Australia’s Most “Bond-Like” Commercial Real Estate: Why McDonald’s Yields Have Compressed to Nearly 3%
When a new McDonald’s opens, most people see a burger restaurant.
Commercial property investors see a long-term income stream backed by a global covenant.
Recent industry data highlights a significant structural shift occurring within the Australian commercial property market.
According to the latest GapMaps report, Australia’s quick service restaurant (QSR) sector experienced its strongest network expansion in nearly a decade over the past 12 months.
For the 12 months ending December 2025:
• 359 new stores opened
• 109 stores closed
• Net growth of 250 stores
Australia’s 36 major QSR brands now collectively operate approximately 7,779 locations nationwide.
Importantly, this expansion occurred despite elevated operating costs, higher interest rates, and continued market competition. In other words, underlying consumer demand has remained highly resilient.
While QSR brands continue expanding, investment yields are compressing
At the same time, research from CBRE highlights a parallel trend occurring on the investment side of the market.
As major fast-food operators continue to expand their store networks, an increasing number of investors are beginning to view QSR real estate as a highly defensive, income-focused asset class.
For example:
• Average McDonald’s investment yields have compressed to approximately 3.31%
• Average yields across the broader QSR sector now sit around 4.69%
This reflects a growing market perception of QSR assets as “bond-like” commercial real estate investments.
The reasoning is straightforward.
These assets typically combine several highly desirable characteristics:
• Long-term lease structures, often spanning 15–25 years
• Internationally recognised tenant covenants
• Stable, non-discretionary consumer demand
• High-exposure, high-traffic locations
• Strong underlying land value and long-term site relevance
In today’s global capital environment, very few asset classes are able to simultaneously provide secure cash flow, strong tenant covenants, and long-duration lease income.
A recent example further illustrates this trend.
In February 2026, a Hungry Jack’s property located in Devonport, Tasmania reportedly transacted for approximately AUD 3.58 million at a capitalisation rate of 3.38% — one of the lowest recorded yields for a QSR asset in Tasmania.
From a property perspective, QSR assets operate differently
The expansion of fast-food brands is fundamentally driven by retail network strategy rather than traditional real estate speculation.
Operators prioritise:
• Population growth corridors
• Major traffic intersections and transport nodes
• High-visibility corner locations
• Long-term operational suitability
Once established, these locations often become permanent components of a brand’s operating network.
This helps explain why brands such as McDonald’s, KFC and Subway continue expanding annually across Australia. Notably, Melbourne’s total QSR store count has now reportedly surpassed Sydney for the first time.
For commercial property investors, this represents something highly valuable:
stable and predictable long-term leasing demand.
Why sophisticated investors are increasingly targeting these assets
Over recent years, we have observed a clear trend:
many investors are shifting away from traditional residential property toward income-producing commercial assets.
Particularly assets leased to:
• McDonald’s
• KFC
• Hungry Jack’s
• National fast-food and large-format retail operators
These investments generally share several common traits:
• Strong lease structures
• High-quality tenant covenants
• Predictable rental income
• Relatively strong liquidity upon resale
For investors seeking stable long-term cash flow, these assets often provide significantly greater income visibility compared with traditional residential property investments.
In many cases, these properties are acquired within family trusts or long-term holding structures as part of broader intergenerational wealth strategies.
Long-duration leases and resilient tenant demand allow these assets to function not only as investments, but also as long-term capital preservation vehicles.
Cornerstone Assets’ Perspective
Commercial property investing is fundamentally about data analysis and structural assessment — not emotional decision-making.
As one of the few Australian commercial buyer’s agencies with a banking and institutional analysis background, our investment approach focuses heavily on:
• Lease structure and income durability
• Tenant covenant strength
• Cash flow resilience
• Demographic and population growth trends
• Exit liquidity and market depth
Through long-term industry relationships and transaction experience, we are also able to access selected off-market opportunities that are not broadly available to the public market.
These assets are often circulated privately among sophisticated investors and industry participants, providing access to more tightly held opportunities with stronger competitive positioning.
Within this framework, our focus remains consistent:
identifying commercial assets capable of delivering stable long-term cash flow while maintaining resilience across changing market cycles.
