Investors scramble for an Officeworks in Windsor which sold for $13.425 million and a 4.74 per cent yield

A ‘lower for longer’ interest rate environment is convincing investors to snap up quality retail properties for higher prices and tighter yields.

Elliott O'Shea and Tim Jones in front of Officeworks Windsor which they sold.

RETAIL investors were increasingly accepting the “lower for longer” interest rate environment with the sale of an Officeworks in Brisbane’s inner north generating a wave of inquiry and a tight yield.

A Queensland-based private investor paid $13.425 million for the newly developed asset on the corner of Newmarket Rd and Sylvester St, Windsor, after an expressions of interest campaign by JLL’s Elliott O’Shea, Tim Jones and Jacob Swan.

After being redeveloped a Bunnings in Lawnton attracted a flurry of bids before being sold for $18.86m on a very tight yield

Almost $44 million of Queensland property was snapped up by investors from around the country with a Bunnings warehouse scoring the top sale price

Officeworks sale in too-hard basket

Part of the ASX-listed Wesfarmers, Officeworks developed the 4979sq m site after acquiring it from AP Eagers.

Mr O’Shea said the campaign generated 190 inquiries from domestic and offshore private buyers and institutions and the sale represented a yield of 4.74 per cent — a record for an Officeworks in Queensland.

“This result is another example of the strong competition for investment opportunities that offer defensive cash flow and locational attributes,” he said.

“There was a lot of activity sub 5 per cent which probably speaks of the strength of our market and that people have now accepted a lower for longer interest rate environment.”

Officeworks Windsor has a 1944sq m of gross lettable area and 65 on-grade parking bays.

In the leaseback deal Officeworks has signed up to 12 years with multiple options.

Mr O’Shea said 2020 is expected to bring further strong results.

“The Brisbane market is garnering more and more interstate and offshore attention and it’s not about yield spread between the states. Investors are beginning to see our city’s infrastructure investment take form,” he said

Mr O’Shea and Mr Swan are set to bring Bunnings Indooroopilly early next month which is expected to fetch about $20 million.

Mr Jones said investors were focused on reducing their risks.

“With term deposit rates at record lows, real estate for a lot of private capital is the preferred risk-return alternative,” he said.

“This was the profile of the majority of inquiry we received for Officeworks Windsor, with a large number of these purchasers looking at Brisbane for the first time.”