This article is from the Australian Property Journal archive
THE Bunnings Collingwood store has hit the market and is expected to sell for around $65 million and drum up competition between local offices and offshore developers.
Located on Victoria Parade and overlooking the intersection of Hoddle Street, around 3km north-east of the Melbourne CBD, the asset is one of the largest individual holdings in the area on a 5,375 square metre site zoned Commercial 1.
Billy Holderhead, Yosh Mendis, Zomart He and Beau Coulter from Burgess Rawson are managing the sale of the property.
“The site is extremely unique compared to any Bunnings freehold investment every offered, presenting a steady income stream from one of the most sought-after tenants in the Asia Pacific, underpinned by a major, city-fringe landbank opportunity for a legacy development in the future,” said Holderhead.
“Collingwood’s skyline has changed dramatically over the past three or four years, perhaps more so than any other suburb in Melbourne. The tightly-held home of the Pies has enjoyed phenomenal cultural, culinary, artistic and socioeconomic transformation in that time too. And with the population projected to grow by 72% by 2041, Collingwood is set to see this evolution continue for many years to come.”
While Bunnings stores across Victoria are typically located within Industrial or Commercial 2 zones, this site’s Commercial 1 zoning means it has a vast range of potential future development options, including any sort of residential, mixed use or hotel development.
“In Collingwood, Urbis assessed the property as having the potential to build up to 14 levels based on recent approvals, while owners of sites nearby have been pushing for approvals up to 23 levels,” said He.
According to Coulter, the team is anticipating strong levels of competition from local private family offices and Asian developers, looking for a strategic and defensive investment, with the underlying land value reflecting around 75% to 80% of the purchase price.
“For our Asian developer client base, their main focus is the long game and the priority of characteristics that appeal to them are perhaps in reverse order (compared to domestic private investors),” added He.
“In this case, Asian buyers’ first focus is the location on the City’s doorstep, the disproportionately large landholding (second), then zoning for future mixed use development (third), and a significant, set-and-forget income stream from Bunnings (fourth).”
Beyond the site’s appeal as a potential and expansive redevelopment site, the property serves as a secure investment with Bunnings having no plans to vacate the location.
“The campaign hasn’t gone live yet but it’s apparent that buyers are seeing this differently to any Bunnings freehold they’ve considered before. Private investors are assessing its set-and-forget Bunnings investment value (now) as well as a legacy value of a high-rise development site for their children in the future,” added Coulter.
