March Commercial Property Auction Market Update

The Commercial Auction Market Returns…

Very little tends to happen in the commercial auctions market in January. The two large commercial auction houses generally do not schedule a sale. Everything opens up in February, however. So let’s take a look at what happened at the main commercial auctions last month.

The first Acuitus sale of 2024 raised just over £16m with a success rate of 84%.

The lots included a fully let retail parade with significant upper parts in central Nottingham sold for £2.125m at a yield of 9.3%. Two other industrial properties in the city sold for £1.47m and £1.37m – and offered yields of 4.6% and 7.2% respectively. A modern neighbourhood centre with four tenants in Newton Abbot, Devon sold for £1.96m at a yield of 7.3%. A modern purpose built student accommodation (PBSA) investment with 14 single and four double ensuite rooms sold for £1.6m at a yield of 7%.

David Margolis of Acuitus reports: “What we are seeing is that the auction market is allowing sellers to access a much wider range of buyers than ever before. They are motivated and many are able to perform as soon as marketing begins, once again highlighting the certainty of the auction contract.”

Freehold Retail and Residential Investment in Brentford, London for Sale at Auction Through Acuitus (March 2024)

Chairman Richard Auterac adds: “Once again at the start of the year we are seeing a diversity of demand from across a wide range of buyers looking to invest in property sectors which offer a range of risk and return criteria, which is really encouraging as we move into 2024.

“We expect to see increased momentum from sellers and buyers as price expectations become more closely aligned for the larger and more complex assets in which Acuitus specialises.”

The Allsop commercial sale raised £47m from selling 52 lots with an 80% success rate.

Twelve lots sold for £1m or more, at an average of £2.878m. The bulk of the lots sold were retail and the most popular lots saw strong competition from upwards of ten bidders each.

The largest lot sold (prior to the day) was Larkswood Retail Park in Chingford, Essex, at over £7.3m. Other highlights included: Lot 16, 8-9 Loval Lane, The City, EC3 – an 8,068 sq.ft. office building, let at £358,000 pa offering development potential, which sold at £4.26m (7.8% yield and £528 psft.). Lot 21, Farmfoods, Gateshead – let at £100,000 pa on a new 20 year lease which sold at £1.45m with 6.5% yield. One of the most popular lots was a builders’ merchants in Bedford (Lot 20) let on a short lease at £41,125 pa for only two more years which sold at £900,000 (4% yield).

George Walker, partner and commercial auctioneer at Allsop, said: “It is always invigorating for us and clients to see larger lots with so much competitive bidding, often after some months on the market with little success. The auction buyer’s mentality is clear: they are seeking value or opportunity and can be very driven where they see the right mix in which to invest their cash.

“Lack of supply continues to be one of the greatest challenges that motivated buyers face, which itself drives competition to the better lots. Neither the changing political landscape this year nor the costs of money impacts their appetite to buy, so provided the price is right we see this demand continuing. With that in mind, we look forward to building the next auction catalogue which will be released on 1 March.”

Meanwhile Bond Wolfe’s mixed sale raised £28.5m with 182 lots offered and a 92% success rate – which the auctioneers say was their highest result since 2021.

The total included £3.9m raised from 24 properties sold on behalf of Birmingham City Council, with several sales well above guide price. And another £1.1m from the sale of a marina, house and outbuildings in South Warwickshire (sold prior to the day).

The properties sold for Birmingham City Council included a day nursery in Moseley producing £18,000 pa rent which had a guide price of £180,000+ and which sold for £416,000. A fire-damaged former children’s centre in Quinton with a guide price of £300,000+ sold for £565,000. In Duddeston council land and premises offered with a guide price of £75,000+ were sold for £380,000.

A fair description of the commercial auction market after the short winter break might be that there is lots of interest and the market is busy – at least in the case of well priced lots.