There is no denying that there are some problems and concerns with some aspects of the real estate market. That should not mean that a real estate professional or investor should not continue to constantly research for current and future opportunities. An airplane needs enough fuel to reach its destination regardless of the number of passengers.
We had a recent situation in which a (literally) billion dollar asset, the biggest office building in Boston, was sold at auction for 40% of its estimated value. It remains to be seen how the property will be utilized as rumors swirl about conversion to mixed use or various forms of repurposing. Clearly, by spending $400 million to acquire a discounted property, the buyer has research and information leading them to a vision of long-term profit potential.
From my viewpoint, the large purchase and the 60% “discount” the buyer engineered is actually not the most significant part of the story. According to the recap article, the winning buyer was the ONLY bidder. We may never know if there were no other bidders because of the large sum of money needed or if other realistic potential bidders had non-financial reasons for passing on the property.
Meanwhile, the winning bidder obviously has research indicating the potential for making a $400 million investment work. Had there been other bidders, they may have had to go higher, or perhaps drop out of the bidding, depending upon their research.
The fact that there was only one bidder is what stands out in this situation. An offer of slightly under half price might have outbid this buyer to acquire a property at a bargain rate. Let this serve as a lesson about missed opportunities. We won’t know for sure for a few years, but, as the saying goes, you miss 100% of the shots you don’t take.
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