NEW YORK (MO.Properties) – The Commercial Real Estate auction market is performing at stronger levels than anticipated despite the widespread crisis, which slowed the economy to a crawl in Q1 & Q2. Supported by healthy investor demand and abundant capital, deal volume has increased contrary to many analyst projections.
“We’re currently in a unique and compelling environment to sell commercial real estate. We are dealing with a health-based crisis, very different from previous recessions caused by over-leveraging. That means there is still a tremendous amount of capital ready and waiting to be deployed. Opportunistic investors have been watching for any stumble in the steadily strong market and are now turning to auctions to find assets and place capital quickly,” says Damian Smoter, Vice President of RealINSIGHT Marketplace.
Following the onset of COVID-19, we see robust transaction volume in Retail. Additionally, Land and Office assets are outperforming on the auction platform.
Across all asset classes, Marketplace has seen a measurable increase in transaction volume since late March, with an average contract price 157% above the reserve, or the minimum price the seller will accept. To put these numbers in perspective, and illustrate the effectiveness of auctions currently, the average contract price increased 41%, from 116% pre-pandemic. Moreover, the average number of bidders per property increased from 10 to 18 in the same timeframe.
Marketplace’s May 13th auction featured nine retail properties, and all transacted at amounts above anticipated value. The event averaged 19 vetted and approved bidders from 37 states taking part in the bidding. Sellers achieved an average auction sale price of 150% of expected trade value. Confirming the trend, the recent June 25th auction, which included one of the first non-performing note sales since the beginning of the pandemic, yielded an average of 13 registered investors per asset, resulting in average contract pricing at 118% of reserve.
About RealINSIGHT Marketplace:
RealINSIGHT Marketplace is the leading platform for commercial real estate transactions, bringing buyers, sellers and brokers together to efficiently list, market and close deals. The platform allows local, national, and global investors the opportunity to quickly review and bid on assets throughout the country. The auction platform is managed by a dedicated team of commercial asset experts with more than $11 billion in online real estate sales. RealINSIGHT Marketplace has completed over $2.7 billion in transactions since its inception in May 2017.