Pros of Buying Retail Properties at Auction

CRE_Editorial_September_NAT_BUY_0915_V1_ProsofBuyingRetail|&utm_term=|Editorial-Editorial-NAT(Editorial)|"> Auction.com, tells GlobeSt.com. The online auction process attempts to level that playing field and create transparency so that all parties interested in investing can learn the same information about a property and everyone has the same opportunity to close the deal, which is especially important in the broad spectrum of retail investing.

“Usually, the broker controls how long a bidding period lasts and who gets the last bid or chance to make an offer,” says Schreck. “An auction opens up the process to everybody, even those who wouldn't otherwise get a seat at the table. This increases the number of buyers exposed to the property, increases the potential sales price and gives the buyer a last chance to make a final offer. Sellers can find that needle-in-a-haystack buyer they otherwise wouldn't have.”

As a seller, once the buyer has met the reserve price that you've set, and the auction ends, you're assured of closing. Upfront due diligence is done, so there's no delay in earnest-money deposits, says Schreck. “It's a 24-hour process, and there's an immediate hard-money deposit. If it falls through, backup buyers are automatically committed to their bids, so the seller is assured of closing within a 90-day timeframe. Traditionally, this can take upwards of 180 days.”

From a retail perspective, being able to view the full gamut of properties available for sale is a distinct advantage over traditional investment outlets. “Retail can range from the biggest super-regional malls in the United States to small, freestanding properties,” says Schreck. “It's a huge market to cover. The Auction.com website allows interested investors to easily see what's available at any given time. It covers a broad swath of the market.”

Current available properties range from a 294,000-square-foot mall in Milwaukee to a 2,700-square-foot freestanding, vacant restaurant space in California. Schreck says that the site is also listing several retail properties in the Southwest, Southeast and Midwest—specifically in California, Arizona, Nevada, Florida, Kansas, Missouri and Michigan. 

“It's a borderless market,” Schreck says. “If you're an investor who's targeting certain regions or looking at demographics for future growth, you can view the properties on a map, target what's available where and focus on those properties.”

The site offers unique research data as well. Schreck says it's important to have a wide range of data for a market with property types as diverse as retail.

“To help people do their due diligence, we produce in-house research for many properties in major markets that provides information on demographics, economics and retail market fundamentals for investors to consider,” says Schreck.

Auction.com has sold assets worth under $2 million to more than $50 million. He adds that Auction.com's “sweet spot” in retail is downtown and strip malls in the $5-million price range. “The platform is well-suited for smaller investors who buy mid-sized retail properties. They're not necessarily going to compete with big institutional buyers, so it's a good place to go because there's a collection of retail properties in the 50,000-square-foot-or-less range.”