Allsop raised more than £30m from its hastily rearranged, scaled-back commercial sale last month, shortly after the country went into coronavirus lockdown. Partner George Walker talks about an experience unlike any other in his 24-year auctions career.
How did vendors react to the sudden change in the broader climate and the switch from ballroom to online sale?
The market changed unrecognisably in the three weeks of marketing. The lockdown and forced closure of most businesses, certainly those on the high street, really impacted confidence in a way that only ever occurs in simulated conditions, but this was real.
Our switch to online was welcomed by most, because it was necessary and it worked, and despite the limited timescale – less than a week – we kept everyone in the loop as much as possible.
Clearly some withdrew lots, and we will never know whether this was down to the seismic change in market conditions or going online. I suspect a bit of both.
What was the key theme of the sale?
The theme more than ever was that buyers were only prepared to invest where they either saw longevity in the tenant, when they were happy to pay a strong yield; or where they were buying off a good double-digit return, where the risk was well rewarded by return. We sold across all sectors and averaged 14 bids per lot overall.
How did investors respond to high street retail and leisure lots?
Cautiously. Having said that, one vendor had a portfolio of regional restaurants and bars, and encouragingly a good number were sold. Two lots sold to tenants even as the businesses were closed – lot 131, a nursery in Rothwell, Leeds, and lot 130, a restaurant in Newmarket. This is a good sign as we look ahead. It shows independent tenants thinking well beyond lockdown about the benefits of being owner occupiers. Interestingly, they both used finance.
Which were the most sought-after investments?
Lots 1 and 2, both let to Boots [in Halstead, Essex and Worcester Park, Greater London], were among the most popular. Lot 9, a shop let to Joules in Horsham [West Sussex] attracted the most bids of the day and sold at more than double its guide price.
Transaction volumes were down, but were you able to see any impact from the Covid-19 crisis on pricing?
As we know, a lot of assets didn’t sell, and without that sales data it is hard to see where pricing is across the board. Very few reserves were reduced, so for those sales that were achieved there was little movement in pricing from six weeks before the auction.
Are online auctions a less spontaneous affair than in-room auctions?
We had feedback that the buyers like to see other people bidding, which seems to give them confidence to bid in the auction room and this is hard to replicate online. It’s the human measure: “If it’s good enough for Tony Khalastchi, then it’s good enough for me!” It’s that feeling of, “If they want it, then so do I!” All these basic human reactions are engrained in us all and are hard to quantify, but they are very evident in the auction room.
Allsop’s next commercial sales will be online on 19 May and an extra date of 16 June.
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