Open auctions
The fact that the U.S. Postal Service is using a open auction to sell its former Chicago headquarters, a 14-story building at 433 W. Van Buren Street, after trying unsuccessfully to sell the property conventionally, just might be an indication of the increasing popularity of the auction method of selling real estate of all kinds, whether it be a condo or a corporate headquarters.
The building known as the Main Post Office originally went on the auction block on August 27, and British developer Bill Davies submitted the $40 million winning bid for the 14-story, 3,000,000 square-foot property. Considering that the suggested opening bid was $300,000, it is easy to see how the price can escalate in the competitive environment of an open auction, when bids are made publicly. This is just one reason real estate auctions are becoming popular ways to sell property in a difficult economic climate.
Built in 1932, the building that spans the Eisenhower Expressway and two city blocks once held the record as the largest postal facility in the world, with operations conducted on nine floors. It has been vacant since 1995, when the USPS moved its headquarters to a few blocks away, to 433 W. Harrison St. Several attempts to redevelop or sell the unique property have been unsuccessful.
Before the August auction, Tom Samra, vice president of facilities for the USPS, expressed confidence that the “innovation and transparency of an open auction” would result in the sale of the building. But because Davies did not complete the transaction within the allotted time, for whatever reason, the historic structure is going up for sale again. Mark Reynolds, the USPS spokesman in Chicago said only that Davies is no longer in the running. “I’m not sure why he didn’t complete the deal. Only he could answer that,” he said on Oct. 15.
Of course, setbacks like that can and do happen with all types of real estate sales. When that happens, depending on what the owner decides to do, the property could go back on the auction block, the second-highest bidder could be given a chance to buy the property, or the property could be taken off the market or sold in a conventional manner. Just what will happen does not have to be decided before the auction. In the case of the post office, the runner-up bidder, Chicago attorney Nathaniel Hsieh, has been described in published reports as “outraged” that the USPS mailed letters to all the auction participants to solicit new bids, rather than just accepting his back-up contract. He said he intended to file a complaint.
Reynolds said that to his knowledge, no plan had been set up before the open auction to determine what would happen if a deal fell through. He said the USPS “is in communication” with other bidders and a decision has not been made about how to proceed. He did not rule out accepting Hsieh’s offer.
“We had expected to have the building sold by now. We want to complete this as soon as possible,” said Reynolds.
Tags: auctions, open auctions, real estate in Chicago, sell a condo