November Commercial Property Auction Market Update

Some Commercial Auction Lots Sell, Some Don’t…

Not for the first time have we said it in this bulletin – these are tricky times for the commercial property market. Commercial property auctioneers don’t seem to be doing too badly however, with lots of lots on offer and some impressive headline results. With that in mind let’s take a look at some of the commercial auction results in October 2023.

The latest Allsop’s commercial sale sold 54 lots raising almost £54m in the process. The average lot size was over £1m due to the sale of 22 lots of £1m+. The sale included the auctioneer’s largest lot sold ever – a care home in Kenilworth, Warwickshire, which sold for £4m+. Interestingly half of the top ten lots sold for funds and REITs. Many lots were sold before the sale began yet buyers still looking to buy will find a number of properties remain available.

George Walker, Partner and Auctioneer at Allsop, summarises: “Whilst buyer numbers are clearly down, it was good to see competition for the more popular lots where buyers recognise good real estate let at realistic rents, for which they will compete hard.

“Cash returns continue to be strong as a risk free alternative to property, but regardless the very best lots are selling at better than the benchmark 6% as our buyers trust the sector.

“The majority of sales were retail, making up 72% of lots sold, but the breadth of stock included industrial, a long let pub with Marstons plc guarantee, a cinema, and a care home giving buyers a wide choice of stock.

“With the MPC holding rates at 5.25% again for the second month, the market has had a break from ever rising rates but the medium term is far from certain and a buyers’ market is likely to prevail for a while.”

The Acuitus sale in October raised £27m and the sales rate of 84% left little from this event unsold. The star of the sale included a freehold retail and residential parade in Hackney, London, which sold for £3.45m at a yield of 6%.

Elsewhere three tenanted trade counter properties were sold for a combined price of £3.31m with an average yield of 6%. A tenanted retail property in Southwark, London, sold for £1.98m. In the Reading area, two office park investments sold for a combined total of £1.95m and a retail parade in Woodley sold prior having a guide price of £3m. A grade A office building on Vanwall Business Park, Maidenhead, also sold prior having a guide price of £2.75m. Further north in Aberdeen a heritable business centre investment at Waterloo Quay offered on behalf of administrators achieved £1.35m after strong bidding.

Acuitus Chairman, Richard Auterac, said: “Measured against the somewhat downbeat news coming out of capital markets businesses elsewhere this was an exceptional result for our clients and follows on from the upbeat results Acuitus has recorded over the last 6 months.

“The successful results achieved through our auctions for assets in a range of property sectors located across the UK illustrates the latent strength of investor demand. Our clients are working with Acuitus to gain exposure to this demand.”

Some key commercial results from Pugh & Mark Jenkinson Auctions October mixed sale included a detached, four storey former care home and offices which was offered at a guide of £340,000. Following what the auctioneers called a ‘bidding frenzy’ it sold for almost double that amount at £656,000.

Former Care Home and Office Building Sold for £656,000 - £316,000 Over the Guide Price - Through Pugh & Mark Jenkinson October 2023 Auction

A mixed use terraced property in Bircoates, South Yorkshire, sold for £90,000. Small retail properties in Liverpool, Castleford in West Yorkshire, and an interesting-looking former social care centre in Osmondthorpe, Leeds, did not find buyers at this particular sale. The auctioneers reported that plots of land proved popular.

Commercial highlights from Bond Wolfe’s mixed sale included the former Bilston School of Art in Bilston, West Midlands, which sold for £550,000 from a £495,000+ guide price. A former pub on a 2.7 acre plot on Bromyard Downs near Norton in Herefordshire sold for £319,000 from a guide of £275,000. The auctioneers also reported that land sales went well – a 1 acre site in Pedmore, near Stourbridge, Worcestershire, with a guide price of £10,000+ sold for £154,000. Small retail units returned mixed results with several going unsold. A large, listed vacant former office building in Smethwick, West Midlands, guided at £450,000 also remains available.

One analysis of the commercial market at the moment might be that it is something of a market of two parts: Anything that is well priced, offers good returns/yields or has clear development potential sells – and at fairly strong prices. It should be remembered that what sells is only part of the story though.