Selling and buying commercial real estate can be a lot like sprinting through Jell-O. Lots of effort expended, but rather slow progress. The properties are often unique, negotiations can be complex and urgency may slip away as the process stalls.
According to Jeff Cates, president of Cates Auction & Realty, these are precisely the reasons both sellers and buyers turn to the auction process. He adds that many commercial properties sit for extended periods with “For Sale” signs out front while qualified buyers don’t even know they are available.
He points to a recent commercial auction promoted and handled by his firm. The seller had purchased, redeveloped and fully leased two retail commercial buildings. According to Ray Bucklew, Cates’ commercial auction specialist who handled the listing, the buildings were in great shape with solid tenants and good cash flow. “Our seller had a successful project and was ready to move his cash into other business activities,” he said. “He chose auction as a way to streamline the process and he was attracted to the idea of competitive bidding to surface his buyer.”
Following a 45-day advertising campaign fully designed and managed by Cates’ marketing department, the auction took place on May 25. Prospective buyers competed live onsite and online. The seller chose an “absolute” (no reserve) auction strategy which Cates says generates the most interest and largest auction crowds. According to Bucklew, “When the bidding subsided and the final purchase price was announced, our seller was thrilled!”
Approaching its 75th year in 2017, Cates Auction & Realty attributes much of its growth in the last two decades to its ability to adapt the principles of auction to the commercial real estate market. According to Cates, the company’s largest commercial sale was last year at $3.5 million. “That property had been for sale for nearly 14 years!” he adds with a note of pride. “We’ve sold hospitals, offices, daycares, development ground, strip centers, aquatic facilities, and everything else you can imagine at auction.” One of his most memorable commercial sales was the historic Katz Drug Store at the corner of Westport Road and Main Street in Kansas City’s Westport area.
More commercial buildings are scheduled for auction in the next few weeks. At noon on July 27, buyers will have the opportunity to purchase a former Bank of America building at the corner of Raytown Trafficway and Overton Avenue. Site inspections are July 13 and July 20 from 11 a.m. to 1 p.m. It is anticipated that the likely buyer will repurpose the facility to another retail or office application. There is no reserve on this auction, so the building will sell to the highest bidder regardless of price.
One week later, on Aug. 3, at 12:30 p.m., bidders will compete for an 11,538 square-foot office building just off Interstate 70 and Noland Road. The three-story facility was most recently leased to Xceligent, a commercial real estate research firm. In 2013 the property was appraised for $420,000. The building will sell at auction to the highest bidder over the seller’s published reserve of $75,000. Public inspections are July 20 and 27 from 11 a.m. to 1 p.m.
Live bidding for both of these buildings will be offered both onsite and online for buyer convenience. Both are also available for purchase in advance of the auction for buyers who prefer not to wait.
Later in August, Cates will be selling a former 15-bay car wash at auction. While the county appraisal on the property is $284,000, the seller’s reserve at auction is $50,000. The bidding for this property will open at the reserve and take place entirely online beginning July 20 and close Aug. 24. The seller has provided plans for converting the site to retail or office which prospective buyers may request from the auction company.
According to Cates, what all these sellers have in common is the full understanding that real estate values are determined by what buyers are willing to pay. “Each of them has decided to strip away all the complexities of typical commercial real estate sales and simply sell to the highest bidders,” he said. “This means these are extremely good opportunities for buyers to acquire quality commercial real estate at the values they are willing to pay.”
Details on these and other properties coming up for auction, including homes and land, can be found at www.CatesAuction.com. Buyers wishing to be notified of newly added auctions can join the Cates Auction mailing list or follow the company on their favorite social media. Owners of quality real estate curious about selling at auction can contact Cates Auction at 816-781-1134 or Sold@CatesAuction.com for a free consultation.