Just in case anybody doubts that location has value in the 21st century, here’s a report from Bloomberg about a 31-acre Aurora parcel that became valuable because it’s adjacent to the CME Group‘s data center, enabling one to trade a millionth of a second faster. The site sold for $14 million, “probably twice as much as it’s worth” according to a local real estate exec. I would argue that it must be worth $14 million, else the buyer would not have paid it.
The article reports a couple other nearby deals, but provides no parcel numbers nor even a map, so we can’t see what the assessment of this parcel is. There’s also no indication who the seller was.
The Internet doesn’t make the earth economically flat. Some locations are still worth many times as much as others. But technology can affect the criteria for “most valuable site,” as most recently illustrated by the sale of One Wilshire Blvd in Los Angeles for more than twice the price per square foot of a mostly similar office building nearby. It also commands about twice the rent, per square foot.
The difference: One Wilshire is ” the primary terminus for major fiber-optic cable routes between Asia and North America,” and is therefore is a location prized by telecommunications firms.
“You can’t reproduce the connectivity,” said real estate broker Kevin Shannon of CBRE Group Inc. “It’s telecom gold.”
Of course the buyer thinks it’s a fine investment that will only become more valuable in the future. Presumably the seller thinks different. The only thing certain is that technology will change, and the pattern of valuable sites will likely be affected.