Retail Auctions Double in Value as Investor Confidence Builds

The total value of retail assets sold has more than doubled, climbing from £27.9 million to £56.23 million, driven by a 28% increase in average lot size.

This performance stands in contrast to the broader retail investment market, where H1 figures showed a 2% fall in total value transacted and only a 2% rise in deal volume. However, the auctions market appears to be aligning with wider yield trends, as all retail prime yields have compressed from 6.3% to 6% over the past 12 months.

The strength of the commercial auctions market may be an early indicator of a broader recovery in retail investment. Historically, auctions have often led the wider market, and the uptick in activity could signal growing investor confidence and appetite for retail assets.

In the first three quarters of the year, the commercial arm of Savills auctions has raised more than £250 million.

Ben Hodge, Director, Savills commercial auctions, comments: "Momentum in the auction room has remained strong over the course of the year, particularly within the retail sector. We're seeing sharper yields and larger lot sizes, indicating a clear shift in investor sentiment. So far this year, retail assets have accounted for 44% of all commercial lots sold under the hammer, compared to 41% for the first nine months of 2024.

There's a growing appetite from private investors and smaller property companies who are returning to the market with confidence. The competitive bidding environment and high clearance rates suggest that auctions are increasingly being viewed as the primary route to market, particularly for granular retail assets that offer strong fundamentals. Auctions have often been considered a barometer of the wider market, and these trends could may well be an early indicator of a broader recovery in retail investment."

James Stratton, Director, Savills Retail Investment, adds: "The confidence in shop investments evident at auction is also seen in the private treaty market, where sustained buyer interest and competitive pricing continue to reflect demand for retail assets. While the overall retail landscape remains steady, this stability is highly valued by investors focused on dependable income streams. Among retail sub-sectors, high street shops consistently outperform due to their proven cash flow stability and long-term viability. Well-located, rack-rented properties are particularly attractive to investors, as they offer income returns that comfortably exceed borrowing costs, providing a secure buffer amid economic headwinds."