LOS ANGELES-As GlobeSt.com reported earlier today, industry veteran Steve Winger has launched EverestAuctions.com, an online auction site for leasing commercial real estate properties. Winger tells GlobeSt.com that the web portal, the first to auction commercial space for lease rather than properties for sale, actually simplifies and accelerates the leasing process, condensing it from roughly six months for as little as 45 days.
“Leases are not quite as simple to auction as a sale,” says Winger. “With a sale, it's easy to determine who the highest bidder is, but leases have different elements, which you have to drill down to determine the highest bidder. We take all these elements—the primary term of the lease, the range of the term amount, the base risk a landlord is willing to accept, amount of tenant improvements, free rent, commission—and find the net effective rent number. This is the landlord's reserve amount, so when bidders come to the site, they can bid in different parameters, but unless it exceeds the landlord's net effective rent, the bid won't be accepted. That's how we're different on the lease side.”
An average auction on the site runs for 45 days, but even if it were extended to twice that time, an auction would be faster than the average time of six months it takes to lease a property through traditional means, Winger says. “Putting the site together took some time and effort, but using it really isn't complex.”
Tenants who use the site simply click a button to search for space, and the site wizard asks them the parameters of the space they're looking to lease. The five-minute process collects all the information the landlord or landlord's broker needs to qualify the tenant, and the tenant in turn gets all the information they need to make an informed decision and place a bid. Also, tenants aren't required to speak to a broker right away if they choose not to do so while doing their due diligence.
During the auction time, the site sends out several email blasts to brokers and prospective tenants and places strategic ads in order to drive traffic to a particular property. In fact, the broker is an integral part of the process, since the site doesn't receive its fee until any brokers involved have negotiated a successful lease agreement. “The way we set it up, it's kind of a no-risk situation,” says Winger. “If we don't provide a tenant who's willing to do a deal under the landlord's terms, we don't get paid.”
From the other side, landlords and/or brokers are notified instantly when bids are made, so there's a great amount of transparency to the process. Also, brokers can continue marketing alongside the site's marketing efforts, which doubles the exposure for the space.
Essentially, the site seeks to make the leasing process faster and more efficient for all parties involved. Winger adds that it is applicable to all commercial property types: office, industrial and retail.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
