October Commercial Property Auction Market Update

Commercial Property Auctions Market Back To Busyness…

The commercial property auctions market takes a break over the summer holidays and commercial properties are rarely if ever offered during this time.

But, as with residential sales, commercial auctions usually get back to business in September, with this frequently being one of the busier months of the year for commercial sales.

Here’s what happened at some of the main commercial sales last month:

Allsop’s large September commercial sale saw a sizable increase in both the number of lots offered and the amount raised.

September’s sale offered 227 lots and raised £111.6m compared to the previous sale in July which raised £81.6m. The percentage sold was similar at both sales at 89% and 88% respectively.

Acuitus offered 47 properties in their September sale of which 34 were sold raising a total of £18.9m. A highlight was the sale of a Royal Mail distribution centre in Kilmarnock (south west Glasgow) for £1.405m. The lot sold for £200,000 above its guide price, and the purchase reflected a net initial yield of 6.3%.

On the state of the commercial market currently Acuitus Chairman, Richard Auterac, comments: “There is no denying that the current economic headwinds are producing differing opinions among investors but this leads to opportunities.

“We’re seeing assets becoming available that historically have been the preserve of the investment funds. Many of these assets have seen a dramatic reduction in price during the past 10 years or are development opportunities that the current owner no longer wishes to take forward.

“However, as the results of this auction show, commercial property still offers the potential long-term attractive income streams which preserve value notwithstanding a period of higher inflation.”

Strettons offered 42 lots last month in London and around the UK, including commercial and some residential with 25 lots sold either at the auction, prior or afterwards.

Interesting lots included a terraced commercial property and upper parts in Hackney, London, where the seller was not receiving any rent, which sold for £345,000. A freehold investment in Kentish Town consisting of a shop and five flats producing £130,240 pa did not sell off a guide price of £2m.

Savills also held a mixed sale in September, with commercial and residential properties, portfolios as well as development sites nationwide. The catalogue was its largest in five years and reflected a 40% year on year increase. Over £40m was raised with 78% of 156 lots sold.

Nicholson Boyd, Auctions Associate Director at Savills, commented: “After a summer break following our most successful ever auction in July this year, it was encouraging to see a 40% increase in the amount raised in our September sale year on year. We are heartened to see continued momentum despite a backdrop of interest rate rises and inflationary economic headwinds.

“157 lots were on offer in our multi-sector catalogue which included residential, commercial and development opportunities. We saw strong demand for houses in central London and the suburbs from bidders and there was also competitive bidding for several commercial lots. Enthusiasm continued yesterday in the auction room, though a degree of cautious optimism is in the air.”

Again, as with the residential market, most September commercial sales were arranged and/or held before the possible impacts of the mini-budget and Bank of England interest rate rise became apparent at the end of the month.

So it will be interesting to see how these might affect the commercial auctions market in our November update.