Commercial Real Estate Auction Market Continues Strong Levels of Activity
Auction statistics show significant increase in bidding volume and minimal pricing discounts.
The commercial real estate auction market is performing at stronger levels than anticipated despite the ongoing coronavirus health and economic crisis. Contrary to the projections of many analysts, deal volume has increased due to healthy investor demand and abundant capital.
“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,” said Damian Smoter, vice president of RealINSIGHT Marketplace.
According to RealINSIGHT Marketplace, there has been robust transaction volume in retail since the onset of COVID-19. In addition, land and office assets are outperforming on the auction platform.
Across all asset classes, Marketplace has seen an increase in transaction volume since late March, with an average contract price 157% above the reserve, or the minimum price the seller will accept. The average contract price increased 41%, from 116% pre-pandemic. Moreover, the average number of bidders per property increased from 10 to 18 during the same timeframe.
