Published by the Estates Gazette 28.08.26
The UK commercial property investment market may still be experiencing sluggish transaction activity overall, but the auction sector is bucking the trend and has just achieved an all-time record high of half-year sales volumes.
Analysis in our latest Commercial Property Auction Database report shows that that auction turnover in the first six months of this year reached £444.2m from the sale of 794 lots, beating the previous highs established in H1 2025 and H1 2024. A strong start to the year was compounded by an additional £205m worth of sales in Q2, which represented a level which was 55% above the long-run average for the quarter.
This somewhat paradoxical performance in comparison to the mainstream private treaty market reflects both a broadening of the auction buyer base and also an increasing diversity in the types of assets being offered for sale at auction.
Many new auction buyers have turned their backs on the residential buy-to-let market and have a buying preference for relatively lower priced assets. This is reflected in the lot sizes of commercial assets being successfully offered at auction. Average lot sale prices in Q1 were £604,000 in Q1 and this ticked down to £515,000 in the second quarter.
What are deemed to be ‘alternative’ assets such as leisure, medical facilities, care homes, pubs, bars, restaurants and hotels have been the focus of concerted buying in the past year and have typically been accounting for around 25% of total sales. However, in the first half of the year that market share fell from 17.4% in Q1 to 7.7% in Q2.
But given that overall volumes are at record highs, this change in sector proportions shows that there are still plenty of buyers for the more ‘traditional’ assets that come to auction.
Against a backdrop of ongoing cost of living pressures and fragile consumer confidence, retail sales activity has remained remarkably robust. Retail assets accounted for 51.6% of Q2 sales – equivalent to £105.8m and slightly up from a 48.5% share in Q1.
Office and industrial assets remain sectors to watch as investor confidence appears to be gradually building – although buyers are highly selective. Established office locations, good transport connectivity and where there is a shortage of good quality secondary stock continue to be the key drivers of demand.
In the industrial sector, purchases by owner-occupiers have been a notable example of the expanding buyer base, and has seen demand for older, smaller and second-hand properties which might otherwise might not have been in demand. These trends in both the office and industrial sectors are important signals for potential sellers of these types of property and represent a window of opportunity.
From a geographic perspective, London continues to demonstrate its enduring appeal to investors. A total of 162 lots sold across Greater London during the first half of the year and accounted for 33.5% of all sales. This concerted buyer demand is reflected in the yield profile London lot sales which hardened slightly in Q2, moving to 6.15% from 7.31%. In contrast, the Rest of UK yield moved up to 9.96% from 9.36%.
Overall, yield movements were more muted than the changes seen in transaction volumes. The cPad All-Property Average spot yield eased marginally to 8.63% from 8.65% in Q1. Rolling average yields were unchanged at 8.89%, extending a period of broad stability that has now lasted for well over a year.
Prime yields have remained comparatively tight, with the cPad All-Property Prime Yield standing at 7.17% on a spot basis and 7.06% on a rolling average basis. At the other end of the spectrum, secondary yields softened slightly to 11.31%, highlighting the continued distinction investors are drawing between stronger and weaker assets.
Understandably, investors are keeping a watchful eye on the challenges facing the wider commercial property market. Yet record sales volumes, a broadening buyer base and stable yields all point to a market that remains active and resilient. For those willing to look beyond the headlines, commercial property auctions appear well positioned to maintain their momentum into the second half of the year.
