Competition for the property was intense. The Indianapolis-based developer, which made the purchase with equity backing from Stockbridge Real Estate Fund LP of San Francisco, faced 20 other bidders for the 100-acre property. The steep $765,000-per-acre cost demonstrates the extreme desirability of what could easily be a white-elephant property in lesser locations.

The high sales price is especially impressive in that it represents land value only. Duke plans to raze the existing buildings and replace them with an undetermined amount of retail and light industrial/distribution uses. The inclusion of retail helps justify the purchase price, says Duke vice president of communications Joel Reuter. The location has already proved itself viable as a retail destination. Cappelli Enterprises Inc. of Valhalla, NY redeveloped the former Linden Regional Airport, which neighbors the GM property, as the 619,000-sf Aviation Plaza shopping center.

As is not uncommon with older Rust Belt properties, redeveloping the entire site with retail or other higher-paying commercial or residential use was not politically feasible. Anxious to preserve at least some of the blue-collar jobs lost to closure of the 73-year-old GM plant, both the city and state pressured to keep the bulk of the site industrial. The facility, which closed three years ago, employed 6,000 people at the height of operations and 1,700 at the end.

More importantly, Reuter tells GlobeSt.com, continued industrial use makes sound economic sense. The property's frontage on New Jersey state routes 1 and 9 and location three miles south of the New Jersey Turnpike makes it ideally suited for regional distribution purposes. Its position 10 miles from Port Newark and five miles from the Elizabeth-New Jersey Port Authority Marine Terminal, the second largest container port in the US, further supports industrial use.

Price was not the only factor in GM's decision to sell to Duke, which is making its New Jersey entry with the purchase. The two companies have a track record of working together. Two years ago, the Detroit-based automaker sold a 184-acre former minivan factory in Baltimore to the REIT for similar redevelopment. Christened Chesapeake Commerce Center, the project ultimately will have 2.8 million sf of warehouse, distribution and office space in 16 buildings. The first two warehouse buildings, totaling about 460,000 sf, are nearing completion. The complex is expected to provide up to 3,000 jobs at completion five to seven years from now.

GM has other plants on the market and has four more scheduled for closure this year in Georgia, Michigan and Ontario.

Instant Insights /

Auto Plant Closures Open Door for Redevelopment

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