March 2022
Colliers' expert Hunter Higgins, National Director, Brisbane City & Metro Sales | Investment Services provides a market update on premium investments.
The start to 2022 has seen restrictions eased and the opening of certain state and international borders. In 2021 we saw many institutional and private investors adapt to the ever-changing landscape of COIVD-19. With consumer spending behaviour changing, so did the demand for commercial retail space. The appetite for convenience, neighbourhood and large format centres remained strong, while ever popular Premium Investments like childcare, fuel stations, medical, and fast-food services have strengthened as recission-proof assets. Particularly in times of uncertainty and unknown snap lockdowns, the past two years has seen drive-thru retailers and service stations perform better than ever.
In addition to their ‘defensive’ income nature, these assets provide:
- a long-term future land holding,
- ideally located on a corner,
- traffic-light-controlled intersections,
- dual laneways on a major road or highway and
- the site may be repurposed into something else in the future.
Premium investment’s yields continue to break records with new benchmarking price points. Typically sitting between 4.5% – 5.5%, with some breakout yields being achieved for high quality, long WALE assets breaching 4% yields.
This was evident in 2021, with the Colliers Queensland Premium Investments Team of Nick Dowling and Daniel Vella negotiating the only McDonalds in Queensland to be sold in over 12 months. 18 Nicklin Way, Minyama Sunshine Coast was 100% leased to McDonald’s Australia Ltd. The property was sold at Auction with 16 registered bidders and over 150 enquiries generated throughout the campaign. The 2,795sqm* asset sold on a 3.57% yield, a record for the Sunshine Coast market.
Neighbourhood centres, fuel stations, fast food, medical, and childcare are being perceived by investors as far less riskier assets. The defensive nature of these assets and changing consumer trends will likely see them retain their values in 2022.
