Enthusiastic bidding on commercial property in desirable locations across the UK pushed receipts to £20m at CBRE’s first auction of the autumn where buyers sourced stock to asset sweat or promising security of income.

A packed room at the auction held on 17 October at The Millennium Hotel, Grosvenor Square, London, W1, saw overseas and UK bidders compete against telephone buyers producing some strong results and prices well above guides. Six properties sold for more than £1m and several for more than £750,000.

Success rates closed at almost 70%. Yields ranged between 4.9% on the sale of a prime retail investment let to Starbucks in Earls Court Road, London, selling for £920,000 off a guide of £700,000-£750,000. At the other end of the spectrum a 23% yield was achieved on Queensgate Shopping Centre in Grays, Essex, which sold on behalf of the Receivers for £1.25m.

Furious bidding broke out on Lot 19, the largest lot of the catalogue. The office building in Heathrow Central on Bath Road, located directly opposite the UK’s major airport was entirely let to Philips Electronics (UK) Ltd until March 2013, producing £451,000pa. The prominent freehold office investment had clear redevelopment or alternative use potential.

Experienced buyers in the room spoke of its potential conversion to hotel use and a bidding war broke out culminating in a 20 minute contest before narrowing down to two buyers. Guided at £1.2m it was eventually knocked down for £3.76m reflecting a capital value of £200 per sq ft.

Experienced buyers in the room spoke of its potential conversion to hotel use and a bidding war broke out culminating in a 20 minute contest before narrowing down to two buyers. Guided at £1.2m it was eventually knocked down for £3.76m reflecting a capital value of £200 per sq ft.

The managing director of the private property company based in London, who chose to sell through CBRE’s auction said afterwards: “There were in excess of 40 viewings and over 50 sets of legal documents downloaded so we anticipated competition but witnessed firsthand the high level of emotion generated by the auctioneer. The final price was outstanding, far better than we could have achieved through private treaty.”

John Townsend, CBRE’s lead auctioneer, said: “This is one of the largest commercial investments to sell at auction this year. It demonstrates how equity rich buyers are willing to invest large sums of personal wealth into larger lots if they are correctly priced and in the right location.

“High yielding asset management opportunities as well as stock let on long leases with at least 10 years unexpired let to good covenants are in demand. However we are also seeing a notable rise in appetite for sensibly priced vacant stock in desirable locations and also for smaller lot sizes in the provinces which local buyers with regional market knowledge can easily manage.”

Townsend added: “We were delighted to raise £20m from the sale of commercial property in just over two hours at a time when the private treaty market is still extremely slow. The outcome is an indication of the power of auction. There has also been huge interest post sale and we expect revenues and success rates to rise.”

Other auction highlights included:

•A prime freehold bank investment let to Santander (UK) plc in Winchester High St, producing £125,000pa. Guided at £1.8m- £1.85m it sold for £1.87m, a 6.3% yield.

•Falcon Park, West Wiltshire Trading Estate: A highly reversionary freehold industrial ground rent investment with 140 years to run, producing £62,920pa sold for£1,060m, reflecting a yield of 5.6%.

•A substantial office investment in Trinity Park, Birmingham, offered with part vacant possession offering numerous asset management opportunities, sold for £750,000 off a reserve of below £500,000 reflecting capital value of approximately £17 per sq ft.

CBRE’s last auction of 2012 takes place at The Millennium Hotel, Grosvenor Square, London, W1, on 5th December. We are now accepting instructions for which entries should ideally be confirmed by 2nd November.

John Townsend, Head of Auctions
j.townsend@cbre.com
020 7182 2538

Chris Mills, Executive Director, Auctions
chris.mills@cbre.com
020 7182 2539