The volume of sales completed this year by commercial property auction house, Acuitus, approached the £200m mark as its latest auction raised £46.25m with a success rate of 77%.
A busy and vibrant room witnessed bidding for all property investment sectors across the UK, and the trend for looking at alternatives to pure retail saw a Travis Perkins trade counter in Melton Mowbray sell for £1.4m at a yield of 4.38%. With nine years unexpired on the lease and no break options, the investment currently produces rental income of £65,000pax.
Acuitus auctioneer, Richard Auterac, commented: “Investors are looking at these assets as a kind of ‘proxy shop’ which – because they are essentially warehouses with a retail kicker – means that their value is underpinned by the kind of long-term potential that is currently fuelling the logistics and fulfilment centre market. They are, in effect, a clever two-way bet by investors.
“However, there is still good demand for well-let, well-located retail investments – especially if there is relatively secure income from the outset and future scope for active management.”
A 2,918 sq ft Tesco Express with 2,802 sq ft offices above in Cambridge sold for £1.415m. The yield on the sale – 5.25% – reflected the perceived potential for converting the offices to residential.
The sale’s highest price achieved in the room was the £1.91m paid for 108 Kilburn High Road in London NW6. It is believed that this was the first time the property had been on the market for more than a century. The ground floor of the property is occupied by Palace Amusements at a current rent of £95,000pax and there may be scope ultimately for conversion of the upper floors to residential.
Not long ago regional offices felt like a friendless asset class, and Permitted Development Rights saw swathes of office space removed from the market by residential conversions. However, the sector is now the subject of increased investor support and the auction saw standalone business park office buildings in Winnersh and Luton sell at prices which reflected capital values of more than £210 per sq ft.
Richard Auterac comments: “Investors are discerning, taking an increasingly thoughtful approach to the market and are not hide-bound by previous buying patterns.
“Where they see potential, they are aggressive in their bidding. They can also think outside the box to spot value in assets even if the general view of that sector may incline to the negative – as with city centre retail.”
The next Acuitus auction will take place on December 5th at the Radisson Blu Portman Hotel, 22 Portman Square, London W1H 7BG.