Yep, the R2 zoning in this case will add several hundred thousand over the commercial value. It's in a good location, too. It will scoot past the $1m price in the auction in a flash.
I don't keep much of an eye on local prices, but reckon $1.4m - unless there are two people who really want it. In that case, who knows. I just drove past after picking the kids up from school and noticed the sign was going up. That's going to get a lot of interest - plenty of traffic on that road.