Wallsend McDonalds gets gobbled up for $9 million

SYDNEY, 05 December 2019 – A local investor has snapped up a McDonalds building in Wallsend for $9 million demonstrating the fierce competition for fast food investment opportunities after the site generated an unprecedented total of 321 genuine inquiries.  

JLL’s Director of Metropolitan Sales and Investments, Dylan McEvoy and Senior Director of Retail Investments, Sam Hatcher struck the deal for the property at 86 Cowper Street at a yield of 2.24 percent on behalf of Haben Property Fund during a highly competitive public auction, attracting a mix of local, interstate and offshore bidders.

Mr McEvoy described the property as a ‘defensive asset’, allowing the buyer to capitalise on long term indexed income streams, underpinned by strong land values.

“McDonalds investments are sought after for their low levels of risk during exposure to market downturns and recessions, in part due to their strong covenant and defensive sales base,” Mr McEvoy said.

The building at 86 Cowper Street is leased to McDonalds for 25-years, expiring in 2039 and generates a total of $402,820 per annum.

“McDonalds leases are one of the most desirable leases in the retail and fast food asset market due to the quality of lease tenure and favorable lease structure, offering base rental increases throughout the term,” Mr McEvoy said.  

“The demand for fast food assets shows no sign of slowing down, with yields compressing and a growing appetite for tenants that are responsible for paying outgoings and building maintenance,” Mr McEvoy said.

Built in 2014, the building is 470 sqm with a total land area of 4,063 sqm containing 62 car parking spaces and four motor bike spots.

Mr Hatcher highlighted that foot traffic is a key driver for buyers who are looking to invest in fast food retail assets.  

“Wallsend McDonalds is ideally positioned to capture high levels of consumer exposure and Wallsend is predominately a residential suburb that is supported by strong commercial and recreational centres,” Mr Hatcher said.

“The city of Newcastle has seen strong growth throughout the past decade, showing a population growth of 15.4 percent between 2011 and 2016 and a positive amount of development in recent years that include the University of Newcastle’s new law faculty building and the Newcastle Light Rail system, “ Mr McEvoy said.