Late last month, one of my properties sold at auction for $3.35 million despite having a reserve of just $1.7 million. Let me explain how.
Laing+Simmons Parramatta was appointed to coordinate the sale of a rather unique property in the heart of Parramatta’s CBD. Three retail shops, all with tenants in place, all in one line on a popular street.
From the outset, we knew interest would be strong.
The property, at 398-402 Church Street, has been privately managed for 40 years. It has been a solid performer through different economic cycles and enjoys a prime location in Sydney’s second CBD.
The market fundamentals were also in our favour. Rents for this type of retail stock in Parramatta are below market at the moment. The future development potential for the site and the possible rental upside in the future certainly commanded attention.
Another factor crucial to piquing buyer interest was the amount of new development surrounding the property. Meriton’s 'Altitude Apartments', Parramatta’s tallest residential building, is just down the road at 330 Church Street.
The marketing campaign we employed was very targeted. Our research told us that, for this style of property, the likely buyer would come from within a 5km radius of the property.
Hence we used a database linked to the land and titles office that helped us identify owners and tenants in the Parramatta CBD who might be looking to relocate, perhaps due to a forthcoming lease expiry, or even those who might be due to re-invest.
We supplemented this with a media advertising campaign. Laing+Simmons Parramatta has been active in the commercial market for 15 years, so the value of our existing contacts, database and brand recognition all helped.
Here are some fast facts that give an indication of the interest generated: We received 1,024 enquiries about the property, took 362 calls, issued 287 information memorandums, gave out 73 contracts and held 42 inspections.
Which brings us to the auction day. The room was full and the anticipation was palpable. The property was being sold on behalf of a deceased estate, which is always an emotional occasion. Family members were in attendance and were understandably nervous.
They needn’t have been. The bidding started at $1.2 million and rose consistently. Even when the $2 million mark was reached, the bids were rising in $100,000 increments. Five parties were still fighting it out when the bidding reached $2.8 million, and even then the raises were $10,000 and $20,000 at a time.
It was an exciting auction, with 58 bids in all. The winning bid was from a local private investor, as expected, who secured the property for $3.35 million. Given the reserve was almost half this, the relief on the faces of the family members was immediately evident. There were a few tears shed. The sale was one of the highlights of my career to date.
All in all, it was a rewarding end to a successful campaign that underlined how popular Parramatta is at the moment and reinforced the strength of demand for residential and commercial properties in Sydney’s geographic centre.
There were seven auctions scheduled for the venue on the day. After this one was knocked down, the room quickly emptied.