May Commercial Property Auction Market Update

A Slow Month, But No Reflection On Commercial Auction The Market

April wasn’t the busiest month for UK commercial property auctions. Rather than any reflection of a lack of willingness to buy and sell, the Easter break falling slap bang in the middle of the month was probably the reason – just as with the residential property auctions market.

However, let’s look at what has happened in the market over the last few weeks.

Major commercial auction house Acuitus held its last sale at the end of March and raised £16.28m in total. The sale saw competitive bidding across several commercial property sectors including High Street retail, residential conversions and industrial property. Acuitus didn’t hold a sale in April itself, however.

The Allsop April sale was something of an unusual one. It was a single vendor sale offering properties around the country occupied by betting chain William Hill. All 57 properties were to be let on new leases with lot sizes ranging between £633,000 to £63,000 and yields from 3.3% to 15.6%. The sale achieved a 100% success rate and raised almost £9m.

Tom Hanson, Senior Associate at Allsop, commented: “The results reinforce our view that there is clearly liquidity in the market with cash buyers undeterred by the turbulence in the financial markets, taking a long-term view.”

He added that the sale attracted considerable interest and competitive bidding: “There was a lot of competition for lots, with over 220 registered bidders for this auction and 23 active bidders vying for the most popular lot”.

Savills held a mixed sale this month. Of particular interest, was an unbroken parade mixed commercial and residential unit in Beckenham comprising of 10 retail units, 16 residential flats amongst other accommodation and garages which sold for just over £8m – nearly double its guide price of £4.5m – and making it one of the most expensive properties to be sold under the hammer by any auctioneer.

Other lots also achieved some strong prices: A three storey mid terrace comprising of a commercial unit on the ground floor and a self-contained two bedroom maisonette flat sold for £555,000 – £60,000 more than its guide price. An end of terrace ground floor commercial and office unit achieved a price of £255,000.

Jeremy Lamb, Director of Savills Auction team, comments: “Despite a more price sensitive commercial market which is largely driven by  uncertainty around the increasing Bank of England base rate, shops and uppers remained of interest and we have seen some good results. On the residential side, end users are highly active at the moment and there is an increasing demand for owner occupier stock.”

SDL Property Auctions also held a mixed sale this April. Returns suggested keen interest from buyers in well-priced lots. A shop in Nottingham with a guide of £150,000 sold for £155,000. A mixed use property in Belper, Derbyshire, with a guide of £125,000 sold for £135,000. A mixed use property in Stoke on Trent with a guide of £75,000 sold for £91,000 (above its Red Book valuation). However, a lot in Leeds with a guide of £75,000 went unsold and remained available at £80,000.

Highlights from the sale included a three story commercial property in Whitefield, Greater Manchester, which sold for £312,000 from a guide of £250,000. A mill in Burnley sub-divided into units and let at £75,000 pa sold well over its £480,000 guide price with the hammer eventually falling at £595,000. A social club in Birmingham B23 with a guide of £500,000 sold prior to the auction for an undisclosed amount.

Looking ahead, although May is also peppered with bank holidays it promises to be a busier month for commercial auctions with a number of sales and interesting lots already in the catalogues. In particular the catalogue for the Acuitus sale on 18 May promises ‘larger lots bringing bigger opportunities’. It already lists several lots with guide prices of £1m or more.