City officials haven't given up hope on keeping 1,400 lucrative manufacturing jobs at an Indianapolis steering parts plant, but Ford Motor Co. has. The company this month said it will close the facility by the end of 2008.
A closure will leave the 1.8-millionsquare-foot building empty, but real estate observers say it could be redeveloped as leaseable industrial space-as shuttered Chrysler, Maytag and Western Electric factories nearby have been.
Some of the premier projects in the area are leasing well, reporting occupancy at 95 percent to 100 percent of capacity, according to IBJ research. But the Ford plant's size, age and unknown condition make it difficult to guess its fate or value.
Built in 1957, the factory sits on 153 acres on Shadeland Avenue just south of East Washington Street, anchoring a corridor that used to be dominated by manufacturing given the quick access to interstates 70 and 465.
Ford spokeswoman Della DiPietro said the company hasn't made moves to appraise the building or seek out a listing agent.
"We haven't gotten that far yet," she said.
The Indianapolis plant is owned by Automotive Components Holdings, a Ford division created in 2005 to buy back the assets of bankrupt spin-off Visteon Corp. Ford tried to sell it and other manufacturing facilities under the ACH umbrella, but failed to line up a buyer.
The company said in mid-January that it would shutter the factory by late 2008, cutting its 1,400-person staff in phases.
If that happens, local industrial brokers say, it could be a prime candidate for a conversion into leaseable space for industrial warehousing or light manufacturing, similar to other redevelopment projects that dot Shadeland Avenue.
Brokers said the building could sell for anywhere from $3 to $12 per square foot-or a total of $5.4 million to $21.6 million-depending on whether it needs environmental cleanup and how easily it can be subdivided.
A redeveloper could add loading docks, divide the building and lease it to companies who have warehousing needs but don't need polished, new-build space. Industrial rents in the area range from $2.50 to $7 per square foot.
"It's definitely a price-driven submarket," said John Huguenard, a principal with the local office of St. Louis-based Colliers Turley Martin Tucker.
The industrial inventory in the submarket-an area bounded by Emerson Avenue, 38th Street, Interstate 465 and Interstate 74-has hovered around 5.5 million square feet for years, according to statistics from Bethesda, Md.-based CoStar Group Inc. But vacant rentable space has dropped from a high of 1.9 million square feet in mid-2002 to less then 530,000 square feet, CoStar's tracking of 38 buildings shows.
In fact, many of the projects breathing a second life into shuttered plants are doing well.
New York-based Norry Management Corp.'s Western Select, an industrial park in the former Western Electric plant at 30th Street and I-465, boasts 1.6 million square feet of industrial space-all but 24,000 square feet of which is leased, said industrial leasing representative Michael Weishaar of Colliers Turley Martin Tucker.
Nearby, Boston-based First Highland Management & Development Corp. redeveloped a former Maytag plant and a complex including a former Chrysler factory, both of which are fully leased.
"It would be a redeveloper who would buy [the Ford site]-somebody looking for a deal and willing to take the risk on leasing it up," said Terry Busch from the local office of Los Angeles-based CB Richard Ellis.
Still, others question whether Ford's dated, squarish building would be easily subdivided.
"It would be tough to divide into smaller, contiguous units because the building depths are so dramatic," said Jake Sturman with locally based Meridian Real Estate.
The other option is for a developer to buy the land and tear down the building. Some put the going price for land in the area at about $30,000 an acre, or $4.6 million for the site, but other property available close by-at Eastgate Mall and in Hancock County, for example-could hamper demand. The Ford site's heavy-industrial zoning could be an advantage, though.
"Ground isn't that hard to come by," said Jeremy Woods of locally based Summit Realty Group. "The interest will be much higher if the bones of [Ford's] building are good."
But while real estate professionals may already be eyeing the site, city officials said United Auto Workers Local 1111 leaders are trying to stave off the closure. They have 90 days to respond to Ford's announcement. Messages left with union officials weren't immediately returned.
Indianapolis Economic Development Director Jim Garrard said Ford officials are doing an in-depth study of environmental issues on the site this year and have promised to work with the city.
"They've said they aren't just going to board up the windows and disappear," Garrard said.