Hoffman’s company has been busy, leasing up 80,000 square
feet to a Louisiana energy company; a 46,000-square-foot
expansion for Product Service Manufacturing; a build-to-suit brownfield development at 150,000 square feet; and a
30,000-square-foot expansion for Wisconsin Oven.
“There’s a lot of space out there that’s third or fourth generation,
and while you might be able to get a good deal on it, that in and
of itself will create operational issues,” says Hoffman. A lot of
the manufacturing that we are seeing has been requiring more
modern industrial space.”
One traditional manufacturing area, Southern Georgia, hopes
to attract manufacturers to its old mills and factories that
were closed when textile jobs began moving overseas. Cotton
product companies were once found all over the South,
particularly in rural areas because of voluminous amounts of
water that were needed to manufacture textiles. Those facilities
have been vacated.
“Over the last three years, there has been as much as 700,000
square feet of space available at any given time in Georgia,
two-thirds of which was located in the northern part of state,
mostly in and around Atlanta,” says Arthur Barry III, SIOR,
associate broker and partner, with Coldwell Banker/Eberhardt
& Barry in Macon, Ga.
Most of the space in the southern part of the state is second
generation or older. It’s not leading edge or high-tech, but
still useful. “We have sold several million square feet of
plants at relatively inexpensive pricing,” says Barry. “People
were buying them to tear down, retrofit, and reposition for
Recently, for example, two Canadian groups snapped up
vacant properties in Southern Georgia. One needed space to
smelt metals for the automotive industry and the other acquired
a 385,000-square-foot former plastics extrusion facility.
Perhaps the most interesting deal was the sale of a 1. 1 million
square foot BF Goodrich plant to the Blackstone Group, which
successfully remarketed the property to a developer. About
450,000-square-feet was torn down and the building materials
sold. The rest of the space will be residential lofts, dry bulk
warehouse and medical offices. In addition, the production
team for the sequel to the Hunger Games movie has temporarily
taken up some of the empty space.
The driving force for redevelopment here, says Barry, is still
“cheap labor, dependable resources, and numerous national,
state, and local incentives.”
Not every region in the country has come out winning the
manufacturing game. Many more have lost manufacturers than
gained new companies. And the hits keep coming.
In Baltimore County, Maryland, the closing of the huge
Sparrows Point steel mill, which in the 1960s employed 30,000
workers, not only affected the remaining 2,500 workers who
were still there when the announcement was made in 2012,
but nearby ancillary plants that worked with the mill over the
decades were also impacted by the closure.
One of those plants was the former 235,000-square-foot,
10-acre Signode operation, also in Sparrows Point. Tasked
with the job of selling the property, J. Allan Riorda, SIOR,
a principal with Lee & Associates, has been marketing the
property to local owner-occupied businesses, one of which is a
big distribution company. The property is in negotiations. “It’s
in a good location on the east side of Baltimore,” says Riorda,
“and it has decent loading. The negative is, it is a fairly cut-up
property and the ceiling heights aren’t ideal for distribution.
But, it all depends on the price at the end of the day.”
Despite the old steel mill property having been closed, Riorda
reports a lot of space in the area has been absorbed and
vacancy rate in the area has been sliding downward since the
recession. Also, there is good access to I-95 and not a lot of
competitive new product nearby. “This is an older building and
the company that buys it will probably be a local- or regional-owner occupant,” says Riorda.
Industrial space, in general, has been expanding with new
developments and additions to older structures. Whether that
space is for distribution or manufacturing, completion time is
faster than for other property types. That’s the good news; the
downside is, expect occupancy and lease-rate improvements
in 2014 to be moderate as new building roll-outs pick up
STEVE BERGSMAN is a nationally
recognized financial and real estate
writer. For more than twenty-five
years, he has contributed to a wide
range of magazines, newspapers and
wire services, including the New York
Times, the Wall Street Journal Sunday,
Global Finance, Executive Decision,
and Chief Executive.
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