Commercial Auction Market
Overview
The first quarter of 2025 and early part of Q2 has reinforced the role of well-run auctions in the real estate market, as transaction timescales continue to lengthen and buyers need solid deadlines to commit to a purchase.
In this time, Allsop’s Commercial Auction Team have held three online auction sales, raising over £122m through 183 separate transactions by way of unconditional auction contract. The team has worked hard to match buyers’ and sellers’ expectations to get deals concluded, both inside and outside of the auction.
As always there have been some particular highlights and we started the year with a package of London lots, all let on eighteen-month leases to the Royal Mail. Pricing of medium-term development stock is always hugely subjective, with every bidder having a different view on the potential of the site and their input variables, all helping to make a perfect auction scenario.
The largest of the three sites to sell was in Leyton and raised just over £4m.
The first cut in rates for a while inspired some stiff competition for single let assets, and one example of a traditional private investor buy was a Spar in Portsmouth, let until 2039. Four parties bid competitively on the day, driving the eventual sale price to below 6% NIY.
Total Raised to date
Total Transactions to date
Mixed-use parades remain popular with our buyers and in February we marketed one in Ealing, comprising six shops with flats above, which was sold prior to the auction some way ahead of its guide price of £1.8m, and reflecting a strong yield of c.6.5% NIY.
The March 20th auction was a more retail focused catalogue, with retail making up 77% of sales which is well ahead of our long-running average of 60%. Buyers responded well, with a general consensus that rents have certainly stabilised and even improved in some geographies.
The largest lot sold was a High Street asset, being offered for a Fund in Halifax. It comprised 7 shops with offices above part let to the NHS & Secretary of State, whilst it was the largest lot sold it was also one of the most popular with four bidders driving the price from £3m to £3.53m (9.5% NIY).
Buyers are very happy to compete where the pricing offers some value, which is not always easy to do, but in the last example attractive and realistic pricing was key to achieving the sale.
These investors are also very aware of the best locations and will bid competitively to secure these. York is one such popular location with plenty of local investors looking to acquire, and we sold a Keyline Builders Merchant to a local Family Office ahead of its guide price of £950,000 (7.1% NIY)
We have also seen a few ground rents in the auction room and in these turbulent times they make a very compelling investment case with long-term income and little management required. The market competed strongly for a hotel ground rent in Corby, Northants which was let on a rare 999-year lease from 2013 with five-yearly RPI reviews, and which sold for £925,000 (5.9% NIY).
Our May auction provided further examples of the above-mentioned location and value-add themes, with well-located shops in London suburbs, which offered future redevelopment potential, seeing some of the most competitive bidding. The Robert Dyas in North Finchley (with lapsed planning) and Vodafone in Tooting Broadway both achieved net initial yields of c.5.25% whilst the Clarks shop unit in Wimbledon Broadway sold for 4.4% following stiff competition.
'Mixed-use parades remain popular with our buyers and in February we marketed one in Ealing, comprising six shops with flats above, which was sold prior to the auction some way ahead of its guide price of £1.8m, and reflecting a strong yield of c.6.5% NIY'
These examples illustrate where buyers are competing to invest their money, and there are plenty of them where the pricing is realistic and the asset is well prepared. Our buyers’ surveys undertaken after each auction indicate that there is a continuous flow of new entrants to the market, there is healthy appetite from them to buy again, and the proportion of those using finance to fund their purchase is increasing.
Recent political events and the subsequent economic turmoil may have impacted wider market sentiment, but investors in the auction market are experienced and long-term players who understand the benefit of high yielding real estate as part of their investment portfolio.
In combination with our dedicated Residential Auction team, Allsop has raised £265m for our clients in the seven auctions we have held in 2025 to-date and this gives us unparalleled access to cash rich buyers.