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Commercial Auction Annual Review 2012
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2012 Commercial Overview

We started the year in a recession with predictions that the economy would continue to contract for most of 2012. Our results for the first quarter however did not reflect this and we raised an encouraging £90m.

The second quarter was more cautious and risk averse but sentiment improved over the summer and the year closed with a total of 671 lots sold, raising £337m at an average success rate of 81%. This was an increase on our volumes in 2011 and our market share has been sustained at 45% reinforcing our position as the UK’s leading
Commercial Auctioneer.

Activity in Commercial Auctions contrasted significantly with the Private Treaty sector which saw a marked fall in volumes over the year reinforcing the auction room as one of the principal barometers of the market.

Looking specifically at the retail sector, events on the High Street continue to exert a downward pressure on rents. Volumes from this sector however improved by over 10% compared to 2011. The investor’s affection for retail, while not unconditional, remains firm.

Across all sectors we have seen a polarisation of demand however, with the strongest bidding for the high quality assets, an increased appetite for the multi-let opportunities, leaving the investments in the middle ground with few followers.

At the quality end we continue to see good competition for the best located buildings and our examples throughout this review will show how in many instances we exceeded historic pricing levels, with cash buyers chasing quality with enthusiasm.

The middle ground faces the three factors of historically high rents, short leases and questionable tenant strength. This has led values to fall in the last 12 months, a trend which gathered pace from the end of the first quarter and seems unlikely to change.

Asset management opportunities and multi-let centres in less good locations which are correctly priced can draw in a number of buyers, some of whom have been out of the market for some years who are now being attracted by high initial yields and the chance to add value.

We would like to thank you for your support in 2012 and wish you well for the coming year.

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