NEWS

Green light for new developments in WA’s service station market

Colliers International sells Landsdale service station for $8 million.

Investment demand in WA is climbing to an all-time high for service stations and the development sites where they can be constructed.

Backed by long leases to oil companies, Colliers International says the service station sector has caught the attention of local and overseas investors in a commercial property market where there is strong competition to buy securely leased assets.

In the most recent deal which settled in January, a Landsdale fuel and convenience store with a lease to 7-Eleven and a carwash leased to international operator IMO Car Wash, sold to an overseas property group for $8 million.

The off-market transaction was negotiated by Colliers International industrial agents Jeremy Parasiliti and Raj Singh on behalf of vendor, Perth-based Blackmont Property Group.

Blackmont developed the 7-Eleven and IMO Car Wash as part of a four-lot commercial subdivision next to existing retail developments on Gnangara Road. All lots were sold before construction finished.

The sale represented a yield of 5.6 per cent which is expected to rise closer to 6.0 per cent after the leasing of a remaining lunch bar tenancy. 

The service station has a 15-year lease to 7-Eleven with five, five-year renewal options and the carwash has a 10-year lease and a 10-year renewal option to IMO.

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Mr Parasiliti said local and Eastern States developers were obtaining leasing pre-commitments and building service stations because there was a view that the Perth petrol sector was undersupplied.

“The arrival of new service station operators has also increased competition for sites,” he said.

“Retail chain 7-Eleven is rolling out service stations across WA, while new entrants Vibe Petroleum and Puma Energy are also securing sites.”

In response to the tighter market, Mr Parasiliti said established operators Caltex, Shell and BP were moving to renew leases well ahead of expiries.

“Yields of 5.5 to 6.0 per cent for WA service stations are expected to tighten in 2017,” he said.

In 2016 Mr Parasiliti sold a Canning Vale service station for $4.5 million to an overseas Chinese buyer who out-bid oil companies to secure the property. He also sold a Maddington site, which has the potential to accommodate a service station, to an Eastern States developer for $880,000 (plus GST).

Mr Parasiliti said the clamour for service stations was occurring despite car manufacturers pushing ahead with electric vehicles that would get their energy refill from charging points.

“Because service stations are in high-amenity locations they will also provide owners with future real estate development options,” he said.

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