When is auction the way to go?

When is auction the way to go?

Harcourts National Auction Manager, Aaron Davis, talks about selling commercial property at auction and the intangible factors that can make the magic happen.

Aaron Davis has been in real estate for 15 years and has called upwards of 4,500 auctions over the past decade. You could say that Davis has real estate in his genes. His father owned the Harcourts Blenheim franchise, which is where Aaron cut his teeth on the business of selling real estate.

NAI Blog 2

Keen to enter the world of auctioneering, Davis trained with Harcourts’ best, but nothing replaces time spent on the auction room floor and the veteran auctioneer has spent thousands of hours honing his skills to stay at the top of his field.

This year he outmanoeuvred 27 of the country’s top auctioneers to win the REINZ National Real Estate Auctioneering Championships and represented New Zealand at the Australasian Auctioneering Championships in Melbourne.

“An elite auctioneer requires a high level of industry knowledge, excellent communication and numeracy skills, and most importantly, the ability to build rapport with people from all walks of life”, says Harcourts Managing Director, Bryan Thomson.

“Historically Harcourts has always had a culture of excellence in auctioneering in New Zealand and internationally,” says Thomson. “So it’s no surprise to us that Aaron won this year’s championship, or that 22 of the 28 auctioneers competing were trained by Harcourts.”

To auction or not to auction?
We’ve all become familiar with auctions in the residential property market, but how common are they in the commercial property space? And how effective are they when compared to other methods of selling?

Davis admits that auctions are not perfect, but says they are far better than the alternatives. “Auctions cut through the noise in the market,” explains Davis. “They offer transparency and they put a fixed timeline on the transaction.”

The principles of transparency and timeliness were clearly at work during the auction of a commercial property in Hamilton earlier this year. After only four weeks of marketing, which included vendor paid online and print advertising, the property went to auction and sold on the day.

Auctions give potential buyers a reason to act within a specific time frame. In the case of the Hamilton property, 23 enquiries were generated in under a month, with eight confirmed bidders including three telephone bidders.

Auctions also offer an environment where buyers can respond to competitive bids on the spot. Other methods of selling property leave buyers guessing about what other bidders are offering. The auction process puts everything out on the table.

On the day of the Hamilton auction, five active bidders generated a total of 23 bids and the property sold for $2.5 million, well above
pre-auction expectations.

“Quality commercial properties should be auctioned because the auction process goes beyond the tangibles of yields, returns and fixed costs,” says Davis. “Auctions introduce emotion and competition – intangible factors that can produce a premium result.”

The advantages of auctions
Auctions outperform other methods of selling commercial property, offering benefits for both buyers and sellers, and playing an important role in determining the market value of a property.

“Auctions are the most cost-effective way of determining market value,” says Davis. “The market is constantly changing, which means the expectations of buyers and sellers can be poles apart. Auctions determine market value in real time, not based on historical data that can be months out of date.”

The unconditional nature of selling by auction also offers sellers some significant advantages. Sellers are coming to realise that they no longer have to take on the risk associated with due diligence clauses, which can potentially open up a minefield for renegotiation after a conditional contract is drawn up.

But auctions aren’t just good for sellers. They offer buyers the advantages of being fully informed and in control of how they respond to other buyers’ offers – and ultimately how much they pay for the property. Buyers at auction also don’t have to worry about third party representations.

Davis says that for a long time the auction process was misunderstood and cloaked in mystery. “In the past, the agencies controlled the information, but now the relevant data is readily available to both buyers and sellers.”

“Transactional sales consultants are a dying breed,” says Davis. “Anyone can put a conditional offer together. A professional auctioneer gets involved well before auction day and will take the seller through the entire process. A well-researched and executed auction campaign will create buyers and gives the seller confidence that they have the best bidders in the auction room on the day. That’s when the magic can happen.”

Does the auction of a commercial property always result in a premium? “Not every time,” says Davis “but as a seller, wouldn’t you prefer the possibility of getting a premium price, or at least fair market value for your property?”

And if the property doesn’t sell at auction? “The seller is in a position to make an informed decision on setting a price based on real time feedback from the market. The auctioneer offers a neutral point of view, acting as a problem solver and negotiator to help close the deal.”

“Auctions offer transparency, aligning buyers’ and sellers’ expectations, and resulting in a timelier and more efficient sales process,” sums up Davis. “If you want your real estate agency to be more accountable and add more value to the transaction, auction is the way to go.”

Auction Case Study
A recent Auckland commercial property sold under the hammer demonstrates the power of auctions:

  • Wairau Valley development opportunity
  • Marketing campaign ran 4 weeks
  • Generated 91 registered parties
  • Off market offer of $2.7 million
  • Sold at auction for $3.66 million

This article featured in NAI Harcourts’ Key Assets magazine issue 3, 2019.
View the latest e-book and subscribe to future issues:



NAI Harcourts,


Key Assets,

business broking,

harcourts new zealand

Popular Listings

  • Practical Trade Unit
    Highly functional office/warehouse unit available for lease. The space is currently configured with shop front, bi-folding doors set inside the roller door at the entrance of the Warehouse. If the bi-folds suit your business that's great! But if not, they can easily be removed, thus reverting the space back to its original intended use as a Warehouse. Key Features: - 72m² warehouse - Mezzanine office (30m²) - Roller door / bi fold doors - Two allocated car parks Call the sole agents at NAI Harcourts today.
  • Takapuna Retail Showroom and Warehouse
    Situated in the heart of sought after Barrys Point Road in Takapuna, these large retail showroom, warehouse and office premises totalling approx. 1,462m² are available on a new lease from 1st August 2020. Offering wide street frontage with excellent exposure and large front yard for display purposes or customer parking this building has been occupied for the last 10 years as a successful Motorcycle Dealership providing sales, accessories and service facilities. Comprising retail showroom of approx 524m², mezzanine office 186m² and warehousing and storage of 752m² the premises include 6 car parks on the front yard, further 9 at the rear and option for additional basement car parks. Only 3 minutes north of the Harbour Bridge, Barrys Point Road is home to many outdoor sports, trade retail, automotive, furniture and service retail type uses. Call now to arrange an inspection of this exceptional opportunity.
  • High Profile Wairau Warehouse / Showroom 916.72m²
    Now available! This 916.72m² (approx) high-stud warehouse / showroom is one not to be missed. Located in the heart of the Wairau Valley, the site makes for an ideal trade or bulk retail location. Featuring a highly flexible open plan layout, the high stud warehouse can be configured to provide as much showroom and warehouse as your business requires. Retail access is at the front and full height roller door at the rear. Adjacent to the roller door is a designated container drop off area. Access is a dream and is complemented well by the use of 14 dedicated carparks plus half share of an additional 22! Be where the action is! Direct neighbours include Mitre 10 Mega, Pak'n Save and Bunnings Warehouse. The site has fantastic exposure to Wairau Road and great signage opportunity. Motorway access is only 800m down the road at the Tristram Avenue interchange. Approximate Area Breakdown: Breakdown: - Warehouse / showroom - 710.69 - Office and amenities - 206.03 - Car parks (dedicated) - 14 car parks - Car parks (half-share) - 22 car parks Call the joint sole agents at NAI Harcourts today.
  • Vibrant Wairau Business Hub Development
    Stage 1 resource consent obtained - Sept 2019 Huge potential for Childcare, Pharmacy, Entertainment, Medical GP's & Specialists (e.g. Chiropractors, Physios), Dentists, Gym, Pilates, Yoga, Restaurant/Cafes, Offices etc*, to be strategically located within this exciting development. Flexible tenancy sizes range from 100m² to over 1000m². The site offers elevated, road front profile, within the Wairau Valley's growth corridor. Large format food retail premises are scheduled for development next door and the Southern Cross Hospital is just around the corner. Ample parking - 90 car parks. Accessible location - 1 minute from SH1 on-ramps at Tristram Avenue. Completion due early 2021. The developer is now inviting expressions of interest. Call NAI Harcourts today to discuss your requirements and secure premises in this exciting development. (* Subject to resource consent)
  • A-grade Industrial Investment – New 10 Year Lease
    Finally, a stunning standalone Industrial investment worthy of your attention. Taking pride of place on the ever-popular Apollo Drive on Auckland's North Shore, this prize asset offers a new 10-year lease to its anchor tenant and will sit proudly in your portfolio. Currently occupied by RPM International Tool & Die Limited as well as Mitre 10 New Zealand Limited, the contract rentals combine to $492,080 pa plus GST plus outgoings. Situated on a high profile freehold site with wide street frontage, the building was purpose built to allow for future growth of RPM, but also allows for a split tenancy arrangement which is currently in place. With an A-grade seismic rating of 92% and a warehouse stud height of 7.8 - 9 metres, the quality of the asset is on par with new builds, but in a sought after location. Warehouse construction is full height pre-cast concrete tilt-slab panels and the main offices at the front of the building are fully air conditioned. Opportunities of this calibre rarely come to the open market. Please call one of the preferred joint sole agents today for further information or to arrange an inspection. Key Features: - Freehold site of 5,160m² (more or less) - Total building area of 3,368m² (approx.) - A-grade seismic rating of 92% - New 10 year lease to anchor tenant from 1st June 2020 - Dual tenancy providing for future expansion - Zoned General Business - 53 car parks onsite - Combined contract rental of $492,080 pa plus GST plus outgoings. For sale by Deadline Private Treaty (unless sold prior) Closing 4.00pm, Thursday 2nd July 2020 To download further information please copy and paste this link into your browser: http://www.propertyfiles.co.nz/property/NSC34249 NOTE: all outlines in images are indicative only
  • Affordable Devonport Office
    Positioned in the heart of Devonport are a variety of professional office options. Access via a stairway in the central lane way courtyard leading to the first floor office suites. Each office features a kitchenette, pitched ceilings and air-conditioning. The offices are within close proximity to a number of eateries and retailers along with just a short walk to recently redeveloped Devonport Wharf. Features: - Car parking available - Character brick arcade - Close proximity to Devonport wharf - Through access to Wynyard Street - Air-conditioned - Short term lease available to the right tenant - Available now Available Options: - Office 4: 52 m² Call the sole agents at NAI Harcourts for further information and an appointment today.