Fernvale Village Sold for $35m

Demand for Neighbourhood Centres with value add potential continue to be strong with local developers selling Woolworths based Fernvale Village in Brisbane’s west for $35.55m.

Past and recent flooding around the Centre were also not enough to dampen investor interest with a competitive ‘on market’ EOI campaign generating over $450 million in value of offers from 14 parties, with the successful private investor securing the site.

The Neighbourhood Centre was put up for sale in October 2021 through Colliers’ James Wilson and Stewart Gilchrist together with Michael Hedger and Joe Tynan of CBRE.

The Centre is the dominant supermarket based retail facility within 20kilometres and is well located on the Brisbane Valley Highway linking Ipswich to the northern Brisbane Valley regions.

Residential development, both planned and under construction, surrounds the Centre with over 2,134 lots currently under construction within 4 kilometres, providing an expected population growth rate of 2.5% pa to 2041.

The Centre was constructed in 2008 by the current Vendor and comprises two main structures, containing Woolworths and The Reject Shop with specialty tenancies alongside, all fronting an open air, highly accessible221 space car park. The tenant mix is well suited to the location and size of the Centre and include a Bakery, 2 fast food retailers, a large discount Pharmacy, Liquor store and health & medical services. The Centre has 1 vacant tenancy (covered by 12-month rental guarantee) and covers a total NLA of 5,824sqm.

The Centre currently generates approximately $2.18m in annual gross income, with 42% of the rent from Woolworth who are currently also paying turnover rent. The sale reflects a passing yield of around 5%.

The sale includes a vacant 1.1ha of DA approved land which adjoins the site. The approved scheme provides for the addition of nine separate tenancies including two mini-majors over a gross floor area of 3,285sqm and a total of 180 additional car spaces, as indicated below.

The vacant site does however have a large overland stormwater drainage facility which is proposed to be re-routed around the side and rear of the proposed development.

This part of the site filled with water in the 2011 Brisbane Floods, while the Centre remained unaffected.

The events of last week were more significant with flooding over the Brisbane Valley Highway as shown below, suggesting additional flood mitigation work will be needed to safely develop the vacant site.