by John J. Lothian
Word broke yesterday that the CME Group had a buyer for the historic CBOT Building and the deal would close by June. The price of the deal was $150 to $180 million.
I just have one question. What numbskulls would sell a building at the corner of LaSalle and Jackson in Chicago? My apologies for name calling, but I just find this stupid. This is the greatest location in the Chicago financial district and it’s worth more in intangibles than all the money anyone could give me for this building.
The CME Group is a money machine. It does not need the cash. With interest rates low, this is the time to buy real estate, not sell it.
I get it that real estate is not futures trading, that the margins are different. I get that the CME Group may just break even on the CBOT Building. But what is the value of being closer to your customers? What is the value of having another significant aspect to your relationship with your customers in order to nurture their businesses?
I get it that in the era of electronic trading that the central meeting place does not hold the same value as in the days of open outcry trading. But it still has value, a lot of it.
I don’t buy into the idea that the CME Group is still made up of different groups of people, those from the Board and those from the Merc. But to hear the way that this issue is discussed, it is not the CME Group that is selling the CBOT Building, it is the Merc.
Maybe the Merc has its reasons to sell the CBOT Building, but from my perspective it is a bad trade. Ownership matters. Location really matters in real estate. And, the intangibles of owning LaSalle and Jackson are priceless.