Source: Dow Jones News Service, February 8, 2012
Posted on: http://envfpn.advisen.com
(From THE WALL STREET JOURNAL)
More than 10 years after the last steelmaking operations were closed down at the Bethlehem Steel Corp. plant in Pennsylvania, its 1,800-acre site is slowly attracting new businesses.
A casino operated by Las Vegas Sands Corp. opened in 2009. It was followed last year by a 302-room Sands hotel and an arts and entertainment complex called SteelStacks.
A few miles away on the site, a more-prosaic project is the latest sign of rebirth. Liberty Property Trust expects to finish a $62 million warehouse this summer on a site that used to be a slag dump. The 1.2 million square-foot warehouse is one of the largest “speculative” industrial projects under way in the U.S., meaning it doesn’t have a tenant lined up. Liberty hasn’t launched a speculative building of such scale since 2008.
“We’re steadily making progress bringing that property back,” says Bethlehem Mayor John Callahan.
To be sure, the city has far to go before it comes close to making up for its loss of the steel plant. In its heyday as many as 35,000 people churned out steel on the site where steel mills had flourished since the 1850s. Now about 4, 600 people work on the property.
But the slow progress at the Bethlehem Steel site gives some hope to numerous other Rust Belt communities struggling to find new uses for now-fallow and possibly contaminated manufacturing sites. In Bethlehem’s case, it helped that over $30 million was spent by the company, as well as federal, state and local governments, to demolish buildings and clean up the plant site.
The company stopped producing steel in 1995 and its coke works closed in 1998. But a forge once owned by Bethlehem Steel still is operating on the site.
Before filing for bankruptcy in 2001, Bethlehem Steel sold some pieces of the land, such as an area that now houses a Calpine Corp. power plant. But the larger chunks were divided up several years after the Chapter 11 filing. In 2003, Wilbur Ross’s International Steel Group bought the land and other assets from Bethlehem Steel and began to sell various parcels.
When the dust settled, much of the property was controlled by three main groups. Las Vegas Sands built a casino, a hotel and a mall on about 126 acres located atop an old ore pit. Sands also donated about 10 acres to be occupied by SteelStacks. Billionaire Edward Roski Jr.’s Majestic Realty Co. took about 450 acres of the property, and his firm plans to build industrial buildings on the site.
In 2004, International Steel sold the largest 1,000-acre chunk to Lehigh Valley Industrial Park Inc. The nonprofit formed in the late 1950s using donations from local businessmen who sought to broaden the area’s economy by buying land and developing industrial parks as steel strikes began to take their toll on the region. The Bethlehem Steel parcel is the group’s seventh park.
Kerry Wrobel, president of Lehigh Valley Industrial Park, said that to buy the land the group tapped sources that included money from selling property in other parks, bank loans and government grants.
Lehigh Valley Industrial sold 107 acres to Liberty last summer for $11.5 million. Mr. Wrobel pegged the per-acre price in the parcel at about $140,000 — only about 80 acres on the site can be developed.
Liberty is betting that the property’s location just off Interstate 78, which connects with the New Jersey Turnpike, will be attractive to companies that need to store and distribute goods on the East Coast. It also helped that Liberty was able to tap its existing line of credit because few banks are willing to lend money to construct speculative buildings, says Bill Hankowsky, Liberty Property Trust’s chief executive.
The decidedly unglitzy warehouse is a win for local officials who have drawn some criticism for spending money to build infrastructure to bring new uses to the former Bethlehem Steel plant site. About seven years ago, an $11 million half-mile road was built with county money to provide better access to the area. Some dubbed it “the road to nowhere.”