- The McDonald’s drive-thru land in Kelston is for sale, but don't expect free food if you buy.
- The site offers a $500,000 annual return, attracting interest due to McDonald’s strong tenancy.
- JLL agents highlight the rarity and investment quality of McDonald’s properties, typically on 20-year leases.
It’s the Macca’s run that could end up costing you well over $10 million. The land occupied by the McDonald’s drive-thru in Kelston, West Auckland, has hit the market for sale, and while the buyer is guaranteed a return of almost half a million dollars a year, free Big Macs are not part of the combo.
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The JLL agents selling the 1425sqm site at 2-18 West Coast Road, near Kelston Shopping Centre, have high hopes, given that only a handful of fast-food properties have come to market this year.
“They’re being snapped up quickly,” Harry Fergusson told OneRoof. “But none have been anchored by the golden arches. Given McDonald’s unparalleled strength and the scarcity of these opportunities, we’re expecting significant interest.”
The 1425sqm site is close to Kelston Shopping Centre and sees 47,000 vehicles daily, according to the listing. Photo / Supplied
He said fast-food properties typically attract well-capitalised private investors. “They value long-term stability over short-term gains and understand how rare it is to have a McDonald’s on the market.”
McDonald’s, he said, was an exceptionally reliable tenant. “Average private hold periods for McDonald’s properties exceed 18 years, which speaks volumes about their investment quality.”
McDonald’s typically signs 20-year lease agreements and seldom exits prime spots. Simon Kenny, head of impact and communications at McDonald’s New Zealand, told OneRoof: “We don’t close restaurants very often. Sometimes we might relocate them, but the only ones we’ve closed in recent years have been in food courts.”
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Most of the 173 McDonald’s outlets in New Zealand sit on land that the company itself owns. But there are cases where head office leases the site, and then sub-leases it to the franchisee. “So, Kelston would be a case like that, where we weren’t able to buy a site in the area we wanted, so we leased the site.”
McDonald’s Kelston has been around since the 1980s. The 541sqm restaurant building sits on a high-profile corner site that, according the JLL listings, captures over 47,000 vehicles.
Kenny laughed when asked if the site could come with free Big Macs, saying the buyer could do a deal with the franchise owner. “If you talk to the franchise owner nicely, there might be like a lease reduction and contra for some free food, maybe.”
Inside the Kelston restaurant. McDonald’s properties are highly prized by investors. Photo / Supplied
Fergusson also laughed at the suggestion, telling OneRoof that he had racked up, with his colleagues, a big bill at the restaurant recently. “Our consumption has gone right up for the last few weeks, while getting the listing ready.”
JLL head of research Chris Dibble said that commercial real estate buyers right now were focusing on properties with strong tenancies. If the tenants have good cash flow, then the landowners can sit back and enjoy capital growth. “Which, given recent changes in the OCR and the outlook, looks likely to be a little bit more imminent than the previous few months.”
Dibble said 20-year leases were massive in the retail sector. “Smaller retail tenants would probably be looking for two to three years. Something a bit more established, maybe five years. Ten-plus is pretty phenomenal. Twenty-plus is what commercial real estate agents would call a good bottom-drawer investment. The franchisee pays rent, but the lease is backed by McDonald’s NZ, adding security,” he said. “It’s definitely the upsize that one, isn’t it?”
Also up for grabs next door, at 3370 Great North Road, is an abandoned development. Photo / Supplied
JLL declined to give a price indication on 2-18 West Coast Road, but Dibble said a standard property in the sector, which also includes supermarkets, would typically sell north of $20m. However, this McDonald’s property was more desirable than most, thanks to its tenant and cashflow, and therefore did not fit within the usual price range.
OneRoof reported in July that McDonald’s bought a landmark site in Hamilton CBD to turn into one of its restaurants.
Kenny told OneRoof in July that the restaurant brand had been looking for a suitable site for a new restaurant in central Hamilton for some time, and was pleased to have completed the purchase.
Meanwhile, a run-down property right next door to McDonald’s Kelston was listed as a mortgagee sale in August. The tender for the 809sqm “as is, where is” property at 3370 Great North Road had closed, and parties were still in discussion, Bayleys listing agent Mike Adams told OneRoof.
A resource consent for a 10-unit townhouse development at the site was granted in 2020, and construction started around 2021. The listing photos on OneRoof showed partially completed structures that had been vandalised.
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