CBRE Auction Results - 15th October 2013

Strong Demand for Office to Residential Conversion Opportunities & High Yielding Asset Management Angles Drive Sale Prices at CBRE’s October Auction

The anticipated increase in investor demand for value added properties sharpened at CBRE’s 15th October auction which saw a number of professional buyers bidding competitively for lots with alternative use potential, in some cases against new faces from the residential market.

Vacant office buildings with potential for residential conversion and retail investments offering opportunities for intensive asset management initiatives pushed total revenues to almost £21m, and in several cases pushed prices well beyond the guide prices, at The Millennium Hotel, Grosvenor Square W1.

In a very busy room, there was a tangible sense of anticipation as Lot 6, Millennium House, an office block in Feltham High Street, Middlesex, went under the hammer. Offered on behalf of Aviva Investors, this freehold office investment had real potential for residential conversion, or alternative uses. Currently producing £42,500pa with just 10 months left on the lease, it sold for more than double its guide price, and was eventually knocked down for £1.12m.

David Margolis, auctioneer, said: “This is an outstanding result reflecting a capital value of £143 per square foot against a guide price of £64 per square foot. It demonstrates how buyer sentiment in the room has genuinely improved since the summer, particularly for this kind of asset. The result also demonstrates how the wider marketing an auction can achieve produces outstanding and unexpected results for the right property, however the market remains very price and location sensitive.”

Some 44 lots were offered for sale with 28 sold to date, reflecting a 64% success rate on the day, with strong post-sale interest in a number of lots likely to push this figure beyond 70% within days.

Some highlights of the sale included:

Lot 8 - Central Buildings, Queens Square, Bowness-on-Windermere, Cumbria:
Situated in the heart of this popular tourist destination and offered on behalf of a private investor, this Art Gallery with potential for residential conversion on the two vacant upper floors produces £22,000 pa. The property has not been on the market for a number of years.

Guided: £525,00/£550,000 Achieved: £653,000 (3.18% NIY)

Lot 12 - 5/17 Palmerston Road, Southsea, Hampshire:
A freehold retail and residential investment including seven shops let to tenants including Greggs, Holland and Barrett and Carphone Warehouse with six flats above. Offered on behalf of Receivers.

Guided: £2,000,000/£2,250,000 Achieved: £2,495,000 (10.3% NIY)

Lot 15 - Burntwood Town Shopping Centre, Staffordshire:
A substantial freehold shopping centre investment with tenants including Bet Fred, HSBC, Lloyds Chemists, Heron Foods and Boots Opticians, with car parking, producing £281,077 pa. The investment was offered on behalf of Joint Administrators.

Guided: £1,500,000/£1,600,000 Achieved: £2,120,000 (12.5% NIY)

Lot 31 - 17/21 High Street, Weston Super Mare, Somerset:
The former TJ Hughes Department Store, offered on behalf of the Receivers. This landmark property had been unoccupied for some time reflecting the challenging local economy and had failed to sell via private treaty in the region of £1m. The building of 38,000 sq ft offered tempting alternative uses including possible residential conversion.

Guided: £750,000 Achieved: £670,000 (£17.50 psf CV)

Entries open for 4th December Auction

We will be accepting instructions up until Monday 4th November and would be delighted to discuss the best marketing strategy on any properties you may be considering for sale. To ensure maximum exposure and the best possible price (this may be a sale solely by auction or a combination of both auction and private treaty), please contact any member of the Auction Team to discuss the best strategy.

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