Listed hardware retailer Bunnings is selling a one-month old outlet in Melbourne’s burgeoning south east.
The Clyde North warehouse could fetch more than $35 million, which would reflect a passing yield of 5.4 per cent, or less.
The asset is the first metropolitan Melbourne Bunnings to hit the market since 2015.
On a 3.765 hectare site with four street frontages and 372 at-grade car parks, the 16,634 square metre facility is being offered with a 12-year leaseback to Bunnings, which pays starting annual rent of $1.904 million.
The Berwick-Cranbourne Road asset offers significant depreciation benefits, according to CBRE’s Justin Dowers, Mark Wizel and Kevin Tong.
“This is clearly a quality property with a blue-chip tenant,” Mr Dowers said. “It would be difficult to find another property which is so quintessentially defined as a prime commercial property investment”.
The agents hint at the redevelopment prospects of the site, which is within MAB Corporation’s 30-hectare Element Park.
MAB is building – and seeking occupiers for – a 2000 sqm retail centre across the road.
“The long-term potential of the asset in the context of Melbourne’s enormous and well documented population growth forecasts is at the same time exceptional and compelling,” Mr Dowers added.
Mr Wizel said as part of the Element Park development, MAB was undertaking significant works to upgrade the adjacent roads.
“The new Bunnings store will obviously benefit from the current 11,000 cars which pass the store daily, a figure which [VicRoads estimates] will increase to 25,000 by 2041 when the population of the City of Casey is expected to swell to over 500,000”.
According to the ABS, the City of Casey is the third fastest growing city in Victoria and the eighth fastest growing city in Australia.
Clyde North is forecast to see continued growth with residential building approvals over 2016-17 up 22 per cent, the brokers said.
“Those sort of growth figures provide an enormous amount of confidence for investors looking at not simply the short term, but the long term prospects of an investment which will grow with its community.
Local developer Goldfields recently invested in the area – spending about $110 million on a 71-hectare site proposed to be subdivided into about 1000 residential lots. Stockland and Brown Property Groups are other major land owners in Clyde North, which is about 50 kilometres from the city.
In August, we reported that private developer Nic De Luca sold an eight-week old Bunnings-leased investment in Brisbane’s Lawnton (pictured, above) for $18.9 million – reflecting a 4.69 per cent passing yield (though this parcel did have 3190 square metres of surplus land which could immediately be developed).
Two months earlier, a Bunnings outlet in South Australia’s Victor Harbour sold to a Melbourne syndicate for $21.3 million, reflecting a 5.13 per cent passing yield.
Bunnings was the anchor occupier of a Newcastle retail investment which Sentinel acquired for $23.3 million last October.