For the price of a condo, you very well could buy 2.7 million square feet in downtown Chicago.
Sadly, after 13 years of failed re-development efforts, the US Postal Service is auctioning off what was once described as the world?s largest Post Office with a suggested opening bid a measly $300,000. Hard to believe that at its peak, 5,000 workers processed more than 35 million letters annually, using 10 miles of conveyor belts and 48 elevators. The building was vacated in 1996 when the Postal Service built a new more technologically advanced building just a block away. Since then, many development plans, including a data storage facility, condos and a hotel, have come and gone as market conditions changed.
While one might argue that $300,00 might seem like a steal for this amount of space in downtown Chicago, keep in mind that it?s not so much the acquisition cost but the development cost and the annual maintenance costs. Even in its current vacant state, the cost for utilities, maintenance and security is approximately $2.5 million annually.
The behemoth, which is nine stories tall with 14-story corner towers, is several blocks southwest of the Loop, the downtown central business district. It was designed by Graham, Anderson, Probst & White in a Neoclassical/Art Deco style and built in phases from 1921 to 1932. The total cost was $22 million. A peculiarity of the building is that it was built using air rights over railroad tracks that terminate several blocks to the north, at Union Station, and so it has no basement. In addition, the Congress Expressway literally passes through the structure.
The auction, to be held on August 29, 2009, is one of many that the Postal Service expects to conduct as it begins a major downsizing effort aimed at aligning capacity with declining volume. As the mail sorting process becomes more automated, we may see more auctions like this one unfortunately.