Tight supply and continued Brexit uncertainly across the South Coast are continuing to drive off market deals in commercial property.
While there have been off market deals for office and industrial properties, it’s land transactions that are the most common. During 2016 pockets of land across South Hampshire were sold without being publicly marketed. There were a number of reasons this but for the majority, vendors didn’t want to lose potential value by openly marketing their land, particularly post-Brexit where market uncertainty has led to under offer deals not completing as purchasers react nervously to a drop in market sentiment. However, we are advising on several diverse transactions across the region and have noticed a marked increase in client interest for buying or selling off market.
Historically, off market sales were the preferred method for high profile buyers and sellers who wanted anonymity or had sensitive reasons for transacting privately. More recently the variety of clients looking to use off market transactions, particularly sellers, has widened as they seek to test the market prior to advertising publicly. And there are benefits to selling privately such as the flexibility of dealing with a single buyer when negotiating the T&Cs and a degree of cost saving with no advertising or promotional materials required which can result in a quicker completion.
There are some essential considerations that need to be taken into account when managing a private sale. The trust between agents and agents and their clients is hugely important as without it deals can go badly wrong with the knock on effects damaging to long-term relationships. A thorough knowledge of the market is also key as is knowing what is available that will be of interest to buyers.
A recent example of a successful sale followed a market valuation we undertook for a parcel of land owned by a local charity. We were able to introduce the vendor to a potential purchaser who we knew was looking for development land and a second plot of land with associated buildings is also close to completion. It’s these types of transactions that work well for both parties.
It’s not all land related deals. We are currently negotiating the sale of small retail unit with residential accommodation which has attracted far more interest from prospective purchasers than envisaged. We anticipate that this sale will go to sealed bids and several parties have asked if we can find something similar if they bid unsuccessfully. As it happens we are likely to have a similar unit to offer in the coming months and we expect this too is will be sold off market.
Each transaction has to be carefully considered as best value may only be achieved by publicly marketing the asset, whether it’s a piece of land, an existing office, retail or industrial site. There are occasions when personal approaches and small scale marketing work very well to gauge buyer appetite and determine the best time to sell to get a premium price without affecting open market value. However, in some cases this just isn’t possible and in order to achieve best value, we advise clients to openly market their property or land.