A Higher and Better Use for Old Manufacturing Plants
They’re well located near highways, ports and rail lines. They’re situated on enormous tracts of land. They can be had for relatively low cost. And they’re not doing anything at the moment; in fact, they’re highly unlikely to be put back into service for their original purposes. All are excellent reasons to repurpose former manufacturing facilities for logistics hubs.
“Logistics and fulfillment is really the segment of the industrial world that has backfilled the void that manufacturing has left in terms of employment and economic activity,” Thomas J. Hanna, president of Harvey Hanna & Associates, told the New York Times. Hanna’s company plans to tear down a former General Motors assembly plant in Newport, DE to create a three-million-square-foot complex for distribution firms.
“This plant has sat dormant for almost a decade, and it is time for it to be put back into a higher and better use,” Hanna told the Times. He added, ““Logistics is the fastest-growing segment within the real estate industry. Everyone is trying to figure out how to get their product to the consumer the fastest.”
Farther up the East Coast from the Delaware facility, the Rockefeller Group is repurposing land that’s now occupied by a former Dow Chemical plastics facility. The 228-acre site, which Rockefeller Group bought last year for $57 million, will hold five distribution centers totaling 2.1 million square feet when all is said and done. One is already leased to Best Buy (pictured).
“It’s very unusual that a site of that size is available in New Jersey,” the Rockefeller Group’s Brandi Hanback told the Times.
Of course, with a disused facility’s past as a manufacturing site comes, well, its past. Developers of older industrial properties have to incur the time and expenses of demolition or refurbishment, environmental cleanup and retraining an area’s workforce to logistics-related job functions, said NKF’s Robert J. Vodinelic.
However, many are eager to seize these opportunities due to strong demand for logistics facilities, Vodinelic told the Times. “If they are able to buy these properties for a fraction of the replacement cost, then they can make the numbers work,” he said. “Even with the huge cost of building a manufacturing facility, new construction may end up being the best route.”
For comments, questions or concerns, please contact Paul Bubny
- ◦Development
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