Heightened Confidence Drives Prices as Investor Sentiment Hardens at CBRE’s December Auction
CBRE marked a resounding end to 2013 at their 4th December auction, raising £22 million with a 78% success rate, after competitive bidding erupted in a packed room at London’s Millennium Hotel.
Some 34 out of 44 lots offered have sold to date including five prior to the event. Big ticket properties sold well with three lots in the room and two prior, producing final bids in excess of £1 million. Professional commercial buyers and private investors chased retail and leisure stock with a particular focus on properties with residential upper parts, for which there was a good depth of bidding in the room.
48/49 East St, Brighton, (Lot 14), produced one of the strongest single results on a retail investment at auction for a while and the second largest lot to sell under the hammer in 2013. Located in a “destination” shopping street surrounded by designer boutiques, the shop was let to Hobbs Limited until 2019. The residential upper parts were divided into five self contained flats producing a strong combined income of £214,300pa. It was knocked down in the room for £4.02 million off a guide price of £3.75 million, reflecting a 5.03% net yield.
Interest prior to the auction had been “intense” according to John Townsend, CBRE’s Head of Auctions, who said: “This is one of the largest commercial lots to sell at auction this year. Vendors are becoming increasingly keen to offer higher value stock at auction as demand for correctly priced property continues to outstrip supply, particularly in the retail sector. This part of Brighton has always been in favour with investors and properties here are rarely offered in the room”.
“There is a renewed and increasing confidence in the auction marketplace, coupled with a growing realisation that now is a very good time to sell and with more stock now coming to the room, there are huge reserves of equity out there waiting to meet it.”
Freehold Bank investment in The Square, Liphook (Lot 4). Let to Lloyds Bank plc until 2023 (subject to option) at £37,000pa, this property sold for £670,000pa, a net yield of 5.22%. The investment included a large car park to the side, which had future potential for development, subject to consents and the existing lease.
A public house investment let to JD Wetherspoon PLC, with nine flats above, located on South Norwood High Street, London SE25, (Lot 15), made almost a third above its guide price of £1 million, to sell for £1.41 million in the room.
The Scotch Corner Service Station at Middleton Tyas, (Lot 16), located at the junction of the A1 and A66 exceeded all expectations. This highly reversionary property was predominantly let at a peppercorn for a further 23 years and had a further 16 acres of land let at just £780pa. Guided at £600,000+, the property quickly passed the £1 million barrier, before being knocked down in the room for £1.125 million.
A Kwik-Fit Tyre and Exhaust Centre investment in a prominent position in Durham Road, Gateshead, (Lot 18), producing £50,000pa and let on a lease expiring in 2032, sold for £800,000, off a guide price of £675,000-£700,000, reflecting a 5.9% yield, underlining investors appetite for good quality income streams.
Another sale of note was a Freehold Leisure Centre Investment in Sefton, Liverpool, (Lot 35), located on the A59. Let to Total Fitness Health Clubs Ltd until 2038 (subject to option) at a total rent of £300,000pa, it was guided at £2.2/£2.3 million and sold immediately prior to the auction.
Entries now open for our 26th February 2014 Auction
CBRE’s first commercial auction of 2014 will be held on Wednesday 26th February at The Montcalm Hotel, 34-40 Great Cumberland Place, London W1H 7TW.
If your financial year closes at the end of March and you wish to bring your properties to the market before then, CBRE’s February auction will be the perfect sales platform for you. The deadline for entries into this auction is Friday 24th January 2014.
If interested then please do not hesitate to contact any member of the team below for an estimate of realisation without obligation.