Commercial Auction
Market
Overview
Like most capital markets, the Commercial Auction market is down on historic volumes, but in contrast to the wider market ours is only down by around 10%, with overall volumes to the end of February 2024 at £1.08Bn against £1.2Bn for the corresponding period the year before.
The Allsop Commercial Auction team numbers for the first quarter are in line, as we have traded £115M against £135M in Q1 2023 which included portfolio sales by William Hill and Bournemouth Council which boosted volumes.
The wider market auction market has seen a marginal fall in lot size with an average success rate of just 70%, which is where the Allsop team differ.
The Commercial Auction team continues to see a meaningful increase in the average lot size, from £648,000 to £859,000 this year with the success rate holding strong at a little over 85%, which compares to £351,000 and 73% across the market as a whole.
These volumes show a strong appetite from buyers, and volumes will increase once sellers are prepared to trade at levels where the market provides competition, but not every seller can.
Rising success rate
Increase of average Lot size
Headline Deals
The biggest lot sold this year was Larkswood Leisure Park, Chingford which had been on the market for 5 months and was sold ahead of its £7.25M guide price at 8% net.
Other notable deals are the run of sales of Shopping Centres, we sold over £12M alone in the March sale – over the course of the last 12 months we have sold about 25% of the stock in the sector below £10M at an average of over £3,000,000. Once again demonstrating that when the sellers price assets realistically, even these bigger complex assets, the auction buyer is ready with their cash.
February Lot 26 - Larkswood Leisure Park, Chingford
Who is buying?
Private Investors are a wide base of buyers with regulars buying and being outbid at every sale competing with cash rich individuals looking to expand their portfolios.
Various overseas buyers have been successful, but no theme has emerged, except they are informed, seeking value for money and have ready cash to deploy.
Who is selling?
The year to date has been dominated by portfolios from smaller private property companies, with some evidence of trading beginning to emerge.
Tesco and Funeral Partners have continued to use the auction room for their ongong sale and leaseback programmes but not in the volumes that we saw last year from Tesco, Farmfoods and William Hill.
Various Funds have been liquidating historic assets, with the majority in the retail sector.
Direction of Travel
With every single auction, it is clear that the buyers are ready and will happily compete for the right asset when priced realistically.
As with all capital markets, the first move of rates will mark the end of a long period of speculation and hopefully a period of increased activity with a new level of certainty.
However, as we have shown, the auction market is healthy enough as we are, and have been since August last year when rates increased to 5.25%, so any change is unlikely to change much immediately, but form part of the journey of our new normal.