Development Magazine Summer 2010

Development - Ownership

From White Elephant to Job-Attracting Industrial Park

Before photo: Ford plant in Hazelwood, Missouri.

The last thing that the suburban St. Louis community of Hazelwood, Missouri needed was for its gigantic Ford plant to shut down with the loss of 2,500 jobs. A close second to that bad news was probably getting stuck with a massive, antiquated factory that was great for making 20th century cars but ill equipped for today’s economy. However, the steps that the city and Panattoni Development Inc. took next were transformative, serving as an example for handling other shuttered auto plants and abandoned factories around the country.

Mark L. Branstetter, senior vice president, Panattoni Development, said that the Ford plant had been opened in 1948 with numerous expansions over the years. But in the 2000s, it simply became outdated and had to be closed by Ford. The 154-acre site itself was intriguing to the developer. It consisted of 3.3 million square feet of buildings — 2.7 million square feet in the automobile plant and another half million square feet of warehouse space. The balance of the property was covered with asphalt and concrete so the site was 100 percent developed.

Mark Branstetter

Mark Branstetter

Panattoni and its financial partner, Prudential Real Estate Investors, contracted for the property in 2007 and closed on it in June 2008, but not before doing complete due diligence with a close look at potential environmental issues. "It took us a long time to get our arms around what was on the site and how to deal with it," explained Branstetter. "We also went through an incentive process with the city and with the state in which tax abatement programs were structured. What it did was give us 100 percent tax abatement for the first 10 years of the development and then an additional 50 percent abatement for the following 15 years, for a total of a 25-year abatement window. This all took about a year to put together."

With environmental issues and tax abatements figured out, of course the white elephant in the room was: what do you do with the plant and paved-over property? Branstetter said that Panattoni was the only group that looked at this project as a complete demolition, something Hazelwood was strongly pushing for. "From day one, I never looked at a reapplication or reuse of this facility. That building was designed for one thing and one thing only—making cars. Once you stop making cars, what can you do with it?" he asked.

Demolishing the Building

The first order of business was to get rid of the building, but Panattoni did not want a tangle of steel, copper, concrete and asphalt to wind up in another landfill. Instead, it brought in a demolition expert who set about recycling it to the fullest extent possible. It took a year, but 97 percent of all materials on that site will be reused, including 50,000 tons of steel, 7,500 tons of copper and stainless steel and 450,000 tons of concrete and masonry for roads and building pads. Branstetter estimated that the amount of concrete and masonry that will be reused amounts to a full year’s production of a large rock quarry.

"I don’t know of anything being done on this scale before," he said. "The recycling effort is pretty extreme. A couple of things played into this. It was a very green-minded thing to do; the material went to uses that were appropriated rather than into a landfill. Also, it was somewhat cost effective to do it. You think about where we were one and a half to two years ago with the price of commodities of steel and copper. The pricing of that material in a recycled format coming out of the building was high enough to justify this path." Purchasing an additional six acres of property from a railroad gave Panattoni 160 acres of prime real estate located at a busy intersection one mile north of Lambert- St Louis International Airport. Further, the property offers:

  • Extensive rail service provided by Norfolk Southern.
  • Mega-power supply that includes one 35 kilovolt and two 12 kilovolt of electric service available, capable of providing in excess of 26 million volt amps (MVA) or enough to power a small city.
  • Significant gas, water and sanitary services including a 12-inch gas main to supply a six-gain main to the park, a 16-inch water main that supplies the site through a 12-inch service line and an eight-inch sanitary sewer line.
  • Communication -- The site also has fiber and telecom service, with fiber available from AT&T and Verizon.
  • Panattoni envisions Aviator Business Park as a 2.7 million-square-foot mixed-use business park attractive to light manufacturers, data centers, distribution operators, hotels and office users.
dismantling the abandoned Ford plant in Missouri

Tax abatement programs and a massive recycling effort helped Panattoni’s vision for redeveloping the abandoned Ford auto plant.

"When we first started the project," said Branstetter, "we laid out an office warehouse and industrial park. It showed about 2.6 to 2.7 million square feet of buildable area. That would be your normal half-million-square-foot cross-docked distribution buildings and some rear-loaded office-warehouse buildings. On this site we have been rather pleasantly surprised by the mixture of uses that we have seen and that led to the rezoning of the property from industrial to one that allows for office, educational use, call centers, data centers and retail."

Because of the location of the property, Panattoni reports that they are receiving a lot of interest from firms inside and outside of the area. People interested in moving to the site are not doing so because they wish to make a lateral move but rather because they need to expand operations. Panattoni believes that the 2,500 jobs lost when Ford closed could well be made up in new and expanded businesses on this site.

Redeveloping Abandoned Plants

Is this type of redevelopment practical for other abandoned auto plants around the U.S.? "There isn’t a good answer for that question," responded Branstetter. "Given the location of this property, it made sense to look at a complete redevelopment from our perspective. If the plant had been 50 miles to the west, it might not have made sense."

Branstetter said that the project really started with the site and the amenities associated with it. "To have the ability to control 160 acres at a prime interchange that is rail-served and is surrounded by developed real estate was intriguing," he said. "It starts with location, it has to start there and all of the other pieces need to fall in place. Our original schedule called for build-out during a five- to seven-year window for complete construction of the 160 acres. Given what has transpired over the last 18 months in the economy, we expect that to be delayed but not a lot, so building should be complete in seven to 10 years."

For more information

www.panattoni.com 

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