Auctioneer Sees Bidding as ‘Vehicle of Choice’

NEW YORK CITY-The auction business tends to take on higher visibility in commercial real estate when large numbers of distressed assets need to be moved, such as in the Resolution Trust Corp. era. But Max Spann Jr., whose 121-year-old auction house has just expanded from its Central New Jersey base to open an office here, thinks the format is here to stay.

“We see the auction market evolving,” Spann tells GlobeSt.com. “After the general real estate market stabilizes, we see competitive-bid sales becoming a vehicle of choice.”

President of Max Spann Real Estate & Auction Co., Spann has tapped Jeffrey Freireich, a 20-year veteran of the Kushner Cos., to head up the Manhattan office at 370 Lexington Ave. Founded in 1890 as a cattle auction house, Max Spann is maintaining its headquarters in Clinton, NJ. Yet the New York office, which opened at the start of this year, is seen as a crucial next step in managing the business that has grown beyond its base in the Mid-Atlantic and Northeast states.

“We’re looking at projects all around the country,” Spann says, and therefore it’s important to have a presence in the financial, legal and real estate capital of the world. He adds that many of Max Spann’s national clients either are based in New York City or have offices there.

Over the past year, Max Spann has held dozens of auctions and competitive-bid events throughout the nation, in states ranging from New Jersey and Pennsylvania to North Carolina, Ohio, Massachusetts, Maryland and Delaware. More auctions are planned for New York, South Carolina, Colorado, Illinois and Florida in the coming months, the company says.
Certainly, auctions have gotten their share of attention in this part of the cycle. The Carlton Group, also based in New York City, has sold hundreds of millions of dollars of loans and REO assets through both live auctions and its online Carlton Exchange platform, the latter launched in the summer of 2009. In the past week, both CB Richard Ellis and the Inland Real Estate Group have announced they’re taking advantage of the format, with Inland combining two companies as Inland Real Estate Brokerage & Auctions to offer clients an array of disposition options.

A generation ago, the RTC used auctions as a vehicle for disposing of assets quickly, yet Spann says speed is only one of the advantages the format offers. Regardless of the market, “whether it’s challenged or vibrant,” auctions give the seller the advantage of dictating the timing, as well as the terms and conditions under which the asset is sold, he says.

As the real estate market stabilizes, Spann foresees that the auction market—and his company’s business in particular—will see a shift to properties that are “harder to valuate.” Examples include higher-end residential and “development sites where there are competing views of the highest and best use.”

Spann also believes that portfolio buyers will become increasingly active, but not so much driven by government REO sales as they were in the RTC era. That part of the cycle, though, is some time in the future, he says. “It’s still early in the game.”