Acuitus raised £46.25m at its latest auction with a success rate of 77%, taking its total for the year to almost £200m.
The catalogue offered 112 lots – the firm’s largest to-date – of which 85 sold. However, the success rate was slightly down on the 81% achieved in July.
A busy room witnessed bidding for all sectors and the trend for looking at alternatives to pure retail saw a Travis Perkins trade counter in Melton Mowbray sell for £1.4m, a yield of 4.38%. With nine years unexpired on the lease and no break options, the investment produces rental income of £65,000 pa.
Auctioneer Richard Auterac said: “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 of offices above in Cambridge sold for £1.4m. The 5.25% yield reflected the perceived potential for converting the offices to residential.
The highest price achieved in the room was the £1.9m paid for 108 Kilburn High Road, 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 is occupied by Palace Amusements at a rent of £95,000 pa and there may be scope to convert the upper floors to residential.
Acuitus said it was now seeing increased investor interest in the regional office sector, which not long ago was a “friendless asset class” with permitted development rights allowing swathes of office space to be removed from the market by residential conversions. 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.
Auterac said: “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 sale took place at the Radisson Blu Portman Hotel, W1.
The investor’s view
One longstanding trader, who is focusing on retail outside London, told EG: “It feels like there are a lot of opportunities now compared to nine months ago. There are fewer buyers now and people are naturally nervous so the depth of bidding is different with lots of things selling just above reserve. It’s a good time for me to be buying. The market is going to get worse before it gets better, but you have to carry on – you can never catch the bottom. The auctioneers are smart. They have rebased a lot of the prices.”
Earlier in the week the same investor bought a freehold shop in Worcester, let to Holland & Barrett until 2021, post=auction from Allsop for less than its £500,000 reserve.
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