Wednesday, November 13, 2013

Merchandise Mart Sold -- November 13, 1945


The third largest building in the United States, still a vital part of Chicago's economy (JWB Photo)
On this date in 1925 Chicago’s Merchandise Mart, nearly 100 percent occupied with more than 900 tenants and a daily population of 20,000 persons, was sold to Joseph P. Kennedy of Boston.  The price for the massive building, still the third largest in the United States in terms of square footage, was about 16 million dollars.

Although the building cost 32 million dollars to build by the time it opened on May 5, 1930, the sale did allow Marshall Field & Co. to pay off a mortgage and a loan, together totaling close to 20 million dollars.  As a result, the company was debt-free for the first time since 1925.

Hughston M. McBain, the president of Marshall Field’s said of the sale, “The transaction, the largest real estate deal in Chicago in recent years, produces several benefits for the company.  The management will be able to devote more time to its widespread retailing and manufacturing activities, and the retirement of the funded debt will greatly simplify and strengthen its financial structure.  Also, the company’s investment in fixed assets will be reduced from $52,300,000 to $31,600,000.” [Chicago Tribune, November 14, 1945]

In early 1998 the Kennedy family sold the Mart along with the Apparel Mart to the west and two properties in Washington, D. C., the Washington Design Center and the Washington Office Center, for about 625 million dollars.  About 384 million of that total went toward the purchase of the Mart.

Vornado Realty Trust, the firm that bought the building from the Kennedy’s, has denied recent rumors that the building might be up for sale.  Steven Roth, the chairman of Vornado said early this year that the 80-year-old building is “just on the foothills of creating value.” [Crain’s Chicago Business, February 27, 2013]

Mr. Roth is probably right as the building is making a graceful transition from display showrooms and wholesale operations to a high-tech hub with an attractive riverfront location.  Last year, for example, Google signed a 572,000 lease in order to move its Motorola Mobility unit to the city from Libertyville.

Mr. Roth assessed the building’s future by saying, “We think it is ground zero in terms of the tech and office demand for modern, younger office space in the Chicago market, right in the ground zero, and with Google going in, it is now the ground zero.  And we think as we transform that asset into more of a modern tech office building with . . . huge, 200,000-square-foot floors, the values will go up.”

There might be a lot of new designs around the old Mart, but there are few that are as grand (JWB Photo)

No comments: