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Wanted: New life for closed auto manufacturing plant

For sale: Seventy-year-old manufacturing plant with 50 football fields of floor space on 182 potentially contaminated acres. Only one owner. Comes with easy access to a congested East Coast highway. Zero percent financing unlikely. See your General Motors dealer for details.

With the assembly line at GM's plant in Southwest Baltimore idle, the search is on to find a developer with deep pockets to take on the task of bringing one of the city's largest and most prominent industrial properties back to life.

Developers nationwide have had mixed success turning GM's former manufacturing behemoths into something useful. Of the 112 plants the company has shuttered since 1979, some have been transformed into everything from shopping centers to million-dollar condominium developments. Others have remained vacant, weedy monuments to America's declining manufacturing base.

State officials envision the site on Broening Highway being reborn as a "global trade and technology center," with a mid-rise office park, warehousing and distribution space for the increasingly cramped port of Baltimore and a hoped-for GM research facility focused on the development of hydrogen fuel cells and hybrid vehicle technology.

But dreams of restarting a stalled economic engine in the heart of the city will depend on the interest of developers, who often shy away from contaminated brownfield sites, and a weakened GM's willingness to invest potentially tens of millions of dollars to clean up the site. The process could take years to evolve.

"We'd like to see if we can get 3,000 to 5,000 jobs on that site in the next three to five years," said Aris Melissaratos, Maryland's secretary of business and economic development. The state has offered to play real estate broker for GM by lining up potential tenants.

"We have had discussions with GM saying, 'Before you knock down the first brick in that building, I want to have broken ground on at least two other [new] buildings,'" he said.

All would be done with private investments, plus some potential state incentives, Melissaratos said.

Industry analysts question whether GM would give serious consideration to placing a research facility in Baltimore, especially after so many years of preparation to close the plant.

And the plan recalls one Melissaratos pitched unsuccessfully in December 2003, when a high-powered delegation consisting of Gov. Robert L. Ehrlich Jr., Baltimore Mayor Martin O'Malley, U.S. Sen. Barbara A. Mikulski and U.S. Rep. C.A. Dutch Ruppersberger flew to Detroit in one last attempt to convince GM to keep the plant open.

Melissaratos proposed creating a global free-trade zone around the plant to facilitate vehicle exports. He also pitched the idea of retrofitting the plant to create small numbers of "boutique" vehicles, which could include alternative-fuel cars and trucks.

Developers are much more optimistic about the warehousing and office components of the state's proposal.

Melissaratos said he has already had discussions with potential tenants - including multinational companies he declined to name - and GM officials have attended several meetings to discuss the plans. He says the project is "on the fast track" and that GM likes what it is hearing, though the company is cautious in its assessment.

"Typically, it's not uncommon for it to take several years for that process to play itself out," said John M. McDonald, who works in GM's economic development and enterprise services department. "The state has asked for it to be fast-tracked, and we're doing that in this regard."

The company is in the process of determining the market's appetite for the property. The state has asked GM to donate the land and building to make it more attractive to developers, but that is an unlikely prospect given the company's growing financial troubles and restless shareholders.

"We can't just be disposing of assets without a good business case to do it," McDonald said. "GM is in a business that is highly competitive and we have to maximize our return. We have to think of shareholders."

Possible rebirth

It's rare but not unheard of for abandoned GM plants to be turned around as quickly as state officials envision. On average it takes two to six years for the carmaker to study local real estate markets, gather community input, do the necessary environmental cleanup and pick a potential buyer that will net shareholders the biggest return, according to McDonald.

Industry experts said the cost of the land will depend in part on how it is used. For example, if warehousing is located on the site, it's possible the plant's thick, reinforced concrete slab can be left in place, eliminating the need to dig up soil beneath the plant and clear away potential pollutants. However, anything that requires removing the slab would cost significantly more - $30 million to $50 million, if history is any guide, some analysts estimate.

McDonald declined to put a price on the land or redevelopment. So much depends, he said, on what developers propose and what sorts of contaminants are found.

"You can't have that kind of heavy industrial use over a long period of time without having some kind of environmental remediation that needs to be done," he said.

Industry experts say such sites tend to be expensive to prepare and too huge for most tenants to take on alone.

But McDonald and his group can point to successes. A Van Nuys, Calif., assembly plant that closed in 1992 was converted into a 1.2 million-square-foot retail, entertainment and industrial center that has helped revive a once-crime-ridden neighborhood near Los Angeles.

Other sites have benefited from changing real estate values. The Tarrytown plant, in Sleepy Hollow, N.Y., sits on land in high demand by residential developers and is slated to become condominiums. A Clark, N.J., property is now a nine-hole golf course and driving range. Others have been taken over by parts makers or warehousing and distribution companies.

But industry analysts say many of the GM manufacturing plants that have been closed over the past 25 years remain decaying eyesores of the sort that inspired filmmaker Michael Moore's scathing documentary, Roger & Me. The film recounted Moore's pursuit of GM's former chief executive, Roger B. Smith, and portrayed the company as an unfeeling corporate monolith.

"They become like a dead, beached whale," said Center for Automotive Research economist Sean McAlinden, reviving a metaphor the Michigan researcher has used in the past to describe decommissioned plants.

"Many of them in Detroit are just a gaping part of the great Detroit wasteland," he said. "The plant is gone and there's nothing but a rubble-strewn field left."

Location advantage

GM has left a lot of bitter feelings behind in communities it has abandoned, McAlinden said. But it's not likely to walk away from Baltimore because the company has improved its outreach in recent years, he said. And Baltimore sits close to the Washington power brokers with whom the company wants to curry favor.

Its proximity to the nation's capital also is one reason Melissaratos believes the state may have an outside shot at convincing GM to put a research facility here.

Melissaratos said it would offer the company opportunities to showcase its alternative energy programs to lawmakers, which could potentially garner federal grants or other incentives. The carmaker has fallen behind Japan in the push to replace increasingly unpopular SUVs with fuel-efficient hybrids.

Still, real estate experts say it's more likely that potential tenants will be drawn by the plant's proximity to the port of Baltimore, which has transformed itself in recent years by going after cargo that requires acres of storage space. Meanwhile, the port has increasingly found itself competing for land with residential and commercial developers who covet waterfront property.

State transportation officials say they could free up more room for containers at the port of Baltimore by moving a CSX railroad facility off the Seagirt Marine Terminal and onto a portion of the GM site. CSX uses the 66-acre rail facility to transfer containers from ships onto rail cars. The move would free 40 acres for more container storage and increase Seagirt's capacity by about a quarter.

Seagirt already has excess capacity, but state officials are hoping congestion at busy ports on the East and West coasts will drive more containers to Baltimore, which has historically been held back because it requires a 10-hour sail up the Chesapeake Bay. Melissaratos said that carriers moving cargo from southeast Asia are starting to sail east through the Suez Canal and on to the eastern United States to avoid congested ports in Southern California.

A more immediate concern for port businesses is a lack of warehouse and parking space. The port is a major destination for automobiles and heavy construction and farm equipment, which need to be parked on shore until they are distributed nationwide. There's also a need for more shed space for lumber, metals and other bulk materials that competing ports often turn away in favor of more lucrative containerized cargo, which can be stacked and stored in tight spaces.

"There's a real need for inexpensive warehouse space that can service the port," said Tom Obrecht, president of Obrecht Realty Services Inc., which has developed formerly contaminated industrial sites. Whether buyers come forward will depend heavily on the price tag GM places on the property, he said.

The downside of filling the site with warehousing is that it doesn't create nearly as many jobs as the state is hoping for, Obrecht said. Warehouses tend to require few employees.

In the short term, the site could be marketed as an extension of the nearby Fort Holabird Industrial Park, which has a mixture of light manufacturers, distributors and office tenants, said David P. Scheffenacker Jr., president of Preston Partners, a real estate commercial services firm in Lutherville.

"I think [the tenants] are out there," he said. "But it's going to require a lot of money and it's a big bet."


Fates of other former GM plants

Chevrolet and Pontiac assembly plant

Location: Van Nuys, Calif.

Years in operation: 1947-1992

Reuse: Opened in 1998 as "The Plant" retail complex, with 800,000 square feet of retail space and a 16-screen movie theater.

Tarrytown assembly plant

Location: Sleepy Hollow, N.Y.

Years in operation: 1899-1996

Reuse: Being developed as Lighthouse Landing, a 96-acre residential development on the Hudson River, to include 1,562 homes, 185,000 square feet of retail space, 95,000 square feet of office space, a 150-room hotel, a train station and parking. About 20 percent will be public open space.

Hyatt Division roller bearing manufacturing plant

Location: Clark, N.J.

Years in operation: 1938-1987

Reuse: Opened in 2002 as Hyatt Hills Golf Complex, including a nine-hole golf course, 40-station driving range, two miniature golf courses and a full-service clubhouse.

Cadillac assembly plant

Location: Detroit

Years in operation:1921-1987

Reuse: Opened in 1994 as Clark Street Technology Park. Incubator tenants include Piston Automotive, Hispanic Manufacturing Center, Vitec (which builds plastic gas tanks) and MPS Group, an environmental services firm. Federal Express also operates a distribution center there.

Copyright © 2015, The Baltimore Sun
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