June Commercial Property Auction Market Update

Another Strong Month

While the upcoming general election will have implications for the commercial property market this year, its announcement came too late to impact most commercial sales held in May. So, so far at least, the commercial market appears to be continuing the trends of recent months – the right lots at the right price seem to have no shortage of interest.

The Acuitus sale raised £14.5m and was headlined by the sale of two particularly large lots. An entire retail parade with office accommodation in Cheltenham, Gloucestershire, sold for £1.7m. The property currently earns a rental income of £187,500 pa but was described as having potential for a hotel conversion. Two adjoining shops in Truro, Cornwall, with a rental income of £240,000 pa sold for £1.5m.

Other significant lots included a motor trade/warehouse in Thurrock, Essex, let to Halfords which sold for £874,000 at a yield of 5.3%. A former public house in Tunbridge Wells, Kent, sold for £500,000. Six former funeral parlours in Cambridge, Newbury, Amesbury, Chesterfield, Normanton and Salisbury sold either prior to or at the auction. A large freehold car park with residential development potential in Eastbourne sold prior to auction at substantially above guide.

Richard Auterac of Acuitus says: “Auctions are continuing to serve as a conduit between private investors and the development property market, with transactions such as we saw in our auction indicating a more positive sentiment across the commercial property market.

“As the market awaits impatiently for the reduction in the BoE interest rates, investors can take comfort in the more positive macro picture unfolding and we would expect to see this further charge volumes and transactions across the auction market.”

The May Allsop sale eventually raised £44.3m from the sale of 55 lots. The average lot size was £805,000 and 14 lots sold for £1m or more. The largest overall sale ultimately turned out to be a package of several lots making up an unbroken parade of nine shops and flats on Seven Sisters Road, London N15.

George Walker at Allsop, says: “The market is still very hard to read as talk of falling rates recedes, buyers are chasing quality and opportunity and are prepared to compete for the right assets.

“The total of £45m was made up of a wide range of opportunities from investment grade convenience stores to mixed use retail and industrial investments and even some development sites from National Grid.

“The ambition and cash resources of the buyers is clear as they are prepared to move quickly for the right opportunity giving them and the sellers great certainty in a three week timescale.”

Bond Wolfe held a mixed sale which sold 163 lots for over £25m in total with a strong 86% success rate. The auctioneers sold some interesting commercial lots in the Midlands, on behalf of Birmingham City Council, raising £2m in the process. They included land and premises at Hospital Street and Buckingham Street, Birmingham, which sold for £610,000, off a guide of just £125,000+. An irregularly shaped plot of land fronting Great Barr Street achieved £402,000 from a guide of £250,000+. Land and a building on Coventry Road, Solihull, sold for £176,000 from a guide price of just £50,000+.

Gurpreet Bassi, Chief Executive of Bond Wolfe, summarised: “Our May auction, the third of seven we will live stream this year, saw competitive bidding, not least for the Birmingham City Council lots we were pleased to be able to offer.”

The SDL Property Auctions (part of Eddisons) mixed sale also included a number of commercial lots being sold on behalf of local authorities. It was also one of the few sales that was held after the announcement of the general election. Whether the election announcement made any difference to buyers’ behaviour is impossible to say – but some strong results were recorded amongst the commercial sales in any case.

A commercial property in Swadlincote, Derbyshire, sold for £160,000 off a guide of £75,000+. Land in Dudley, West Midlands, used as a car park sold for £87,500 off a guide of just £10,000+. A childcare facility also in Dudley sold for £755,000 off a guide of £200,000+. Land in Chesterfield, Derbyshire, which was guided at £350,000+ eventually sold for £1m. A commercial property in Bakewell, also Derbyshire, comfortably exceeded its £700,000+ guide eventually selling at £810,000.

The general election (and results of) on 4 July are likely to reshape the commercial property and auctions market over the next few months. And let’s not also forget a likely reduction in the interest rate whatever the result is will be important too. For now, however, the market appears to be continuing its positive progress.