September Commercial Property Auction Market Update

The Story So Far

August is always a slow month for commercial auctions, with very few properties offered for sale. Neither of the big commercial auction houses ran an auction this month. But they did publish some interesting data and opinions on how the market is progressing so far in 2024. We’ll take in some thoughts from these reports here.

Following the last sale of the summer Allsop reported on progress so far this year across all markets in their latest Market Update. The update says that the commercial auction market is set to report ‘modestly reduced volumes’ at a time in the market when many capital markets are trading at historic lows. Their market was down by 2.6% year on year with £1.119Bn traded to the end of June. It added, however, that Allsop raised £291m for the year to date which is a strong 8% over the same time in 2023.

The report says that the wider success rate overall has fallen, despite the lower volumes, to 70% across the sector – although the Allsop success rate held up at close to 90%.

The report notes an interesting trend this year where commercial lot sizes are tending to rise. It says that seven lots sold at over £4m, increasing the average lot sizes to £839,000 from £636,000 – an increase of 31% compared to 2023. Allsop say: ‘We think it is down to the weaker market ironically, where vendors have lost patience with a long sales process and lack of urgency, they have taken the decision to get the property sold. The buyers welcome access to these bigger lots, across all sectors and we see the trend continuing to develop.’

The Acuitus cPad report Q2 2024 says that the commercial market experienced what it called a ‘robust start’ to 2024. There were significant increases in both the volume and value of lots sold and this continued into Q2. It says that the year to date has ‘seen unprecedented activity and record-breaking performance across the auction sector.’

The report records that Q2 sale volumes reached a record £206.3m, well above the previous Q2 peak of £202.3m in 2021 and 70% above the long run average for the quarter. This brought the total volume of H1 2024 sales tracked to £423.3m. It said that this was a significant increase on the previous H1 peak of £348m in 2021 and 58% above the long-run average.

A total of 353 lots were sold in Q2 2024 compared to the previous peak of 329 lots in Q2 2021. The total number of lots sold in H1 was 696.

Acuitus say that there has been a ‘marked growth’ in the number of lots being offered for sale by auction. During the first six months of the year 1,163 properties were listed – a 61% increase on the previous post-pandemic peak of 724 in 2021. (Includes properties listed in more than one subsequent auction.)

Lastly, a few results from the mixed sales in August which included some commercial lots. At the SDL Property Auctions (Eddisons) sale only two out of 11 commercial lots sold with others unsold, withdrawn or postponed. Land and garages in Leicester with a guide of £75,000 sold for a strong £138,000. A former church in Chesterfield with a guide of £115,000 sold for a strong £149,500.

At Auction Estates a former marketing suite/retail shop in Derby city centre sold for £35,000 from a guide of £23,000. A retail shop in Chesterfield let to Betfred and with a guide price of £155,000+ sold prior to the sale. A modern three storey office investment in Sheffield city centre extending to 14,609 sq.ft. and producing an annual income of £128,750 sold prior to the sale to an investor. The auctioneers said this sold ‘significantly in excess’ of the guide price of £750,000+.

The commercial auctions get back into full swing in September, with both major commercial auctioneers holding large auctions towards the end of the month. With some major tax-related announcements due in the next Budget at the end of October it might be interesting to see what buyers and sellers do (or don’t do) at these sales.