$109M commercial properties auctioned in a day
After twenty commercial properties were sold under the hammer in one day for $67 million in February, yesterday’s Burgess Rawson monthly auction saw all 26 assets sell for a combined $109 million.
According to the commercial real estate agency, there was a $633 million buyer pool in the room or online. This meant six times more money was available than listings, with plenty of under deployed capital left sitting on the sidelines.
The auction cleared all properties for a combined average of 11% over reserve.
Demand for commercial properties seems as strong as ever, with “confidence and stability” in the market, said Burgess Rawson in an email to The Property Tribune.
There was a spread of properties in the portfolio with nine Queensland properties selling for a combined $51.3 million on the day.
In addition, ten Victorian assets sold for $38.8 million, and three Tasmanian industrial properties leased to a subsidiary of the ASX-listed Coventry Group sold for a combined $7.3 million, averaging 12% above reserve. Three South Australian assets sold for a combined $9.2 million.
“Investors are eager to spend with plenty of undeployed capital sitting frustratingly idle. Consequently, with low stock levels, yields are contracting as investors are comfortable buying at lower yields in order to secure an investment.”
“A clear example of this was the recent sale of Sparrow Early Learning which sold prior to auction for $2.72m, achieving a record yield of 5.36%. This is the sharpest ever yield for a childcare investment in Western Australia. A private investor couldn’t wait until auction day, snapping up the property on a coveted 20-year, triple net lease.”
The Sparrow Early Learning centre was one of two properties that sold prior to auction day, with a car wash in Townsville being the other going for $2.05 million on a yield of 5.62%.
The two highest price assets were the Pelican Waters Tavern in Caloundra (Qld), selling for $10.8 million and Brisbane City Childcare for $10.15 million (6.62% yield).
There is also some evidence of residential investors turning to commercial, after being priced out of the housing market. Some of the appeal of commercial includes essential service tenants, long leases, reliable rent and strong land values, the agency said.