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  • Sydneys changing road network fuels major changes to service station market

Sydney's changing road network fuels major changes to service station market

Sydney | 21 April 2017
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Major changes to Sydney’s public transport and road network system are set to unlock significant land banking and value add opportunities along major arterials across the city.

Parramatta Road, the main thoroughfare connecting the city to the western suburbs, is currently home to 16 service stations – many of which are set to be impacted by the WestConnex project. 

CBRE’s Victor Sheu said the new tunnel would divert traffic flow and commuters from the M4, unlocking greater commercial opportunities in the city’s Inner West. 

“Service stations are already among the most sought after commercial assets, with properties secured by five – ten year leases achieving record tight yields. This is further exemplified by the severe shortage of commercial investment properties readily available to satisfy the growing investment mandate across Sydney at present,” Mr Sheu said. 

“With 16 service stations located along Parramatta Road, the current changes to the city’s infrastructure network present attractive investment and land banking opportunities – with these properties underpinned by strong underlying land values as well as long term leases for immediate income.” 

Mr Sheu said changes in the city’s transport network – coupled with the rise of sustainable energy – could prompt further changes in the service station sector. 

“With more leading vehicle manufacturers taking a step towards alternate energy sources, introducing both hybrid and fuel-free models, there is likely to be decreased demand on petrol – and subsequently the stations that service them,” Mr Sheu explained. 

“Given service stations are currently trading at a market peak, we expect owners to look at reassessing the use of these assets – either looking at alternative commercial uses or expanding the service station model to incorporate more of a food and beverage element.” 

Evidencing the trend, Caltex has expanding its service beyond the traditional service station offering, having recently partnered with ‘The Foodary’ to provide a quality breakfast café. 

“With service stations traditionally located on high exposure sites, there is a huge opportunity to expand the service station model to capitalise on the shifting business environment with a food and beverage component,” Mr Sheu said. 

“We’re likely to see more service stations adopt this strategy, in addition to some owners looking at re-evaluating their assets all together to maximize value.” 

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About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

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