 million to a local investor on a 5% yield. More than 45 inquiries were received with the property selling within 7 days. The 1,970 sqm site is leased to Woolworths Fuel on a 15-year term to 2030 with options to extend to 2050
  • The off-market sale of the newly built Story House Childcare Centre in Toowoomba for $3.735m to a Brisbane based private investor on a 6.3% yield. The site is leased to Story House on a 20-year term to 2038 and an option to extend to 2058
  • The sale of G8 Childcare Centre in Toowoomba for $2m to a Sydney based investor, sight-unseen on a 6.1% yield. The 2,653 sqm site is leased to G8 on a renewed 7-year lease to 2027

Michael Collins, Cushman & Wakefield’s National Director, Head of Investment Sales, said: “We have seen significant interest from private investors targeting Queensland properties with long-term leases to tenants who have traded well during the COVID-19 pandemic. Fast food outlets, childcare centres, and service stations continue to attract a lot of attention, with most proprieties selling within days amid an influx of inquiry.”

Tom Moreland, Cushman & Wakefield’s Executive, National Investment Sales, said: “Recently, we have seen multiple South-East Queensland sites acquired by interstate investors that have been unable to visit the property before purchasing. To gain access, some buyers have also engaged local representatives to undertake an inspection on their behalf, as they vie for a limited number of sites.”