What's Inside the "Best Kept Secret" in CRE?

CARLSBAD, CA—A carefully curated buyer database and a long history of serving the commercial real estate industry make Real Capital Markets' RCM Accelerated auction platform stand out from its competitors, executive managing director Steve Shanahan and COO Tina Lichens tell GlobeSt.com. No newcomer to the sector, Real Capital Markets has been the industry standard for online commercial sales and marketing solutions that streamline the CRE sales and marketing process for buyers, sellers, and brokers. Since its inception in 1999, the firm has introduced more than 37,000 assets to its qualified investor database, resulting in more than $1.4 trillion in total sales. Last year, RCM launched an auction platform named RCM Accelerated, which facilitated the closing of more than 120 commercial properties and loans in 2014 with a total sales price of approximately $350 million. We spoke exclusively with Shanahan and Lichens about the firm's auction platform, what it has to offer and what makes it distinct.

GlobeSt.com: Tell us about the RCM Accelerated auction platform.

Lichens: RCM has a long and successful track record in the commercial real estate market. Since our inception, our mission has been to provide an online platform that increases exposure and shortens the timelines associated with marketing and selling CRE. RCM Accelerated is the latest means to that end. Our auction platform is unique because it seamlessly integrates with our preexisting end-to-end solutions—most notably our Qualified Buyer Database. Every RCM Accelerated auction event is promoted using the industry's most active community of qualified buyers. This is a huge point of differentiation compared to other auction platforms.

Shanahan: Another key attribute that makes RCM Accelerated unique is that it operates as both an auction platform and a traditional sealed-bid or call-for-offers platform. Why is that important? Because we didn't just build an auction platform—we integrated the online auction selling format into our existing platform—the predominant platform currently bringing roughly 35% of all commercial deals north of $10 million to market. We have been inviting every investor who would buy those deals over the last 15 years. We don't operate on the theory of “advertise it and they will come.” We already know who will come because our in-house research team has cultivated a participatory buyer pool that no other auction platform has. We're able to pinpoint the most relevant investors and distribute opportunities that match their unique investor criteria. That's not to say we don't also promote each auction event using the most popular industry trade publications—because we do. However, as it stands today, the majority of bidders from our auctions have come from our database of investors.

Lichens: This is a participatory group of investors. We're getting a huge amount of deal flow—several thousands of transactions per year—because  they view RCM as the go-to platform in the market. We also benefit from the fact that investors are continually logging into the platform and updating their investment criteria. These insights have been critical in providing us with the ability to better understand what they're interested in buying. Simply put, we've got the marketplace.

Shanahan: We have national contracts with the vast majority of the major brokerage companies and many boutique firms as well. Of the roughly 4,000 live deals currently in our system, approximately 1,500 are public—the remaining 2,500 are distributed privately to our qualified buyers.

GlobeSt.com: What else makes the new platform unique from other auction platforms in the industry?

Lichens: We are commercial real estate and technology focused. Our expertise spans the entire commercial real estate market ranging from land, self-storage, hotels and office space to industrial, retail and multifamily properties. Other auction platforms started off auctioning smaller or single-family assets or retooled their platform to handle other asset classes. Our long-standing specialization in the commercial real estate space provides us with a distinct advantage.

Shanahan: We're a software and research company for the commercial real estate industry. We've always been at the forefront of making our platform intuitive and easy to use. We didn't build the plane in flight; we've built it over the past 15 years. It's the easiest platform to navigate—investors take that for granted these days—but when you look at functionality and usability for the buyer and seller, we have far and away the strongest platform in the market. Our auction capabilities are just one component of the platform. We have an advantage on the technology side as well.

Lichens: From a technology standpoint, we've seen it all—every asset type and location, but also every type of marketing transaction. If you need to market and close a loan in 30 days, we've done that. If you need to have a prolonged marketing period, we've seen that. Our platform can be configured to handle any situation.

GlobeSt.com: What trends are you noticing based on the data you have?

Shanahan: Speaking to our entire business—not just the auction platform—there's just been a tremendous amount of volume. We're back to 2008 or close to it in terms of pricing in most markets. Deals are fast and furious. There's also been consolidation in the investment-sales side of the market: two of our clients (Cassidy Turley and Cushman & Wakefield) just merged and now Cushman's merging with another one of our clients, DTZ. It feels like we're near the top.

Lichens: Our bank clients in particular have worked down their portfolios. They used to have thousands of assets to sell, but that ice cube has melted for a lot of them.

Shanahan: From an auction standpoint, the appetite for deals is on income-producing properties versus land that isn't in an ideal location. Land is tough to auction because the developer usually doesn't want to market a deal quickly—they want to go talk to the City. However, hotels and multifamily properties are good candidates because you're reversing the process of the sale and doing your due diligence up front.

Lichens: In general, sellers and investment-sales professionals are being more targeted in whom they're inviting to bid. Instead of blasting the message out to 10,000 people and conducting huge marketing campaigns, they're spending more time figuring out the right pool of buyers. They're being more protective of their time, but also smarter and more efficient.

GlobeSt.com: What else should our readers know about your company and the new platform?

Shanahan: The sheer volume of product that we're doing is huge. The guy at EQR or Angelo Gordon probably doesn't even realize that these deals from JLL, Cushman & Wakefield, etc., are being distributed by RCM. We're the best-kept secret in the industry.