The tight 3.67 per cent yield was in line with a continuing trend in the region, with the averaged blended yield of the 10 western Sydney 7-Eleven properties Burgess Rawson had sold in the past 12 months sitting at 4.24 per cent, compared with 4.98 per cent nationally.
“It’s clear that western Sydney is hot right now,” Mr Holderhead said.
The service station sector had been given a boost by new entrants seeking a COVID-19-proof asset.
“With coronavirus and the subsequent designation of businesses as ‘essential service’, there are now a lot of people looking at service stations today who weren’t looking in February. They’re looking for something where if this thing [COVID-19] happens again their tenant will still be able to operate,” Mr Holderhead said.
It was this sentiment that had seen strong results for other essential service businesses at the auction, including a United petrol station at 35 Glenlyon Street, Gladstone Central, in Queensland.
“There is a lack of quality stock on the market at the moment and I see it as a very strong market for the right investments – the right essential services assets,” Mr Staddon said.
But the desire for assets also extended beyond essential service businesses such as service stations and liquor stores to industrial assets with exposure to industries which hadn’t been affected by the lockdown.
“Industrial definitely fits into that [definition] – I reckon it’s one of the hottest asset classes around at the moment because it’s covid-sheltered,” Mr Staddon said.
“It’s leased to the the airconditioning arm of the Reece Group, which supplies equipment to the construction industry. Building sites haven’t been shut down and they’ve been active during the pandemic,” Mr Staddon said.
There were seven bidders competing for the property, which eventually sold to a Sydney-based investor for $3.17 million, reflecting a yield of 4.37 per cent.
“Wollongong has really, really picked up in the last two to five years. Newcastle used to be ahead of Wollongong but I can predict that’s going to change,” Mr Staddon said.