Small-time investors are turning their attention to regional assets in the “sweet spot” of $1 million to $3 million as buyers hunt for value, agents say.
Sixteen commercial properties across NSW, Queensland and the Australian Capital Territory are set to go under the hammer on Thursday in Burgess Rawson’s first portfolio auction of 2019. Thirteen of them are in regional areas.
One of these includes a NAB-tenanted retail property at 131-133 Remembrance Drive, Tahmoor, about an hour and a half south-west of Sydney.
Burgess Rawson selling agent Tom Doran said the relative value of regional properties was one of their key points of appeal.
“[These buyers] like the regional areas so they can buy well-known brands at an affordable price range,” he said.
“[The NAB-tenanted property] is going to be around the 7 per cent (yield) mark or maybe slightly stronger. If you were going to find that in the Sydney CBD, it rules out a lot of private investors – it could be about $4 to $5 million. But we’re only talking about the circa $1.5 million range.”
The 299-square-metre building occupies a 650-square-metre site and earns about $100,000 a year, excluding GST.
Another regional asset in the NSW’s central western town of Bathurst is leased to three tenants, including Pizza Hut, Rawson Homes and Johnny Bean Good Drive-Thru Coffee – earning about $158,000, plus GST.
The property occupies 1900 square metres with 15 car parking spaces and has strata subdivision in place.
Interest parties have included mum-and-dad investors, one Sydney-based buyer and a Queensland-based buyer. And the agents said given the level of interest it could be sold before auction.
“Some people are looking at just holding it as an investment now, with potential upside as tenant repositioning,” Mr Doran said.
The Tahmoor and Bathurst properties have each received more than 85 enquiries, and co-agents Simon Staddon and Kieran Bourke also share the listings respectively.
Colleague Sam Horwitz, who, with Mr Staddon, is selling a large format retail property tenanted to Target in the NSW town of Yass, said while markets may go up and down, the fundamentals of demand do not change.
“A few things still drive it, whether it’s regional or metro: the quality of tenants, the length of the lease – it still comes back to some of those basics,” he said.
“The sweet spot really is $1 million to $3 million, which again does attract the mum-and-dad super-fund investors looking to park some money somewhere.”
Mr Horwitz said the retail property at 130 Comur Street, Yass, had attracted about 40 enquiries, from a mix of Sydney-based investors and mum-and-dad, family-type investors, as well as some more local investors.
“I think the majority of interest is for investment because it has a renewed five-year lease with five-year option, they’ve been there for quite a length of time, it’s the dominant department store in town, so really buyers are looking at investment rather than a rebuild,” he said.
“It’s a big block of land so it does have some options, especially with the (B2 local centre) zoning, too.”
Mr Doran said that total enquiry levels were up by about 30 per cent from the previous Burgess Rawson portfolio auction in December 2018.
“I think everyone’s come back with a really positive mindset after the new year,” he said.
The auction will open with two retail investments: a Telstra store in the NSW town of Parkes, and a BWS store in Maroochydore, on the Sunshine Coast.
Both have received more than 80 enquiries, Burgess Rawson director Dean Venturato said, with investor interest coming from along the east coast.
One retail property in Queensland’s Marcoola, leased to Poolwerx, sold prior to Thursday’s auction.
The portfolio auction will be held at Doltone House Hyde Park, 181 Elizabeth Street, Sydney, from 11am. Go to Commercial Real Estate’s Facebook page to watch the first two properties being auctioned live.