Big box update
Bunnings builds multi-level site in Queensland
Bunnings' new-look store in Brisbane will run over four levels
Bunnings' new-look store in Brisbane will run over four levels
 
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Local business owner takes on Bunnings and more ex-Masters stores are transformed
HNN Sources
A Bunnings store in Brisbane will look like no other; Bunnings makes a move into 11 former Masters sites; the Berri store is being sold; Bunnings Horsham got an expansion; expressions of interest are called for Bunnings in South Mackay; Bunnings sets up temporary store in Taren Point; and construction has begun on Bunnings Doncaster.
Four-level Bunnings in Brisbane

Bunnings is building a store in Newstead, a suburb of Brisbane (QLD), that will span 17,000sqm over four levels. It will be more than double the size of a typical Bunnings Warehouse.

The mixed-use site will also feature six street-level tenancies for retail or office space, totalling just under 1600sqm in addition to a basement carpark, the main warehouse, outdoor nursery, bagged goods area, cafe and timber trade sales area.

The Courier Mail reports Bunnings initially paid $20.6 million for a 9400sqm site in 2011, but the development application (DA) was knocked back by Brisbane City Council. A year later it bought the remaining 10,400sqm for $16 million.

A revised DA for the new-look store was submitted in 2014 and approved last year. According to architects Thomson Adsett:
The design of Bunnings Warehouse at Newstead relates to the fine-grain and sawtooth form typical of the historic Newstead wool stores and industrial buildings...Pedestrian linkages along the northern facade will be activated by shipping-container style cafes and will adjoin a future residential development.

In 2012, then-Bunnings chief operating officer Peter Davis said the development "forms part of Bunnings' continuing investment and expansion in metropolitan and regional Queensland".

Retail expert and associate professor at Queensland University of Technology Business School Gary Mortimer told SmartCompany Bunnings' latest development will see success thanks to its identity as a "destination retailer". He said:
Bunnings is a destination retailer because shoppers are willing to take the effort to come in not just for products, but for the experience. It's for families on the weekend, wanting to have a shopping experience and a sausage sizzle.

Mr Mortimer believes Bunnings is similar to Swedish furniture retailer IKEA, which he says helps customers get "actively involved" in the shopping experience. And this store is unlikely to be the last, says Mr Mortimer, who maintains Bunnings will continue to "selectively" place these superstores in key suburban areas.
This store is interestingly placed, as it's right in the middle of the city, and there's a massive amount of high density and high-income living nearby. There's also not really any big hardware chain close to where they're putting it; they're tapping into the area's growth.
I think they'll look at other areas in Sydney and Melbourne where there's a high proportion of the population in one area, with high disposable income.

Mr Mortimer also believes Bunnings is the "clear" market leader with Masters out of the picture and does not see a local player being able to challenge its position. He said:
Metcash is the only other player, and they have a different offer with smaller stores aligned to tradespeople. A big global retailer could have a look at the market and enter, and there's no reason why Lowe's wouldn't have another look at the market.
Warwick local fights Bunnings' plans

The Warwick Daily News reports that real estate agent Helen Harm will continue to fight after Southern Downs Regional Council (SDRC) approved the development of a Bunnings store last year on a flood plain near her business.

Mrs Harm said she lodged a legal appeal against Bunnings Group and SDRC in the Planning and Environment Court of Queensland and has set up a GoFundMe page to help cover legal fees which she estimates could top $30,000.
I am looking at the first phase costing about $15,000 for an independent flood study and legal fees and so far residents and business owners have donated a few thousand dollars to the fund.

Bunnings plans to build its big box hardware store on a vacant block where Mrs Harm believes will put businesses and residents at risk during flood season. Mrs Harm's real estate business is located on the flood plain which she believes will be in jeopardy if the Bunnings complex is built.

The proposal would see the store be effectively built on an island stretching across two acres in the middle of the flood plain.

A hydraulic study by engineering group, Jacobs showed the development would have no major impact on water levels which SDRC based its approval on.

But Mrs Harm believed an independent study she is seeking will show the development could put businesses and residents in jeopardy during floods. She said:
Residents are worried the development could take up 20% of a major flood zone, and all the studies done since major floods in Queensland have said same thing,

Mrs Harm also told Daily Mail Australia:
There is a hardware store just down the road, we don't need this Bunnings at all.

The development was due to start in June but could not go ahead until the court outcome, according to Mrs Harm. She has the moral support of business owners in the area including Alan Olsen of Olsen's Home Timber and Hardware.

Mr Olsen said he backed Mrs Harm's move to take on Bunnings but did not want to risk throwing good money after bad.
We don't like the council decision but Bunnings has experience and size and we are too small to take on its bureaucracy and lawyers in something that could get very emotionally draining.
Bunnings expansion through Masters sites

Bunnings has taken on 11 former Masters Home Improvement stores and announced plans to open nine new stores across NSW, Victoria and Queensland.

The transformation of the Masters sites has piqued the interest of the competition watchdog but only in relation to the four Masters sites that represent new trading locations for the Bunnings network, Fairfax Media reports.

Seven of the Masters stores slated for transformation are in suburbs where there is already a Bunnings warehouse and the big box retailer is shutting these stores and moving into the revamped Masters premises.

Australian Competition and Consumer Commission chairman Rod Sims said there were only a handful of new stores, most of them were "swaps" from current Bunnings stores. He told Fairfax:
We've also got to assess how much interest there is in these stores from other hardware players. We are still looking at it but we are conscious there are only a small number of new stores and there ... aren't a lot of other people clamouring to take them over as hardware stores.

Mr Sims said the ACCC also made a distinction between somebody who gets dominance by outplaying everybody else on the field, versus someone who does it by mergers that shouldn't happen or any "anti-competitive behaviour". He said:
Bunnings are in the best place to buy them but they've really earned their way into that.

In a communication sent to suppliers, which Fairfax's BusinessDay columnist has seen, Bunnings said it would be embarking on a "very busy new store opening program" from April to September. Bunnings chief operating officer Clive Duncan is quoted as saying:
We ask that you [suppliers] plan ahead to ensure you have sufficient stock and representative coverage to support the current store network as well as the ... new locations.

Mr Duncan also said the Masters sites were subject to Home Consortium's agreement with Woolworths and Lowe's.

In addition to its planned makeover of the 11 Masters properties, Bunnings will open 21 new outlets by September, taking its total store network to about 335 stores.

It's not clear what Bunnings will do with the properties it is exiting, which include two that are held by the BWP Trust.

Related:
Bunnings re-brands ex-Masters sites in WA - HI News, page 10
Bunnings SA store to be sold

The Berri Bunnings store in South Australia is on the market.

Located at the corner of Hoskins Road and Sturt Highway, the hardware store opened in May 2016 and is the first stage of a master plan for The Riverland Complex site in Berri.

The 6,557sqm store was developed in a similar design as the Victorian Swan Hill Bunnings, and constructed with a long term view to accommodate the growing population of the Riverland region.

CBRE is selling the property on behalf of Adelaide-based developer Pat & Co Pty Ltd headed by Tony Moro. Mr Moro said the commitment of Bunnings as the property's anchor tenant was a vote of confidence for the developing precinct.

CBRE's Justin Dowers said the property marked the first Bunnings warehouse investment offered for sale in Australia for 2017.
Bunnings warehouse investment properties have been a highly sought after investment vehicle over the past two or so years - a factor that is helping compress yields to as low as 5% in some instances.
The continued lack of retail investment opportunities such as this is also driving investors to compete for assets in regional locations. Furthermore, the consistent performance and revenue growth of Bunnings has been a key attraction for private and institutional investors, along with the depreciation tax benefits associated with the new assets.

In late 2016, the Yarrawonga Bunnings in Victoria was sold off the plan for a record yield of 4.94%. It was the first Bunnings warehouse to be sold to a mainland Chinese investor. Mr Dowers said:
There is evidence that buyers are gaining more confidence in the performance of key regional locations, stemming from increased government expenditure in these regions, along with improved living conditions (mostly related to affordability) driving population growth.
Bunnings investments are always highly sought after, for a number of reasons. The net lease structure and fixed rental increases are favourable; along with the strength of the fundamental real estate given the strategic site allocations from Bunnings.

Related:
Big box update: Bunnings Yarrawonga has Chinese owner - HNN
Bunnings Horsham is bigger in size

Bunnings in Horsham (VIC) has celebrated its $1 million revamp. Store manager Campbell Ballinger told The Mail-Times:
The upgrade represents an investment of more than $1 million and will increase the store size by more than 1000sqm. All our product ranges will expand including a large, brand new lighting display.

Mr Ballinger and his team recently celebrated the store's expansion by holding family activities over a weekend. He said:
We've been part of the Horsham community for more than four years and we're looking forward to bringing an even better store with the latest home improvement and outdoor living products backed by the best service.
Team members continue to support a number of community groups, working together to assist in local projects including repairs made to Birchip Playgroup's playground and providing DIY workshops at Kurrajong Lodge.
Mackay Bunnings up for sale

Bunnings Warehouse in South Mackay (QLD) has been listed for sale via expressions of interest.

The 13,074sqm warehouse is promoted to have a net income of $1,697,440 a year, and has a 12-year net lease expiring in 2026 with options until 2056.

On a corner site near the airport, Bunnings South Mackay is on Maggiolo Drive off the Bruce Highway.

Properties leased to the Wesfarmers-owned hardware chain have become the darlings of the commercial real estate market, with buyers prepared to pay through the nose for a change to secure a piece of that green and red "big box" empire.

However Bunnings sales tend to come at a trickle, with the company's strategy to slowly divest some of the stores it owns across Australia. So when one does come to market, a lot of potential buyers tend to come from everywhere.

Stonebridge Property Group's Philip Gartland and William Blanch, who sold the Bathurst store, say Bunnings listings tend to attract investors who might not otherwise dip their toes into commercial property. Mr Gartland told the Daily Mercury:
It's the sort of asset that can appeal to people that are looking for more secure investments, often people who are 50-plus, that just want to put something into a blue chip covenant, effectively like a corporate bond.
It's set and forget, because you've got fixed annual uplift, so you're not having to worry about how the turnover of the store is performing, whereas a lot of supermarkets are based on percentage of turnover above a certain threshold.

Also adding to the attractiveness of the properties is the fact that Bunnings leases are usually long-term, triple net leases, meaning the tenant (Bunnings) agrees to pay for just about everything - real estate taxes, building insurance, maintenance and any other fees. Mr Gartland said:
Bunnings pretty much do everything, including even the way they define the premises - it's the whole entire land parcel rather than just a pocket of the building.

And with Bunnings' biggest competitor Masters now wiped out, the case for investing in a Bunnings has further weight, adds Mr Gartland.
I guess it's taken away that uncertainty of competitive threat, after the store closures. Obviously they dominated while Masters was still there, but now that's been closed, it'd be a fairly brave competitor that would come in now and try to take on Bunnings.
Recent Bunnings sales
  • Price undisclosed - Bathurst (NSW) November 2016
  • $11.59 million - Yarrawonga (VIC) September 2016
  • $6.425 million - Warragul (VIC) September 2016
  • $10.95 million - Swan Hill (VIC) August 2016
  • $7.05 million - Osborne Park (WA) June 2016
  • $43.5 million - Joondalup (WA) March 2016
  • $24 million - Eltham (VIC) March 2016
  • $40 million - Springfield (QLD) November 2015
  • Bunnings setting up temporary shop

    Bunnings has been given the go-ahead to establish a small-scale, temporary hardware shop while it undertakes a $38 million redevelopment of its Caringbah (NSW) site.

    Sutherland Shire Council approved the fitout and use of the former Cronulla Furniture store at 100-104 Parraweena Road, Taren Point, as a hardware and building supplies store for a maximum of three years.

    Among conditions placed on development consent is that Bunnings prepare a flood emergency response plan because the area is low-lying and has a history of flooding.

    Conversion of the former Cronulla Furniture store for Bunnings' use was estimated in the development application to cost $825,000. A statement of environmental effects said.
    The store will operate under the Bunnings brand [but] will be in effect more like a traditional small hardware store. There will be hardware, tools, paint, fixings, and plumbing, lighting, and garden care type products.
    The key differences [between the existing and temporary stores] are likely to be a minimal timber offer, no garden centre, and there will be a very small range of bagged goods...
    Building start for Doncaster Bunnings

    Work on Bunnings Doncaster in Victoria is set to start within weeks as the big box retailer finalises a contract to build a hardware and apartment complex next to Westfield. Local newspaper, Leader believes the building contract is likely to be finalised and signed off within a matter of weeks.

    The $73 million development will include 250 apartments - 99 flats on top of the 11,000sqm multi-level store as well as two apartment towers. There will be 350 car spaces for shoppers.

    Leader reported last year the plans were finally moving forward after a dispute between Bunnings and Westfield prevented Manningham Council from being able to sign off on permits.

    Initially the Bunnings development threatened to become a legal battle between the retail giants, with Westfield concerned it would affect future growth of its Doncaster complex after announcing a $500 million expansion.

    Andrew Marks, general manager - property for Bunnings, said recently it expected work to start in due course. He told Leader:
    We are currently in the process of appointing a builder for the development. The timing of the project has not been finalised at this stage and we will continue to update the local community as soon as timings are known...

    Bunnings first announced the plans back in 2013.

    Related:
    Big box update: Bunnings Doncaster will be built - HNN
    HNN Sources


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