March Commercial Property Auction Market Update

Has The Commercial Auction Property Market Settled?

The commercial property auctions business is normally slow in January before getting up to speed again in February. Typically sales results this month also give us a clue as to what the commercial market will be like in the year ahead.

Sales this February might be especially poignant however since they should give us some indication of whether or not the commercial market has settled after the political and economic turmoil of last autumn.

With that in mind let’s review some commercial auction sales results from February 2023:

Allsop’s February sale raised £60m, including £39m of retail property. Sixteen lots sold for in excess of £1m each.

Sample results included 8 out of 8 neighbourhood parades sold for Bromley Council for over £6m, 28 out of 28 betting offices let to William Hill sold for over £5m, and 12 out of 16 industrial ground rent investments sold for Bournemouth, Christchurch and Poole Council for almost £6m.

Commenting on the results George Walker, Partner and Auctioneer at Allsop, said:

“We’ve successfully raised nearly £60m at our latest sale (the biggest one since before lockdown), which is just the shot in the arm that a nervous market has been waiting for.

“The February auction saw a broader-than-usual mix of assets, including ground rents, retail parades and standalone retail assets, sold on behalf of councils, asset managers, funds and a gambling company, offering cash buyers ample opportunities to secure attractive assets with income-generating potential.

“This result should provide the market with a much-needed boost of confidence as rates settle following the shocks experienced last year.”

The Acuitus February sale raised £13.3m and achieved a success rate of 88%. The auctioneers said that ground rents and development opportunities were the stars of the sale.

Key points included a rare City of London retail and office ground rent investment where the auctioneers report a ‘bidding frenzy’ and a resultant sale for £1.455m – 70% over the reserve price. A landmark development site in Manchester sold on behalf of liquidators for £1.5m. A development property in a prime area of Glasgow city centre sold for £910,000, with the auctioneers saying it ‘offered sizeable potential returns for its new owner.’ A trade counter investment in Southend on Sea was sold prior for around 20% above its guide price.

Chairman Richard Auterac commented: “A number of lots attracted considerable attention from the very outset of our marketing, especially in much sought-after sectors such as development and ground rent investments. However, we have also seen sustained transactions across traditional High Street retail, especially those assets let at sustainable rents.”

He added: “The diversity of demand that this auction demonstrated is encouraging as we move into 2023.

“Investor demand remains strong and we expect to see more transactions taking place through our market place as owners either look to recycle capital or face difficulties in refinancing assets.”

In the West Midlands, Bond Wolfe held a mixed sale in February which raised £16.6m with a success rate of 90%. Highlights amongst the commercial lots included a series of freehold garage and land lots sold on behalf of Birmingham City Council. One lot sold at £56,000 from a guide price of £10,000 and another sold at £100,000 from a guide price of £15,000. A plot of land with development potential guided at £15,000 sold for £115,000.

Bond Wolfe also sold a freehold two storey commercial property, described as an investment or a redevelopment opportunity, in Cradley Heath for £430,000 from a guide price of £275,000+.

Lastly, some truly unique commercial lots at the Strettons auction comprised a number of unused, traditional red telephone boxes in Brighton. They were listed as being suitable as advertising sites or for micro-businesses, and guided at between £5,000-£32,000. Despite receiving a lot of publicity the lots did not sell however.

In summary it would probably be fair to say that the commercial auctions business has not only settled but got off to a flying start in 2023. There is lots of interest from investors and developers who are looking for opportunities and who are prepared to commit themselves to the commercial market. Value and pricing are very much the key to getting stock away however.

Looking ahead, spring promises to be a busy time in the commercial auctions market. Both the large commercial auction houses have two sales each planned between March and May.

Retail Property with Fixed Lease Sold at Auction in February 2023 by Auction House London