Jon Gollinger does not want to be known as an auctioneer. And yet his company, Accelerated Marketing Partners, conducted 50 condominium auctions in cities around the United States last year, and it expects to hold some in New York City in the coming months.
“We do real estate, not auctions, not liquidation,” said Gollinger, who sees his business as helping revive depressed markets. He notes that Accelerated devises a new marketing program for a building prior to an auction, which — if all goes according to plan — is supposed to spur sales post-auction as well.
Condo auctions have become commonplace in nearly every region of the country aside from New York over the past few years, and Gollinger and other auctioneers are among a new breed of real estate professionals that haven’t been active here since the last downturn.
Auctions typically involve putting a number of unsold units at a building on the block. And like any other sort of auction, individuals bid on units. At a condo auction, the winning bidder is effectively the new owner of the unit. Condo auctions are not pitched at investors or bulk buyers, but at people who want to buy a new home.
Part of the reason Gollinger insists on drawing a distinction between his firm and other auction companies is he has spent the bulk of his career, which began in the mid-1970s, in a more traditional marketing and brokerage capacity — a background he employs today and says sets him apart from companies that are only in the business of staging auctions.
Gollinger first became involved in condo auctions during the last major residential downturn, in the late ’80s and early ’90s, when he formed a joint venture between the firm he founded, the Collaborative Companies, and Kennedy Wilson, that became known as Kennedy Wilson East. In his capacity as East Coast CEO, Gollinger held approximately 25 auctions around Boston. He said the model “worked so well that we decided to take it to New York, where we formed another joint venture with Louise Sunshine of the Sunshine Group.” There, Gollinger conducted more than 20 accelerated marketing events that each culminated in auctions.
Between 1990 and 1994, Gollinger estimates that he worked on 20 condo auctions in New York for buildings such as the Regatta in Battery Park City, 52 East End Avenue, Charlton House, Grosvenor House and Tudor City. At the time, he worked with many of the city’s real estate powerhouses, such as Sunshine, Citigroup and Jones Lang.
Returning to NYC
Jane Gladstein, principal of Gladstein Development Group Auction, was Citigroup’s director of residential asset management for North America and vice president of the finance giant’s real estate division in the early ’90s.
At Citigroup, Gladstein said, she worked with Gollinger on auctions “for everything from a condominium in the Chinatown of Oakland to new construction in Manhattan to a few developments in Brooklyn.”
“By and large, auctions were a very positive experience for us,” she said. “What [Gollinger] was doing in the early ’90s was unlike other auction companies because he has traditional marketing experience. One of the things we learned is that an auction works best when it’s part of a conventional marketing strategy.”
Gollinger said his marketing program before an auction lasts for three and a half weeks, and it consists of keeping an “auction information center” open for seven hours a day, seven days a week; running print and Web advertising about the building and coming auction, and holding a practice auction for prospective bidders. He usually tries to run ads in newspapers that are not in the publications’ real estate sections to “engage buyers with prices they haven’t seen for a decade,” he said. After the auction, if a building still has units to sell, Accelerated helps run a marketing campaign highlighting the low prices that condos sold for at auction.
After leaving Kennedy Wilson in the mid-’90s, Gollinger moved into commercial real estate and eventually went back to working on his own again as head of the Boston-based brokerage Collaborative Companies, the firm he had founded.
He got back into the auction game in 2006, after Collaborative was hired to market and sell a condo in Boston, Folio Boston. The building’s developer knew Gollinger had a background in auctions and asked if he wanted to try using an auction to sell the building. “We sold $26 million of real estate in 45 minutes,” recalled Gollinger. “And I said, ‘Whoa,’ and I looked at my partners and said, ‘I’m going to give you my company.'”
Later that year, he founded Accelerated Marketing Partners, which has since devised marketing strategies including auctions for dozens of condos in Chicago, Atlanta and Oakland, among other cities.
Why it works
The main value of condo auctions, said Gollinger, is that they help jump-start a market that’s at a standstill.
Successful condo auctions — where dozens of units sell in a short period of time — “set a price” that allows more condos to sell afterward. Or, as Gollinger put it, “How can a buyer buy anything without knowing if the value’s going to go down $200,000?”
Auctions, he contends, break just such a stalemate between buyers and sellers when future value is the great unknown.
“We as marketers often fall prey to feelings of omnipotence because we feel that we’re smart enough to perceive where the market is going,” he said. “We perceive that we make the market, but that couldn’t be further from the truth. The market sets the price, and the only way for the market to recover is for the market to set a price.”
And, while New York City’s housing market was, until very recently, healthier than most of the rest of the country’s, it is now once again ripe for auctions, said Gollinger.
“There’s a tremendous amount of product in New York, and there are very few developers who can survive this monolithic disaster,” he said. “There’s going to be a tremendous urgency — whatever your motivation — to let go of product, and the smartest guys who have the best product are going to try to accelerate out of this.”
As of the middle of last month, Gollinger said he was “very close” to signing two deals for condominium auctions in Manhattan — he declined to name the buildings — and said he had already turned down two potential deals here.
While Gollinger would not elaborate about the specific deals he’s turned down in New York, he said his company will not take on a job if it “can’t see the number and can’t predict what the market will pay for it. … Our job is predicated on delivering our projected probable value.”
In New York, for example, Accelerated might turn down a job for a building “with very large units that’s designed for young people, where the price on a square-foot basis would be too expensive for a younger buyer but it’s not characteristic of what an older buyer wants.”
These days, Gollinger said, he’s frequently in New York, meeting with brokerages, marketers, developers and banks.
“It is a monstrous exercise involving a million points that people have to understand,” he said. “You’ve got all these developments that in this economic cycle are basically cancerous. And our job is to take all these and explain the elective operation and the treatment” to all the parties involved with ailing developments.
Simon Mildé, chairman and CEO of the real estate investment banking firm the Greenwich Group, who worked with Gollinger at Kennedy Wilson in the early ’90s, said that Gollinger’s approach is indeed scientific.
“There are loads of auction companies, and you can have a hit or a complete failure with them,” he said. “He’s worked through this process so many times, though, that he’s created a science. The auction is purely a physical thing, and it’s all about the work up to it.”
Mildé said that when he worked on auctions with Gollinger nearly two decades ago, “We were going through the same sort of problems that we see today.” Auctions helped right the market then because they helped people start buying again, he added.
For his part, Gollinger appeared confident about spurring sales once again in New York.
“Just like the ’90s, we know we are going to be a very valuable asset to the city,” he said. “I say that in a self-serving way, but it’s true.”