Imagine a world where wining and dining and months-long real estate negotiations are a thing of the past. Imagine ifgot signed, sealed and money delivered quicker than it takes to play a game of golf.
Welcome to the nascent world of online retail real estate auctions, the latest twist in the growing auction market.
“It's an interesting concept,” says David Birnbrey, chairman and co-chief executive of the Shopping Center Group, an Atlanta-based retail real estate firm that represents big box tenants. “You're seeing it with homes — there isn't any difference.” Birnbrey says he would try the concept. “It might be the best way to maximize your investment,” he says.
However, Birnbrey says that there are some drawbacks such as the loss of the human touch and the lack of time for investors to properly investigate, analyze and strategize.
But that hasn’t stopped some retailers, including The Kroger Co., from auctioning real estate via cyberspace. And Sears is considering the format to get rid of excess real estate.
Kroger, the country’s No. 2 grocer, recently leased space at one of its stores in Columbus, Ohio during a two-hour online auction. The highest bidder, the newly opened Grange Bank of Columbus, acquired the 10-year-lease for an undisclosed price. It’s the first in-store branch for the bank and only the second overall.
“It's a faster, cheaper and more efficient way of bidding contracts for all sorts of things,” says a Kroger spokesman.
The mechanism for the transaction is GlobalNetXchange (GNX), which merged in November with Worldwide Retail Exchange to create a new firm, Agentrics. In addition to auctioning real estate, Agentrics, with dual headquarters in Alexandria, Va., and, brings dozens of retailers and suppliers together for supply-chain collaboration and other services to provide an automated, and therefore cost-cutting, system for procurement.
The combined firm has auctioned $20 billion of products online in the past five years, including fixtures and even freight charges, says Cedric Guyot, Agentrics vice president of strategy and marketing. He wouldn’t disclose how much of the total was real estate. But retail clients include Federated Department Stores, Sears, Carrefour, Target and Best Buy.
Sears, which helped found GNX to assist with product sourcing, logistics and fixtures, is considering auctioning excess real estate online, says Diedra Cheeks, Sears’ vice president of procurement.
“It helps save you time,” Cheeks says. “It takes the face-to-face negotiations out of it ... and you invite everyone to bid and have it all done in a few hours.”
The concept of online auctions for retail real estate space is still new, but the general consensus is it just might work.
Says Birnbrey: “eBay has proven to us that people respond to urgency in a frenzied manner.”