Commercial property brokers move on-line to sell distressed real estate
|Thursday, 17 September 2009|
Some of the world’s largest commercial real estate service companies are turning to online auctions to sell property and debt to help kick start the stalled US commercial real estate market.
Jones Lang LaSalle has entered into a partnership with residential real estate online auction provider Real Estate Disposition (REDC) to offer online auctions.
CB Richard Ellis confirmed it is also developing an auction site as is Cushman & Wakefield. They have opted for a product from AuctionPoint, an independent auction service company that allows brokers from commercial real estate service companies to conduct online auctions.
The default rate on commercial mortgages held by US banks is at its highest level since 1994 and could rise further next year, according to research group Real Estate Econometrics.
And Jones Lang LaSalle said it expects community banks, with their more intensive focus on commercial real estate loans, to be the first to start selling their loans.
‘By offering this facility for auction, we will be able to increase the scope of our traditional outreach and expose the property to a much broader investor base,’ said Guy Ponticiello, managing director Jones Lang LaSalle Corporate Capital Markets.
The first property to be offered for auction under the new partnership will be a 100,000-square foot office building sitting on 12 acres in Dayton, Ohio on behalf of Procter & Gamble.
Initial bidding on the four storey building, which served as the headquarters of P&G's Iams pet food business, has been set at $900,000 when the auction gets underway from the 15 to 22 of October.
‘It’s been frustrating trying to bring buyers and sellers together in this market, and while I believe in the value of the auction model, I haven’t been able to utilize existing auction platforms until now because they disengage the broker,’ explained Gary Stache, Executive Vice President of CB Richard Ellis.
For commercial real estate, holding the auction online instead of in a hotel ballroom makes perfect sense, and we believe that this technology will be the next wave solution for sellers of distressed properties,’ he added.
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