Sold in 3 minutes: Sydney investor drops $2.7 million on Surry Hills warehouse

“I’ve seen auctions (go on) for an hour, I’ve never seen anything like this before,” Mr Carigliano said.

The double-storey freehold property at 12-14 Little Riley Street occupies 124 square metres of land, with 217 square metres across the two levels.

The final buyer wasted no time and opened the auction at the vendor’s reserve of $2.5 million. Two other bidders tried to compete, but the battle was over in five bids.

“With the 14 registered bidders, we thought everyone would have been competitive in that $2.3 million to $2.5 million range and obviously that gentleman just blew them out of the water,” Mr Carigliano said.

“I was shocked, to be honest, when he put his hand up at $2.5 million. I knew he was prepared to pay that amount but I didn’t think he’d be starting the bidding there.”

Three bidders battled it out for the Surry Hills property. Photo: Commercial Real Estate Facebook

The warehouse is on a 124-square-metre land block. Photo: Supplied

The building was formerly owned by American-Australian photographer George Seper, who lived there in the early 1980s.

High-net-worth buyers, including artists and chief-level corporate executives, had similar plans to renovate and live in the building. It was zoned for mixed use, which means it can be developed into apartments, offices or lived in as a house.

But the last one standing at the auction was a private commercial property investor, who has plans to convert the block into office suites and lease them out, as well as adding another level on top to maximise rental income.

The investor had put in an offer the night before the auction, but the vendor decided to proceed with the auction, given the listing’s 310 inquiries, 60 inspections and more than 35 contract requests.

The new owners plan to add another level on the two-storey building. Photo: Supplied

“It did work in his favour because it sold above what (the buyer) offered,” Mr Carigliano said.

“Our phones did not stop ringing; we’ve never actually had an inquiry level like this, ever.

“Everyone’s got this doom and gloom in the market and obviously there’s still people wanting to buy stuff.”

The agent attributed the strong interest to the rarity of a property, with combined commercial and residential potential, and the reasonable price guide.

“You’re never getting a commercial property and a residential property that’s in one, if you are it’s generally a terrace, and if it’s a terrace, you can’t develop much on it,” Mr Carigliano said.

“This property was so rare, when you buy a warehouse, it’s generally already built (or) renovated to its maximum potential and generally you’re asking for a lot more money.

“It wasn’t too expensive because it was unrenovated (and) underdeveloped.”

With the property selling for a land rate of nearly $22,000 a square metre, inner-city land blocks in Sydney ripe for redevelopment are seeing hot demand.

In Erskineville, a 450-square-metre development site, listed with Savills’ Nick Tuxworth, could sell for more than $3 million at its auction in late April.