High net worth investor demand for commercial property leased to blue chip tenants continues to strengthen, with 17 properties selling under the hammer for a total of $94.3 million at an average yield of 4.73% at Cushman & Wakefield’s National Investment Sales portfolio auction.
The auction, comprising fuel and convenience retail assets, childcare centres, fast food, large format retail outlets, and a medical centre, achieved a clearance rate of 94%. The portfolio sold for more than $13 million above reserve, with a total of 369 bids placed across the 17 offerings.
The auction was led by a portfolio of nine Woolworths Caltex petrol and retail convenience assets, that collectively sold for $54.5 million with yields ranging between 2.9% and 5.75%. This included the sale of the Brookvale (Northern Beaches Sydney) EG Woolworths Caltex petrol station which sold for $8.8 million on a record low 2.89% yield, followed by another EG Woolworths Caltex in Sydney’s Newport which fetched $8.3 million on a 3.25% yield.
A portfolio of five childcare investments located across New South Wales and Queensland was also hotly contested. One of the centres, in Taigum, Brisbane sold for $8.31 million to a Hong Kong based investor. A G8 leased childcare centre in regional New South Wales attracted 71 bids, ultimately selling for $2.5 million on a yield of 5.1%. Prior to auction, a childcare asset at Coomera on the Gold Coast sold for $6,309 million at a yield of 5.48%.
Investors continue to seek out regional assets, with a highway retail centre in Bomaderry anchored by Dominos and Red Rooster selling for $8.05 million on a 4.66% yield, the lowest ever paid for an asset of its kind in a regional location. Rounding out the portfolio was an Officeworks-tenanted asset in Brisbane located on Gympie Road Aspley, purchased by a Melbourne based private family for $9.5m on a 4.93% yield.
Held at Sydney’s Doltone House, the auction attracted approximately 150 attendees, with investors also participating from livestreamed auction rooms in Brisbane and Melbourne along with remote bidding activity from Hong Kong, Perth, Darwin and regional locations. This included from Ballarat where a local investor purchased the Lucas Ballarat Woolworths Caltex petrol station for $3.15 million, representing a record-breaking regional yield of 5.4%.
At the auction, investors commented that they have never witnessed such strong competition for commercial property putting this down to low bank interest rates and the strength of these tenant groups as we come out of the pandemic.
Cushman & Wakefield’s National Investment Sales team of Michael Collins, Aaron Dahl, Yosh Mendis, Tom Moreland, and Geoff Sinclair managed the sales campaign.
Cushman & Wakefield’s National Director, Head of Investment Sales, Michael Collins said: “Private investor demand for commercial real estate assets continues to go from strength to strength, extending its run in late 2020. We sent out almost 400 contracts pre-auction and clearance rates across our last three auctions are running around 90%.”
“Our National Investment Sales team has now sold more than $220 million in commercial real estate assets since November last year, and the size, total value and level of bidding activity during our last three auctions has climbed significantly. This latest auction is the biggest held in Sydney for some time.”
“Seeing petrol stations sell on sub-3% yields is reflective of the market dynamics at present, as high net worth investors continue to target defensive assets and scour the market for higher yielding investment opportunities. One Sydney-based high net worth family spent $15.4 million on assets in Brookvale and Bulli, underscoring the value likeminded investors see in these properties.”
“We are regularly seeing private investors bidding up these properties beyond reserve, and vendors looking for opportunities to lock in capital appreciation. It’s a win-win for both parties currently.”
Cushman & Wakefield’s Associate Director Tom Moreland added: “We expect this level of activity to remain for the foreseeable future, as investors seek passive commercial opportunities backed by defensive industries, particularly those that traded well through the pandemic.”
Cushman & Wakefield will be holding their next auction on April 29, bringing another 12 properties to market that are expected to sell for approximately $62 million. The portfolio includes childcare centres, fuel and convenience retail assets, two regionally located Toyota Dealerships together with retail shops located in Cabarita.