Steelcase To Sell Production Plant

December 13, 2002
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GRAND RAPIDS — In an effort to rid itself of a production facility and infuse some much-needed cash, Steelcase Inc. has hired a New England commercial real estate broker that is known for moving big boxes quickly.

Corporate Properties Ltd. (CPL) of Providence, R.I., has listed the 857,250-square-foot plant at 3800 Eastern Ave. for $8.5 million, a price tag that includes 21 acres in Wyoming.

Steelcase used the two-story factory to produce its line of file cabinets. Early indications are that the office-furniture manufacturer will continue to make the cabinets locally, but at a different site.

Whether CPL, however, can find a single user to buy that large of a building is uncertain, but that is the broker's ultimate goal.

"We certainly hope to find a single user. The likelihood is probably less than 50-50," said Anthony Caner, CPL senior vice president.

The building does have a number of sellable assets. Each floor has a 22-foot clearance, the space between columns is acceptable, access is good, and loading docks can be added.

The plant also can be divided up among multiple tenants, something that a manufacturer would not be interested in, but a developer would.

The site is zoned industrial and allows for office use. The plant is not in a Renaissance Zone, but there are some state incentives available for the right buyer.

Steelcase also might consider leasing the building. If so, projected lease rates would run from $1.50 to $3 per square foot, triple net, for an industrial use.

"We haven't crossed that bridge, yet," said Caner.

But when CPL markets a property it normally offers it for sale and lease.

CPL sells and leases throughout the United States. Caner is a licensed broker in 21 states, while the firm's founder, Gordon Simmering, is licensed in 29. That vast of a coverage area has given the company a different perspective on the economy than most normally get, and Caner said things have started to turn around in the industrial real estate market.

CPL recently sold a 2 million-square-foot plant in the Chicago area, along with a 1.6-million-square-foot building near Denver.

When Caner spoke with the Business Journal early last week he was in Chicago closing on a large 3M Co. manufacturing plant, an effort that started in September and that should be sealed within a few weeks.

CPL knows a little bit about the local market, too.

"Grand Rapids has had a great run the last couple of years," said Caner. "It's one of the fastest growing communities in the state. It certainly has a lot of things to offer a manufacturer, including a workforce that is temporarily out of work."

CPL put together a 440-acre deal in Benton Harbor and St. Joseph, one owned by both cities, CSX and the Whirlpool Corp. The site hadn't seen any new development in over 10 years. When the current project is finished, the redevelopment will have $115 million in new construction and be worth $1.2 million in new property taxes annually.

"We spend three months up front doing a very comprehensive market survey: economic demographics, real estate market. We have architects and engineers do a full walk-through of the property with us and we put together an existing-conditions plan," said Caner.

The company uses that data to make plans for a facility, project a price and develop a performance level on an investment basis. A cash-flow analysis is also done to determine the property's value to a developer.

"Then we work with our clients to figure out what the best disposition strategy might be, and we've done everything from donations to bargain-sale donations to sale-lease backs to straight sales. Then we implement a marketing program," said Caner.

"Our average time, from start of study to at least identifying a final buyer and beginning negotiations, is seven months. So we're fast," he added.

The average size of a building that the firm lists runs about 700,000 square feet.

Simmering started CPL in 1979 and Caner said it wasn't likely that his firm would work with a local broker on the project.

"The universe of buyers for that property is not infinite. We've been in business for 23 years and know pretty much the characteristics of the buyer and can find them fairly easily."

Tours of the Steelcase plant are scheduled for Jan. 14-16, Feb. 4-6, and Feb. 25-27. All bids should include specific information on the purchaser and its principals, prior completed projects, current real estate holdings, banking and credit information, and a closing date.

Negotiations on the plant won't start until after the tour dates.

Contact Caner at (401) 274-6810 or at awcaner@corprop.com for more information or to schedule a tour.    

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