Thank you dear readers for monitoring my missives for the past six years as with this week’s column we celebrate an anniversary! Yep. The first column authored by yours truly was Super Bowl Sunday of 2015. My, how the years have flown. Thank you! Here’s to another six. Whattaya say?

Recently, I observed a phenomenon of market activity rarely seen in my years in the commercial real estate business – that of “what’s beneath the waves.” Many deals these days, akin to a Zoom participant smartly clad from the waist-up but wearing pajama bottoms, are happening out of sight. Referred to as “off-market,” these secret agreements are dominating!

So you may be wondering why. I certainly am. Allow me to proffer some opinions.

First, a bit of background. Historically, the motivation of accepting an unsolicited offer was attached to one of the following: Selling pressure such as a pending loan maturity or a foreclosure. Desire to avoid disruption of a business – after all, publicly marketed offerings come with tours – people walking through. Sale of the operation. Many times the buyer of the company will pay the most for the real estate housing the enterprise. Despite these triggers, proceeds to the seller are generally maximized by casting a wide net.

Selling off-market also comes with a down-side angle. You may leave money on the table, you have no advocate to guide you through market conditions and no vetting has occurred. There could be an unresolved title matter, a leaky roof, or an obstinate tenant who must be relocated. Don’t forget the tax impact of selling. Sure, you’ll face this either way, but when that offer arrives, do you understand the after-tax net proceeds?

But, these days, we’re seeing sales occur despite all of the obstacles listed above. The appetite for industrial buildings for buyers to occupy, developers to scrape and build new, or investors to satisfy tax-deferred exchanges is voracious!

If you’re a seller – or considering selling – your options are to list or not. Hmm, sounds like an HGTV show idea. If you list, your broker will run a process – plant a sign in front, create some marketing collateral, notify the local agents, publish in the multiples, and alert the neighbors. Sprinkle in a drone fly, Matterport tour, some digital pushes and voila! Let the games begin.

But with the obscene lack of inventory, many practitioners are phoning sellers with another approach. Just accept our proposal, short-circuit the marketing time, avoid the disruption, and oh, by the way, the buyer we have will pay us, give you top dollar, and close without a financing contingency. Bam! Sellers are responding favorably.

But, also in play is what I call “mini-marketing”. Here’s how it works. An owner gives an indication he’ll transact. Brokerage help in engaged. A brief fact sheet is prepared outlining the offering – all with the concurrence of the seller. The best half dozen buyers are solicited. Typically, four will have a strong interest. Boom.

Finally, a stakeholder may have zero interest in selling. He may only want to lease the building and hold it long-term. But, in the process of finding a tenant, the buyer activity floods his inbox. At the prices folks are paying, he can’t refuse. Plus, he can sell high and redeploy into a tax friendlier state such as Texas or Nevada and bolster his return.

So in order to know what’s really occurring – take a look under the surface. You might just find that whale of a buyer you seek.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104.