Here’s a story that highlights the absurdity of real estate these days:
Yesterday, in China, a 1.7 million square foot plot in a Beijing and a 2.2 million square foot plot in a Shanghai suburb fetched $623 million and $446 million, respectively.
In Chicago, the 2.7 million square foot site of the old post office is about to be auctioned off, and the bids are starting at $300,000. (It will obviously go way higher than that, but probably nothing like it would once have gone for.)
Says the developer in charge of the auction:
“It’s not the cost of acquisition people need to focus on,” Mr. Levin said. “It’s the cost of updating. The minimum bid could have been a dollar. We made it $300,000 in order to weed out complete amateurs.”
We have no idea how high bids will go. Nor do we understand why Walton Street Capital, the real estate investment firm that the Postal Service has retained for more than a decade in an effort to determine what to do with this piece of its 34,000-property real estate portfolio, never advised the agency to just sell the whole thing to Lehman Brothers during the boom years.
But we do know this: The same plot of land would command a billion-dollar price tag in China. Maybe someone there who has too much money on their hands would like to start buying over here?
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