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Fast food and childcare assets remain a firm favourite for investors thanks to their strong rental yields.
Burgess Rawson recently reaffirmed the ongoing popularity of convenience retail, in spite of dwindling demand for other commercial assets.
Yosh Mendis, a Sydney-based partner at Burgess Rawson, stated that high-performing commercial investments are continuing to receive a steady stream of attention.
“These properties continue to see strong demand from investors given the scarcity of blue ribbon investment opportunities, their long-term secure income streams, landlord-friendly net lease structures, and tax depreciation benefits,” said Mr Mendis.
Recently, the agency facilitated the sale of a $22 million fast food and childcare investment for Isaac Property Developments. The property, which reflected a yield of 4.98 per cent, is located in South Windsor in Sydney, and comprised of outlets from Hungry Jack’s, Guzman y Gomez, Oporto, Subway, and childcare provider Kiddiwinks.
Mr Mendis said: “The successful sale of this high-performing asset underscores the strength and desirability of prime commercial investment properties within the market.”
Ben Isaac, director at Isaac Property, conceded with this view, saying: “We have always had strong appetite for the development of premium fast food and convenience retail investments and our Bligh Park/South Windsor fast food and childcare centre is a great reflection of this.”
“Convenience retail continues to outperform other sectors due to its long-term leases and fixed increases underpinned by A-grade national retailers,” he added.
The South Windsor property generates a net annual income of $1,108,169 and has a weighted average lease expiry (WALE) of 13 years. According to Burgess Rawson, the property’s situation on a “landmark” corner block in a major roundabout intersection means it can take advantage of “all major traffic” to and from Penrith, Parramatta, the Sydney CBD, the Hawkesbury, Lithgow and Singleton.
“Fast food and childcare have been incredibly resilient from both a yield perspective and tenant demand,” said Mr Isaac.
He stated that this asset class continues to fare well despite the recent interest rate rises that have put a dampener on trade for other operators.
The South Windsor sale follows hot on the heels of several other major convenience retail sales by Burgess Rawson, encompassing the $34 million sale of the Robina Central on the Gold Coast, which includes ALDI, Guzman y Gomez and Starbucks, and reflects a 5 per cent yield.
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