Auction Industry Thriving in Recession, Talent in Demand
One of Orange County, California’s highest-profile luxury resorts, the St. Regis Monarch Beach Resort, is scheduled to be auctioned off on July 7th, according to the Orange County Business Journal. The report states an affiliate of New York-based Citigroup Inc. is moving to foreclose on the 400-room hotel which opened in 2001. The hotel is currently owned and run by Newport Beach-based Makar Properties LLC, in a partnership with a unit of San Francisco-based hedge fund Farallon Capital Management LLC. Amid the recession, the report adds, the St. Regis was unable to maintain high occupancy levels particularly due to cutbacks by corporate-sponsored visitors.
The St. Regis is just one example of how the overall auction industry is thriving amid a slowing economy. In fact, the National Auctioneers Association (NAA) recently announced that in 2008, approximately $268.4 billion in goods and services were sold at auction in the U.S. Executive search firm, A.E. Feldman, reports that as the number of assets changing hands continues to increase dramatically, demand for talent is mounting. The firm’s President, Mitch Feldman, says that as the auction classifieds expand, opportunities are opening up for a wide range of professionals - from high level sales executives to CFOs.
The Auction Method of marketing is one of the oldest and fastest methods of converting hard assets into cash. The NAA says growth in 2008 was led by five sectors of the industry, including agricultural machinery and equipment, commercial and industrial machinery and equipment, charity auctions…and real estate.
Real Estate Auctions Growing
Last year alone, $58.6 billion in real estate was sold at auction according to the NAA. The group adds that residential real estate auctions are the fastest growing sector of the quarter-trillion dollar auction industry. Real estate auctions have already grown by 30% over the last 5 years in the U.S., according to NuWire Investor. The report adds that both the National Association of Realtors, and the National Auctioneering Association, say that 1 out of every 3 real estate transactions will be sold at auction by 2010/2011 – a 10% increase from 2009.
Meanwhile, foreclosure filings in the U.S. hit a record high in April as banks increased efforts to seize homes from delinquent borrowers, reports Bloomberg. The report states that a total of 342,038 properties received a default or auction notice or were seized last month, citing data from RealtyTrac Inc. One in 374 households got a filing, the highest monthly rate since the property data service began issuing such reports in 2005.
Bloomberg quotes Nicolas Retsinas, Director of Housing Studies at Harvard University, as saying, “What you’re seeing is the inevitable result of severe job losses. Until we stem the job losses, we can expect to see continuing foreclosures.” This trend has been a boon for the auction industry.
The NAA report states, “Real estate auction marketing has historically become the method of choice during times of economic stress. Some of the most well established niche based auction companies grew most successful when times were tough.” The report adds that right now, the group is already seeing the shift.
NuWire Investor pinpoints five more reasons why auctions are currently gaining so much popularity:
- Auctions set the seller apart from other competitive sellers.
- Everything is sold as-is, contingency free – reducing frustration.
- Auctions create increased competition between & among buyers.
- Auction transactions are accelerated - the savings in carrying costs alone can make a big impact on the bottom line for a seller.
- Auctions do away with a list price. This may be perceived as beneficial in tough economic times when determining value is more difficult.
Are you working in the real estate auction industry? If you want to grow your career or address your firm’s talent needs, contact A.E. Feldman’s President, Mitch Feldman.
