CBRE targets Burgess Rawson as commercial auctions take off

The real estate agency is expanding its commercial operations into more of the portfolio auctions that its small rival has made its staple.

A Burgess Rawson portfolio auction.

The country’s largest commercial real estate agency CBRE is in talks to acquire national real estate agency Burgess Rawson to boost its presence in the popular small-scale auctions market.

The small end of the property market is firing with Burgess Rawson currently in the middle of its largest national portfolio event in two years. The agency specialises in selling convenience retail and fast food stores, early education centres, and lower-grade retail, medical, and industrial properties.

It has found a willing pool of buyers looking to the safety of commercial property, with assets often selling for below prevailing rates on term deposits as buyers punt they can get rent increases in future that will drive capital gains.

While the agencies declined to comment on Wednesday, Burgess Rawson is billed as the largest locally-owned commercial agency in Australia and has offices owned by its principals in each state, which has helped it dominate in the smaller end of the market.

The local firm has a history going back to its inception in 1975, and it expanded operations across Australia, with an interstate network of offices as well as international and regional affiliations. The agency has also been strengthening the ties between its firms in five states to provide a more unified approach.

Selling to the US real estate services giant would mark the big departure for the locally-held company but would also bring it into line with other parts of the commercial property market, which are dominated by offshore operations.

The mooted acquisition of the firm – at a price of around $30m – would also signal that the commercial property cycle had bottomed out and that activity is expected to pick up once interest rates come down.

The Burgess Rawson network spans almost all capital cities as well as offices in Kuala Lumpur, Townsville and Mildura. The private agency has remained highly active even in the tougher overall environment for commercial property which has hit the revenues of larger firms.

Small investors have taken to purchasing commercial properties like shops, petrol stations, liquor stores and childcare centres as they often carry strong tenant covenants and spin off a steady income. Partly because of these traits, portfolio auctions have remained more active than many other areas of traditional real estate, such as sales of larger offices, which are still in the doldrums.

If a deal goes ahead, CBRE would acquire a roster of new clients that Burgess Rawson has built up, but it would also be able to bring its wider network of national and international buyers as drawcards for potential vendors. Industry players suggested there were some crossovers between the agencies but they are understood to be limited.

Other groups, including Stonebridge, undertake portfolio auctions but it has become a strength for Burgess Rawson. The agency’s clients include investors, tenants, developers, and landlords nationwide. It offers services including property acquisition, management, and divestment.