- Developers are turning their focus to large suburban car yards as the auto dealership business model undergoes profound changes
- Australia’s oldest dealership network, the Auswild family’s Preston Motors has put its 6953sqm freehold car dealership in Chadstone on the market
- However, it is predicted that the new 15-year leases to Chadstone Ford, Hyundai and Hungry Jack’s will attract most of the focus
- Burgess Rawson partner Billy Holderhead says the sale is likely to set a benchmark for similar sales
As the car dealership business model goes through its most significant changes in recent memory, developers are turning their attention to sprawling suburban car yards.
Australia’s oldest dealership network, the Auswild family’s Preston Motors has put its 6953sqm freehold car dealership in Chadstone on the market. The property is 13km from the CBD and is expected to garner a high level of interest.
However, it is predicted that the new 15-year leases to Chadstone Ford, Hyundai, and Hungry Jack’s will get the most of the focus as investors.
Burgess Rawson and Gross Waddell ICR will market the sale, believing that in the new COVID environment investors are searching for large name tenants in stable asset classes, prominent locations and significant future development possibilities.
Burgess Rawson partner Billy Holderhead said that the Chadstone site ticked all the boxes as more savvy investors had turned to the automotive sector over the past 18 months. He said the response to the property had already been strong.
“The property has been very well received, we are well and truly ahead of schedule in terms of where we thought we would be at this point in time,” he said.
“Properties with a long lease commitment where it is generally a ‘set and forget’ property are hard to come by, especially one in metro areas.
“Especially in the inner or established metro areas, because this one has that 15-year horizon, it gives developers plenty of time to plan. They will likely be comparing the property and income to the dead money they have sitting in the bank.”
David Buckley, partner at advisory firm Fordham Group, Australia’s leading car dealership accountant and consultant, said car sales had boomed in the past 18 months thanks to a mismatch in supply and demand.
“Large groups and listed corporations are actively advertising and pursuing dealership businesses and some businesses that were worth $5 million two years ago are worth $10 million today,” he said.
“These favourable trading conditions for dealership businesses are not abating.”
Robert Gattereder, CEO of Preston Motor Group, which has owned the property since 2012, stated that with such favourable market circumstances, now was the time to sell.
“Chadstone is a lovely property however we are not in the property investment business, we are in the automotive business,” he said.
“When we decided to divest of our interest in the dealership, the property became non-core and as more and more approaches were made to our company from investors wanting to buy the asset, we thought it best to run a process to select an estate agent to represent our divestment plan.”
Mr Holderhead said the sale was likely to set a benchmark for similar sales moving forward.
“People will be watching this campaign to see where we land, and they might make a few decisions on their own property,” he said,
“It is difficult to accurately price as there is not much you can compare to this one – it’s an outstanding opportunity.”