Gavel drives urgency
LJ Hooker Commercial recorded a 19% increase in auctions over the last 12 months as a tightening in market listings has given rise to the transparent, competitive market process.
So why would vendors sell via auction?
James Griffiths, Co-Director of LJ Hooker Commercial Sydney, said his office preferred the auction process over private treaty for one pivotal reason.
“It’s the urgency that an end-date creates, forcing the market to make a decision rather than sitting back,” said Mr Griffiths.
The urgency created by auctions enabled Mr Griffiths and his Co-Director Steven Kruyer to sell the high-profile Tropicana Caffe – the birthplace of the namesake short-film festival – for $6 million in the first week of an auction campaign, last year.
“That buyer really didn’t want the property to make it to auction when it would have been opened up to wider competition. So, the buyer submitted an offer that was strong enough for the vendor to withdraw the property from market, and move forward with their next property venture a month earlier than they originally planned. We would never have achieved that through private treaty.
“We’ll auction anything: from strata retail upwards, but I think it’s especially important if you have a high-profile tenant in place on a strong lease.”
In Sydney’s Central West, LJ Hooker Commercial Silverwater is an on-the-ground market leader. Co-Principal Peter Hanzis said their market connections enabled the team to be acutely aware of where the demand lain.
“Scarcity of particular properties assists in making an argument for auction with the vendor,” he said.
“But price is also a big determining factor in our market. The sweet-spot for cash-ready buyers in our market is anywhere between $300,000 and $3.5-$4 million.
“Larger properties – 2000sqm and above – are perhaps better managed through an EOI campaign where greater due diligence and preparation of terms are needed.”
Mr Hanzis agreed that auctions forced the hand of buyers. He auctioned a property at 37-39 Mary Parade Rydalmere that had been on the market for an extended period with limited enquiry. But once the marketing shifted to an auction event, the market was invigorated, he said.
“It flushed out buyers who had been silent until then,” he said, securing a $1.85 million sale for the warehouse on an 885sqm site.
Mr Griffiths also believes the auction process brings out the best in agents.
“The end date is beneficial for a vendor wanting to plan their future property move, but it also puts a bounce in the step of the agent. Auctions are a transparent, public event which is showtime for the agent to get a result – it’s their grand final.
“For those four to six weeks of an auction campaign, vendors can be guaranteed that their agent is going to go that extra mile to get a result.”
But are auctions only for metropolitan markets? Mike Stewart of LJ Hooker Commercial Toowoomba doesn’t think so.
“I’ve been calling auctions since 1995 and am one of three auctioneers in our business,” he said.
“In regional areas, if you’ve got a property with a good long WALE in that sub-$3m market, auctions are a great method to secure an unconditional sale in a short timeframe.”
Indeed, Mr Stewart said regional markets were au fait with the auction process.
“Farmers are used to the auction process through the saleyards and that familiarity follows through into other arenas like commercial property.”
Across Australia, the LJ Hooker Commercial network will be hosting its National Auction Portfolio on June 28. Visit ljhcommercial.com.au to find out more about auction opportunities in your marketplace.
Table 1 A sample of auctions achieved by the LJ Hooker Commercial network.
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|Cnr Cooyong St and Ainslie Ave, Reid
||Mark Thompson & Greg Lyons
||LJ Hooker Commercial Canberra
|78 Edinburgh Rd, Marrickville
||LJ Hooker Commercial Sydney City Fringe
|725 Gympie Rd, Chermside
||Neighbourhood shopping centre
||LJ Hooker Commercial Brisbane
|8 Bessemer St, Blacktown
||Shaun Lilly & Jason Andreou
||LJ Hooker Commercial Blacktown
|227 Victoria St, Darlinghurst
||Retail building with restaurant
||James Griffiths & Steven Kruyer
||LJ Hooker Commercial Sydney
|4 Marigold Pl, Milperra
||LJ Hooker Commercial Bankstown
|260 Church St, Parramatta
||Retail / office
||LJ Hooker Commercial Parramatta
|165 Victoria St, Beaconsfield
||Warehouse and office
||William Tong & Michael Biskin
||LJ Hooker Commercial South Sydney
|292-294 Port Rd, Hindmarsh
||Retail shops and warehouse
||LJ Hooker Commercial Adelaide
|42 Archibald St, Dalby
||LJ Hooker Commercial Toowoomba