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PHILADELPHIA-Conshohocken-based Preferred Real Estate Investments acquired the 75-acre former Budd manufacturing plant in the East Falls/West Allegheny section of North Philadelphia, approximately 10 minutes from the CBD. It contains 20 primarily warehouse and industrial buildings totaling more than two million sf.

The complex was completed between 1917 and 1988 and vacated in 2002 when the owner, Troy, MI-based ThyssenKrupp Budd Co., consolidated operations near Detroit. Preferred plans to redevelop the complex into Budd Commerce Center, a mix of office, distribution, manufacturing, retail and residential facilities. Rich Gorodesky of the local office of Colliers Lanard & Axilbund negotiated the transaction. Terms of the deal are undisclosed, and Preferred would not provide an estimate of redevelopment costs.

Michael G. O’Neill, Preferred’s founder and chairman, calls the site “the single largest opportunity for redevelopment in the City of Philadelphia.” He says his firm has already received “significant interest from the market for a number of the buildings on the site and [we] anticipate occupancy of over 50% by the end of 2005.” The complex is a designated Keystone Opportunity Zone, which provides significant tax breaks through 2011.

O’Neill describes one fully air-conditioned, 225,000-sf structure as an “industrial gem” with 25-foot clear ceilings, five loading docks and six drive-in doors. “Since adaptive re-use of existing buildings provides for a lower cost basis over new construction,” he says, “future tenants of the Budd Commerce Center will experience a direct economic savings through highly competitive rents.” He did not disclose asking rates for space in the center. Average asking rental rates for manufacturing and warehouse/distribution space in Philadelphia County are $3.03 per sf and $4.24 per sf, respectively, according to third-quarter data from the local office of Cushman & Wakefield.

“A portion of the site will provide an ideal solution for much needed retail redevelopment to serve the site’s surrounding neighborhoods,” O’Neill says, adding, “We have been working closely with the Allegheny West Foundation to come up with a master plan that will impact the community in a positive way.” Allegheny West Foundation is a community development corporation, initiated by Tasty Baking Co. in 1968 to improve the quality of life and revitalize the Allegheny West neighborhood.

Founded here by Edward G. Budd in 1915, Budd Co. was the first to develop an all-steel body for automobiles and a stainless steel railroad passenger car. It also built the Burlington Pioneer Zephyr, the world’s first diesel-powered stainless steel train, in 1934. When it vacated the plant here, 600 jobs were lost. O’Neill says Budd Commerce Center “has the potential of bringing well over 1,000 jobs, … taking the status of this community one step further, while simultaneously working to restoring the area’s once vibrant manufacturing past.”

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