Heading up the sale is the Springwater Business Park, in Whittlesey, Cambridgeshire. It takes place on Wednesday 8th September at the firm’s Cambridge showrooms. Comprising of five industrial units, occupied by three established tenants, the business park currently has a rent roll of £53,043
When asked, why the predominance of commercial property at this auction?, Ian Kitson, Director at Cheffins replied:
Yes…“this is the most commercial lots that we’ve had for a while. However we wouldn’t really say that this is any sort of reflection of the commercial market, its more that the residential market has been so busy that there are less residential lots coming to auction at the moment. Commercial owners are also looking to capitalise on the strength of the current market, particularly in the industrial sector.”
Out of every economic crisis comes opportunity. Given the outlook for global and regional estate markets, there are more opportunities developing that on an attractive risk-adjusted basis will be coming to market over the next 12 months or so.
Kelly Whitman, Executive Director, PGIM Real Estate says that:
“With the right approach to asset management, necessity-driven retail sites, such as neighbourhood centres, can be adapted to benefit from online spending…”
There are several key factors supporting the outlook and more opportunities, barring another set-back with mutant viruses, as Covid wanes in the population. The vaccine rollout is taking effect, and going forward the UK economy is set to benefit from several tailwinds as we go into 2022.
Re-opening this autumn has already given the UK economy a major boost, with spending from accumulated savings giving further fiscal stimulus. Shortages are an inevitable consequence when supply outstrips demand, with an inflationary environment as a spin-off, but this lends support to assets prices.
Commercial property tenant demand appears to have turned a corner, supported by these improving economic conditions and a strengthening labour market, albeit with severe labour shortages in some areas and a continuing skills gap in the UK.
The central banks remain committed to a supporting monetary policy and the motivation for them to keep interest rates low would point towards further yield compression – increased asset prices.
There is no doubting that parts of the retail and office markets are facing structural headwinds, so investors are increasingly turning to niche sectors as a source of resilient income-driven performance. Traditional large-scale offices are going to need substantial investment to not only meet future climate change adjustments, they will also need to be post pandemic compliant as well.
As we emerge from the pandemic, or at least learn to live with Covid, companies are beginning to solidify their strategies, one of which is to go local; to develop a hub and spoke system where smaller office units in strategic locations, staffed by smaller teams, support a central hub.
A major beneficiary of the pandemic has been the industrial sector and logistics hubs, and with online spending on a continuing upward trend, that’s not going to go away soon. There are opportunities to be had in this sector with careful selection.
Auction lots at Cheffins
The are some interesting investments coming up at the auction, many of them with appeal to small-scale commercial property investors.
– The steel frame units on the business park total over 12,000 sqft, currently occupied by EDF EN Services UK Ltd, Trade Van Sales Ltd and Stadler UK Ltd. The Park has an estimate of £675,000 – £700,000.
– A modern semi-detached two storey office/workshop building on Ermine Business Park in Huntingdon. With on-site parking, the premises feature a series of office spaces, totalling over 1,966 sqft, located one mile from Huntingdon town centre and the A1 and A14 trunk roads. The property has an estimate of £195,000 – £210,000.
– In Ipswich, there is a four-storey commercial investment property, which has been recently refurbished and comprises a retail unit, storage area in the basement, a store/workshop and an additional two further storerooms, totalling over 1,679 sqft. Located on Carr Street, the property is in the pedestrianised part of the town centre with nearby occupiers including Santander, Costa Coffee and Specsavers. The building benefits from a recently signed 10-year lease, with a current rent of £15,000 per annum, and it has an estimate of £175,000 – £200,000.
– For anyone looking for a mixed-use investment, a prime shop in Braintree, with planning permission in place for two residential flats is on offer with an estimate of £295,000. Set in the town centre on Bank Street, the property is offered with vacant possession, having previously been let to Edinburgh Woollen Mill.
– On Newmarket High Street is a former banking hall with permission to convert to retail with flats above. The building has the ability to be converted to a large retail unit, with basement storage and either one or two residential flats above. It has an estimate of £325,000.
Ian Kitson, Director, Cheffins says:
“We have seen that demand for commercial investment opportunities has increased over the past 12 months as investors look to diversify income streams. Industrial buildings such as those available at Springwater Park continue to be some of the most sought-after as the sector sees vast levels of demand and strong yields.
“Similarly, mixed-use buildings are being actively sought by both smaller corporate and private investors, or career landlords who look to spread their bets across both the residential and commercial sectors. Values are increasing for small scale investment options, and we have seen that many buyers have turned to the auction room to pick up commercial opportunities at competitive prices as confidence in the market continues to grow following the Covid-19 pandemic.”
In the residential section, there is a renovation opportunity in the form of a four-bedroom bungalow on Barkway Road in Royston, which has an estimate of £350,000, and there are two substantial barns in Hempstead, near Saffron Walden, with an estimate of £60,000 – £75,000.
In the land section there is 17.8 acres of grass and amenity woodland at Creeting St Mary, near Ipswich. The land is intersected by a river and provides an opportunity for amenity use, and is sure to appeal to nature-lovers and those seeking woodland parcels. This has an estimate of £110,000 – £120,000.
Ian Kitson says:
“Renovation projects are continually of interest for auction buyers and the house in Huntingdon is a fantastic prospect for someone looking to purchase a historic property and preserve it for future generations. The land at Creeting St Mary is also set to be popular as a rare opportunity for those looking for amenity or woodland parcels.”
The auction will take place on Wednesday 8th December, from 2pm, online at https://www.cheffins.co.uk/property-auctions.htm