When the bidding surpassed $1 million, the field of contenders dropped to a few, and awkward silence prevailed.
Auctioneer S. Scott Moore announced a short break, then returned with a reminder of the value at hand. This 20,400-square-foot office building, he noted, was in solid shape just off the popular West Dodge corridor. He said the high bid on the table couldn't even build a shell warehouse of similar size.
“It's an opportunity of a lifetime,” Moore said. “Somebody is going to get one heck of a good deal.”
Similar auctions of non-distressed commercial buildings are becoming more common nationally and in bigger cities, but the One Nicholas Plaza event was a novelty of sorts for the Omaha area.
What elevated it to the unusual, said Moore and other local real estate experts, was that the 18-year-old brick and glass structure at 1010 N. 96th St. was not in foreclosure, was well located and would sell that day no matter the price.
Called an “absolute auction,” the two-story structure would go “as is” to the highest bidder with no minimum amount at play. The seller had inherited the property, didn't want to be in the real estate business and was focused on moving forward, said brokers at Colliers International, which had last listed the building for $1.95 million.
“This is a unique strategy of disposing of valuable property when time is of the essence,” said Colliers' Barry Zoob.
Zoob said the property had attracted lease offers, but given the desire to sell fast, he recommended: “Let's get everybody in the room and fight it out.”
Nationally, roughly 5 percent of assets are sold via real estate auction, up from about 2 percent 15 years ago, said Gordon Greene, a Cleveland Ohio-based pioneer of commercial auctions.
He said the share likely will grow as the market continues to recover. In many cases, Greene said, sellers view auctions as a way to stir up attention for a good buy that has been overlooked. Some don't want to wait out the negotiation period in a traditional sale.
“The auction is not going to replace negotiated sales by any means,” said Greene, a partner at Chartwell Group who has been involved in more than 1,100 real estate auctions in 40 states. “But I think you'll see them become more common in the Heartland.”
Drawn to the One Nicholas Plaza event last week were high-profile developers and industry leaders seeking a bargain. Twelve were registered bidders; five actively bid. The bulk of the nearly 40 people were in the field and curious about what would unfold.
Promptly at 2 p.m., auctioneer Moore took his place and made a few announcements, including that the victor must leave a $25,000 down payment.
Everyone earlier had opportunity to tour and access to a “due diligence package.” Moore and others spent weeks marketing the site.
Come show time, Moore's message was methodical and clear, unlike the fast, excitable chatter heard at entertainment-based charity galas or estate sales.
“Now $500,000 ... now $600,000 ... who would like to go to $800,000?”
Moore picked up auctioneer skills from his father, who for years presided over benefit auctions and nudged his son to the microphone when dad was sick or unable to perform.
That practice helped, the younger Moore said. But he noted a definite difference between leading an auction for a charity gala and a high-stakes commercial property. “There's a level of professionalism and sophistication that needs to be maintained,” he said.
Indeed, Moore understands the business of commercial real estate, as he is a broker for World Group Commercial Real Estate and specializes in auctions.
His past jobs include the Rod Kush mansion, which, unlike One Nicholas Plaza, had a minimum purchase price. That bidding war was Moore's longest event, lasting about 35 to 40 minutes.
His fastest involved a west Omaha gas station, which sold in three minutes.
His pick for most fascinating property goes to a 40-acre Wisconsin monastery that went for $1.5 million.
About 20 minutes into the bidding for One Nicholas Plaza, Omaha real estate developer Arun Agarwal toppled the previous high by Debra Graeve, president of NAI NP Dodge Commercial Real Estate Services.
The new price to beat was $1.25 million.
Faced with silence, Moore sought smaller bid jumps. With no takers, he announced the short break and exited into a side room with the seller's representative.
Agarwal and Graeve, meanwhile, tapped away on cell phones. Others crunched numbers on calculators.
Upon the auctioneer's return, Graeve waved her white card, signaling a new bid of $1.26 million.
“I'm at one-million-two-hundred-sixty-thousand-dollars,” said Moore. “We ARE going to sell this building.
“This is your last chance ...
“It WILL sell ...
“ARE we done bidding? ...
Despite his calm and cool demeanor, Agarwal of White Lotus Group later would say that his heart was palpitating.
“You're excited and scared at the same time,” said the owner of numerous properties who was runner-up bidder on the Kush mansion. “You wonder, 'Did I screw up, or dodge a bullet?'”
But he had gone to the auction with a ceiling price, one that calculated in risks and rewards.
Agarwal chuckled, thinking also of the day's nagging horoscope that warned against taking on any more projects. And there was that detail of a summer wedding. When he considered upping his bid, his mind said: “My fiance's going to kill me.”
But for a bidder who planned to use the building for their own business — and didn't have to worry as much about securing renters in a tough office market — the $1.26 million was a solid buy, said Trenton Magid of World Group.
John Lund of the Lund Co. and Crossroads Mall owner and developer Frank Krejci agreed, saying investors had more risky factors to fret, including the cost and time of tenant improvements.
“I would have bought it — for the right price,” said Lund.
Said Krejci: “What brought me here? Something I could steal.”
For the victorious N.P. Dodge, Graeve said the firm likely would move some of its divisions to One Nicholas Plaza.
She described her first absolute auction as exciting, and said her colleagues were pleased with the outcome — though it almost went a different way. “During the break I made a quick call and figured out strategy,” she said.
Moore was satisfied with the turnout, although he had hoped the bid would reach $1.5 million.
“The thing about an auction,” he said, “buyers are going to tell you what it's worth.”
Even as Graeve and some others doubted that similar auctions would catch on in Omaha, Auction Solutions was advertising a live June 6 auction with online bidding for the old Miklin Lumber site near 17th and Cuming Streets.
The north downtown property was said to be in “a quickly redeveloping area, just blocks from TD Ameritrade Park and CenturyLink Center.”
That sale is subject to seller confirmation — meaning it will not be an absolute auction like at One Nicholas Plaza, and the seller retains the right to reject the high bid.
Still, Moore was hopeful that more Omahans would start to see the pros of the commercial auction. Perception is an obstacle, he said, adding that most assume the property is in disrepair or a repossession.
If done right, he said, an auction is a valid method of selling a commercial property — “not an if-all-else-fails one.”
Mark Beacom of Auction Solutions also suspects the commercial auction will become more popular, especially with younger generations who prefer a faster pace in most everything.
“It's a method that moves things along faster,” Beacom said. “That's where our society is headed in general.”
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Correction: In a previous version of this story, the photo caption provided an incorrect address for One Nicholas Plaza building.