April Commercial Property Auction Market Update

All Systems Go!

The main commercial auction houses followed up a busy February with another round of sales in March. What happened at them and what does this say about the commercial market at the moment?

The Allsop sale sold 54 lots raising £33.1m in the process. It reflected the trend in recent months by having a significant number – eight at this sale – of large or £1m plus sales.

The highlight of the show was a 74,000 sq. ft. retail/office investment in Halifax, West Yorkshire. Competitive bidding from potential buyers saw the property sell for £3.53m, 40% above its guide.

Other notable sales included a freehold ground rent investment in Corby, Northamptonshire, which sold for £925,000 (5.9% yield) and a freehold store investment in Gillingham, Kent, which sold for £605,000 (5.9% yield) which was also over £100,000 above its guide. In Bristol a freehold tyre depot sold for £654,000 (5.8% yield).

George Walker, Partner and Commercial Auctioneer at Allsop, said of the sale: “Whilst overall market sentiment is perhaps not as strong as it could be, the investors in our market are still actively seeking out opportunities where they see growth and security to add to their portfolios.

“Our recent sale proved this, with buyers eagerly competing for lots that provide long term income.

“Having raised well over £30m last week, and with several sales after auction in progress, we anticipate this total will increase swiftly as we work towards the release of our 1st May auction catalogue.”

Notable at the Acuitus sale was that a number of lots sold just prior to the auction. A restaurant investment in Royal Tunbridge Wells let to restaurant chain on a lease until 2038, and a supermarket investment in Newmarket let to convenience store chain until 2034, both achieved comfortably over guide at more than £2.5m combined.

Jon Skerry of Acuitus said: “These two assets benefitted from strong covenants backed by household brand names, and their sale shows the continued focus of many investors on security of income.”

At the sale itself a residential and retail investment in Enfield, London, with an annual income of £179,964 sold for £2.4m (7.04% yield). A retail parade in Barry, South Wales, with an annual income of £373,550 sold for £2.43m (14.45% yield).

David Margolis of Acuitus added: “Given that these assets sold for almost the same price, they illustrate the current diversity of investor appetite.

“This is a positive signal for sellers and demonstrates our ability to price and successfully bring to market properties with very different characteristics in very different locations.”

At the Bonde Wolfe sale in March a significant number of commercial lots, including a freehold student investment in Worcester and a freehold retail investment in Acock’s Green, Birmingham, were sold prior for undisclosed amounts.

At the event itself sales included former bank premises in Wednesbury which sold for £302,000, a former spiritualist church in Walsall which sold for £290,000 while office/retail premises in Walsall sold for £243,000. A freehold ground rent investment in Hockley, Birmingham, sold for £465,000 and another freehold ground rent investment in Birmingham B12 sold for £170,000. Both were sold on behalf of Birmingham City Council.

That the main auction houses followed busy February sales with further events so quickly suggests that demand to sell commercial properties by auction is very strong right now. April and May look likely to be busy too, with a number of sales scheduled and the lots already stacking up.