Auction of Burgess Rawson portfolio of 61 properties to top $260m

Channel 7’s South Australia building is part of the auction this month.

Private investors chasing small assets are expected to again set the pace at spring commercial property portfolio auctions, with more than $260m worth of properties to go under the hammer.

The first batch, being offered in a Burgess Rawson portfolio auction, comes at a time that buyers have defied the pandemic to expand their holdings.

Investors have bid up prices, forcing yields to record lows, partly on the back of low interest rates while they chase certainty as the economy emerges uncertainly from the pandemic.

The hunt is on for small properties with exposure to non-discretionary spending where tenants have paid rent throughout the pandemic and show no signs of faltering.

The Burgess Rawson auction will see 61 properties with a combined value of $260m go under the hammer and other agencies are expected to follow suit. The event will be held over three days to accommodate the large number of properties to be sold.

Burgess Rawson national head of the Adam Thomas agency, said the portfolio size reflected the investor appetite for commercial assets, as investors redirected funds from the overheated residential sector.

Mr Thomas said investors who typically would have channelled their funds into the sharemarket or residential sector were seeing greater stability and sustainable levels of growth in commercial assets.

“This of course is a direct result of Australia’s strong economic performance through the pandemic and the recognition that commercial investment properties leased to essential service tenants operate in a class of their own,“ he said.

Since January, Burgess Rawson has sold more than $750m in commercial asset sales and more than 30,000 investors are expected to tune in for the action over the three days from September 28.

South Australia’s Channel 7 studio in Hindmarsh is expected to attract significant interest, as is the Coates Hire facility in Albert Park.

The firm’s head of agency Victoria, Jamie Perlinger, said essential service assets including childcare centres, fuel, automotive, retail and medical offices continue to dominate.

“Once again we are seeing a high quality, essential service portfolio across a range of price points,” Mr Perlinger said. “Essential service assets remain investor favourites, demonstrating an ability to trade strongly throughout the pandemic.” In Queensland the portfolio includes established childcare centres in Brisbane and the Gold Coast, regional shopping centres, food retail, vet surgeries and service stations.

Mr Bowers said the ability of Queensland’s regional cities to operate with minimal disruption during the past 18 months offered significant stability, attracting levels of investor appetite usually reserved for CBD markets.

The Sydney component of the auction includes a selection of blue-chip assets including the DOMA head office in Canberra, and the Centrelink in Busselton, alongside childcare and fuel properties.

“The market is not slowing despite community lockdowns. The … bulk of these will be purchased sight-unseen,” said Darren Beehag, head of agency NSW.

The group’s most recent portfolio auction earlier this month achieved an 87 per cent clearance rate, selling 40 properties for $120m.