NEW YORK - Some of the world's largest commercial real estate service companies are turning to online auctions to sell property and debt to help kick-start the stalled U.S. commercial real estate market.
Jones Lang LaSalle Inc said on Wednesday it had partnered with residential real estate online auction provider Real Estate Disposition LLC (REDC) to offer online auctions.
The first property to be offered for auction will be a 100,000-square-foot office building sitting on 12 acres in Dayton, Ohio on behalf of Procter & Gamble Co.
Initial bidding on the 4-story building, which served as the headquarters of P&G's Iams pet food business, has been set at $900,000. The auction will be held from October 15-22.
The building became surplus when P&G decided to move the Iams headquarters to Cincinnati, the company's home city.
By offering this facility for auction, we will be able to increase the scope of our traditional outreach and expose the property to a much broader investor base, said Guy Ponticiello, managing director Jones Lang LaSalle Corporate Capital Markets.
The default rate on commercial mortgages held by U.S. banks is at its highest level since 1994 and could rise further next year, according to research group Real Estate Econometrics.
Jones Lang LaSalle expects community banks, with their more intensive focus on commercial real estate loans, to be the first to start selling their loans.
CB Richard Ellis Group Inc also is developing an auction site. And on Tuesday, AuctionPoint, an independent auction service company, said it had launched a product that allows brokers from commercial real estate service companies to conduct online auctions.
(Reporting by Ilaina Jonas; Editing by Ted Kerr)