Mirage for sale
This weekend I went to see a commercial site in Wimbledon. The owner had applied for planning, not just on his site, but across the whole parade. Oddly enough one can apply for planning on land one does not own.
The planning had not been granted but the response had been positive and the planning was applied for with the cooperation of the council. It is easy to see why they would wish for the whole parade of shops to come up together. That is always their preference.
The lot is due to come up in auction in the next couple of days. I met the owner at the site. He explained he had owned the site for 13 years and that it was formerly occupied by Ladbrokes. No doubt it was giving him a good rent roll whilst they were in situ.
An empty commercial site generally drops in value, as a large proportion of its value comes from the rent roll and the quality of the tenant. As an empty commercial space, the only thing it had going for it was the strong location of Wimbledon.
The obvious issue with the planning is its implementation. The chances are it will be approved. However, getting the other owners on board with the idea, implementing it and ensuring they have the funds to put into the deal is not an easy hoop to jump through.
We have had this experience first hand, even when it is in the benefit for two parties to work together, often they have varying agendas, which are not always transparent.
So, I posed the question as to whether the other owners are on board. He was shifty with his answer; he mentioned the last owner was on board, but the middle shop owners hadn’t come back to him.
Seeing as he has owned this property for 13 years, and has not managed to get the parties on board, it is unlikely a new incoming purchaser will be able to stitch this deal together.
After drilling him down, it appeared all he was selling is a 600 sq. ft. vacant commercial space, with perhaps some possibility of development.
This brings the value down from a guide price of £450K plus to about £275K, and that’s being generous.
I could see what he was trying to do, paint a picture of a potential to the incoming buyer; a mirage, which probably will not manifest in reality. I am doubtful an incoming buyer will fall for this. But I could be wrong. It will be interesting to see what this lot will go for in the coming days.