More than $412 million in freestanding Bunnings Warehouse investments have transacted in 2021 year-to-date, across 11 assets. The strong level of purchaser competition continues to highlight the increased depth of purchasers and pent-up demand for this retail sub-sector. Doubled with the rise of hardware, DIY and home improvement sales the Bunnings model attracts solid investor interest across the country.
A Victorian syndicate led by The Lowe Group has acquired a Bunnings Warehouse on the NSW mid-north coast in Kempsey for $28.55 million, reflecting a national non-metro benchmark yield of 4.19%. Colliers’ James Wilson and Alex James-Elliott marketed Bunnings Warehouse Kempsey via an on-market EOI campaign on behalf of Bunnings. The Bunnings Warehouse investment was sold on a pre-sale investment structure, with the development due for completion in mid-2022.
Derek Lowe commented, “Our investors are incredibly excited to be acquiring Bunnings Warehouse Kempsey as it complements our growing portfolio across Australia’s eastern seaboard.”
This asset comprises an approximate 10,999m2 Bunnings Warehouse on a prominent 29,832m2 site area, three kilometres south of Kempsey’s CBD on the NSW mid-north coast. The investment featured a new 10-year lease with annual CPI rental reviews capped at 2.5%.
Bunnings Warehouse investments continue to be one of the most hotly contested retail investments, with growing investor appetite driving core cap rates below 5% for both metropolitan and regionally located Bunnings Warehouses.
“We are engaging with demand from investors seeking to deploy capital into assets with strong covenant security. The Bunnings Warehouse Kempsey benchmark result reflects the growing demand of institutional and private capital targeting this asset class,” said James Wilson, National Director (NSW) of Retail Investment Services at Colliers.
Scarcity of premium assets is further highlighted when considering that Bunnings Warehouse Kempsey is only the second publicly marketed NSW Bunnings Warehouse in 2021, after Bunnings Warehouse Young was secured by a Sydney based private investor in June 2021 for $11 million after an on-market campaign by Colliers.
“Colliers has transacted circa $360 million in value of Bunnings Warehouse anchored investments nationally in 2021, including Bunnings Warehouse Eastgardens which set the national record yield of 4.15% when acquired by Newmark Capital. However, the Bunnings Warehouse Kempsey campaign revealed new and emerging private and institutional capital further driving competitive tension”, continues Wilson.
“Colliers engaged 135 enquiries during the four-week campaign, with over 30 parties in the data room comprising syndicators, institutional and private investors”, said Alex James-Elliott.
In Queensland, a brand new Bunnings Warehouse hits the market. Stonebridge Property Group and Savills are jointly appointed to market a brand-new Bunnings Warehouse for sale, at Hervey Bay in Queensland’s burgeoning Fraser Coast Region. Construction has commenced on the new 17,421m2 Bunnings Warehouse on a prime site in Pialba, Hervey Bay’s town centre and CBD, with completion of the new store due in Q4 2022.
Bunnings Hervey Bay is offered for sale with a new 10-year net lease to Bunnings Group Limited, with options extending until 2080.
Stonebridge’s Justin Dowers and Philip Gartland and Savills’ Peter Tyson are handling the marketing and sale.
“The market for Bunnings Warehouse investments has further improved over the last 12 months given the robust performance of the Bunnings business, regardless of lockdowns” said Justin Dowers
Peter Tyson observed, “We are experiencing ongoing and increasing investor appetite for high quality long-leased assets which continues to drive yield compression. The ASX-listed Wesfarmers subsidiary Bunnings Group is quite clearly one of the most highly sought-after lease covenants in today’s marketplace and the new Hervey Bay Bunnings store is expected to attract enormous interest and competition.”
“The demand for Bunnings Hervey Bay is likely to be significantly enhanced by the investor’s ability to acquire the land prior to practical completion, whereupon they will inherit a brand-new ” asset.” said Philip Gartland.
“The Bunnings asset class has proven to be very tightly held and thinly traded and given the attributes of this property, it will be a very compelling offering” he added. Expressions of interest close on Thursday 28 October 2021.