November Commercial Property Auction Market Update

What Next in the Commercial Market?

After a busy September the commercial auctions market had something of an unseasonal holiday in October – neither of the large auction houses held a sale. Business came back with a bang at the start of this month, however, with both auction houses offering sales. So in this report we will focus in on what happened at those.

At the first Allsop sale since September just over a hundred lots were listed. The sale raised £50,756,101 in total, a slight fall from circa £57m at the previous event.

Speaking prior to the sale George Walker, partner and commercial auctioneer at Allsop, said: “It appears as though all eyes are on the Chancellor’s budget on October 30th, which investors may see as a turning point in the market where yields might well compress. We therefore expect buyers to be interested in this catalogue and its wide range of stock, with a Holborn office building being the largest, as well as several industrial and retail assets across the country. We anticipate a strong end to the year as tailwinds give investors further confidence.”

The star of the show – the freehold office investment in Holborn, London, totalling 14,227 sq. ft. and let at £413,250 pa until 2025 and also having future redevelopment potential – and guided from £5.25m+ actually sold prior to the sale.

The largest deals done at the sale itself included a freehold industrial estate Investment in Burton upon Trent, DE14, which sold for £2.71m at an initial 5.81% yield. A high profile freehold grade II listed restaurant in Windsor, SL4, let to the Franco Manca chain and including a telecoms investment sold for £2.2m at a 6.75% yield. A freehold distribution warehouse investment in Ebbw Vale, NP23, let to DHL sold for £2.19m at a very attractive 9.35% yield. In a vote of confidence in retail a prominent town centre freehold shopping centre investment in Sittingbourne, ME10, with tenants including Specsavers, Costa Coffee, Peacocks, F. Hinds, The Works and New Look sold for £2.19m offering an impressive 21.29% yield.

The Acuitus sale in November raised around £12.47m and a healthy 35 of the 48 properties offered sold. The largest lots sold at the auction included a freehold supermarket investment in Uxbridge UB7, let to Tesco Express, which sold for £1.81m at a yield of 4.62%. In Northwich, Cheshire, a KFC drive thru restaurant investment sold for £1.23m offering a yield of 6.5%. A Co-Op convenience food store supermarket in Banwell, Somerset, sold for £840,000 at a yield of 8.67%. In Belsize Park, London, a medical/healthcare investment sold for £735,000 at a yield of 6.81%. In Hereford a commercial high street retail investment let to McDonald’s sold for £655,000 representing an 8.82% yield. Another key lot in Penrith, a well located trade counter let to Travis Perkins, sold prior to the auction.

The latest Acuitus Commercial Property Auction Data (cPad) report shows that the third quarter of 2024 saw 415 lots sell at auction for a total of £232.5m.

Acuitus chairman and auctioneer Richard Auterac said: “The auction market has continued its strong performance throughout the year and this in part be attributed to an influx on new investors into the commercial property market.

“The increased level of transactions in commercial property market continues from the first half of the year with the total volume of sales hitting £655.9m year-to-date, and the total lots sold hitting 1,111.”

The Budget at the end of October and the (small) interest rate reduction this week has  changed the commercial investment climate somewhat. However, these events probably did not affect these latest sales to any great extent since sellers were probably firmly committed to selling (and buyers firmly committed to buying) by then. It will be very interesting to see what direction the commercial market takes over the next few months and, as ever, these auction sales will serve as a very good barometer.