How much would you pay for that post office?

The US Postal Service would like to make you a deal.

The U.S. Postal Service is unloading as many as 200 facilities in an effort to offset some of its huge financial losses.

In Houston, just two properties have been put up for sale. But another four could go on the market soon.

[...]

The postal service, which lost $2.8 billion last year delivering 9 billion fewer pieces of mail, asked lawmakers this week to lift the rule requiring mail delivery six days a week.

Because mail volume has declined so dramatically, the service is adjusting carrier routes and employees' work hours within its mail processing plants and consolidating operations.

"This consolidation is going to leave us with excess properties we no longer require," said national spokeswoman Sue Brennan.

The two properties for sale in Houston are at 1900 West Gray at Dunlavy and 2802 Timmons, near West Alabama. They are classified as "stations," meaning they have both retail and delivery operations.

[...]

Before the commercial real estate market began to falter, the post office on West Gray might have sold for between $100 and $125 per square foot. Today, it could be worth much less.

"Is the West Gray site worth $125 per square foot? I don't know. Is it worth $50? I don't know, because there's nothing to measure it against," said David Cook of Cushman & Wakefield, a commercial real estate firm.

Back when new developments were being readily financed, the Houston post offices might have swiftly sold to developers for apartments, condominiums, retail centers or office buildings.
Prime location

The West Gray site is particularly well-suited for retail space, Cook said, as it is surrounded by high-end neighborhoods, restaurants and shops. The building is about 18,000 square feet and sits on a 2.5-acre parcel. The Timmons office is just over 14,000 square feet on about 2.6 acres of land.

Here's a look at the USPS annual report. They actually did better in 2008 than in 2007 - revenues were up a hair, and expenses were down; as such, their loss was much greater in 2007. But they're now in the red on net capital, so I presume that's why they're looking at selling properties. For what it's worth, the drop in mail volume was only 4.5%; it's not clear to me that things won't improve along with the economy. Longer term, maybe they need to scale down. But I don't think it's necessarily as bad as all that.

I think you'd have to be pretty desperate to try to unload the sites on Gray and Timmons unless you could be sure you were getting top dollar for them. If I were them, I'd want to hold on and try to capitalize in a stronger market. I realize everyone and his sister is asking for a bailout these days, but the Postal Service is a pretty critical part of the economy. Surely we can do something in the short term to keep them from having to make sub-optimal decisions like this.

Posted by Charles Kuffner on January 31, 2009 to National news