Although it seems like he got a good deal since he initially won with a bid at $40 million, according to the Chicago Tribune the deal isn't that good:British developer Bill Davies has purchased Chicago's old post office for $20.8 million, about half the amount he agreed to pay at an auction in late August, according to several sources with knowledge of the transaction.
Davies closed Wednesday on the behemoth building, which ranks among the largest in the city and straddles the Eisenhower Expressway, at the downtown offices of the Chicago Title Insurance Co., according to the U.S. Postal Service.
Although the new price would be a bargain compared with Davies' initial $40 million bid, it is generally believed that he overpaid. The building has been vacant since 1995.Regardless, hopefully there is some plan for the property and it doesn't just sit there for years to come. Knowing this property and the problems associated with it, our guess is that it's going to be awhile until we see this actually serve as a functional building. Our fingers are crossed that we're wrong on this one.
"There's so much deferred maintenance, and such a huge floor plate," said John Gates, a former real estate investor who has toured the building. "It's an awkward layout, with office space in four towers. Many smart people in Chicago have taken a hard look at that space for many years (and passed). It takes some guts to buy it."
(Image from chicagotribune.com)
I was at a real estate panel discussion this week that included some prominent real estate figures in the city and they were amazed that this building was sold for that price (even the new $20 million number). One of the panelists said he was approached to acquire the building and he told them that they would have to pay him 12 million to take it off their hands. The building is too unique/awkward for any conventional real estate use. It is going to take an extraordinary effort to figure out the correct use for that property.
ReplyDeleteThere was a development plan in place for this building about two years ago now (before the market collapsed) that was a mixed use plan that included office, hotel, condo, retail, and a unique two acre park. It was really quite a cool plan...but all that got deep sixed when the credit markets tightened up. http://www.chicagobusiness.com/cgi-bin/news.pl?id=24666
Unless this English guy has something planned that no one else has thought of and he has a giant pile of cash laying around, that space will be dormant for years.