Key points:
- More than 100 new service stations have been added to South East Queensland since 2017
- Experts say fuel companies are reinventing their offering, adding convenience and food to fuel
- Land supply is now drying up for new service stations across Brisbane
Dozens of new service stations are popping up across south-east Queensland as the fuel industry continues to expand into the space once filled by corner shops.
Across 2019-20, Brisbane City Council accepted nearly 50 development applications for new or upgraded service stations and in the same timeframe approved more than 30.
Data compiled by property group m3property shows that since 2017, about 115 new service stations have opened across south-east Queensland.
Savills Australia associate director in retail investments Michael Harcourt said investment demand was so high that many former service station sites around Brisbane were being converted back to their original use.
“A lot of those corner locations in a previous life had been a service station, but have evolved into something else,” he said.
“Over the last six or seven years, almost every single one of those locations has been converted back into a service station.”
“It’s gone full cycle, but the offering is completely different — chalk and cheese compared to that offering 10 or 20 years ago.”
Mr Harcourt said for the major fuel brands, fuel was now only “one string to their bow” as they sought out corner sites on busy roads guaranteeing brisk trade for the convenience side of the service station.
CBRE associate director for capital markets and metropolitan investments Darren Collins said 7-Eleven had been the “absolute pioneers” in adding convenience to fuel stops, and other brands had rapidly followed suit.
“There’s a whole lot of bolt-on options that can complement them and create a good little service centre and not just a service station,” he said.
Land in short supply
Private investor demand for new service stations is now so high that suitable metropolitan land is in short supply and fuel companies are looking to the regions.
Ross Perkins, Queensland managing director of m3property, said there was an “oversupply looming” in some metropolitan areas, but oil companies were still expanding their presence.
He said service stations were a popular choice for entry-level investors, generally in the $2 million to $8 million range.
“The developers secure the tenants prior to construction commencement, so from a development perspective they have a low-risk profile once the tenant is locked in,” he said.
Mr Harcourt and Mr Collins agreed, noting a service station investment could be far more lucrative and reliable than cash left in the bank on the present low interest rates.
Some Brisbane arterial roads now feature multiple service stations within a few kilometres.
“[Fuel companies] don’t really care about what their competitors are doing, because if it’s a gap in their network and they’ve got customers with loyalty cards — then it’s a gap in the network,” said TFA Project Group director John Rowell, whose consultancy designs service stations for major companies.
High-value contracts with major logistics companies for branded fuel cards were a major income stream, he said, but they relied on fuel companies being able to guarantee that service stations would be available wherever those customers went.
While electric vehicles are slowly being taken up, Mr Collins said the technology was not available widely enough for service stations to be facing another rapid change.
“We’ve got such a large industrial workforce here, and we’re reliant on trucks as a major form of transport … [and] electric vehicles for long-haul trucks are a long way away,” he said.
“So there’s a good future for a lot of those service stations, that’s for sure.”
Extracted from ABC