Shortly after Whirlpool announced plans to close its Fort Smith manufacturing plant by mid 2012, company, state and local officials said they would work hard to market the property to and attempt return jobs to the facilities.
But how does one market around 2 million square feet — divided into two large structures — of manufacturing and warehouse space that sports a replacement cost of more than $111.6 million?
“Obviously, pretty broadly,” said Scott Miller.
Miller, a managing director with Chicago-based Jones Lang LaSalle, has worked to repackage and sell large properties for General Motors, Delphi, Phillip Morris and other large corporations. He’s not overwhelmed about the Whirlpool property and structure size.
“I’ve sold buildings larger than this,” Miller said.
Miller does recognize the desire by state and local officials to return jobs to the property as soon as possible following Whirlpool’s planned exit.
The plant closure, expected by mid-2012, will result in the loss of 1,000 existing jobs. However, Whirlpool’s Fort Smith plant employed more than 4,500 in early 2006. The loss of the about 1,000 Whirlpool jobs in Fort Smith will result in the overall loss of 1,550 jobs and a labor income reduction of $56.9 million, according to an economic impact model prepared by Gregory Hamilton, senior research economist at the University of Arkansas at Little Rock, for The City Wire.
Miller says the Whirlpool facility and location in the U.S. may make it easier to sell than some may think. He said the facility is in decent condition, has high ceilings, features numerous overhead doors and docks and has rail access “with good linkage” to major rail lines.
Another advantage is that Whirlpool officials have an economic interest in promoting the facility.
“Whirlpool will market the assets and the people,” Miller said, adding that any marketing of the property must include detailed info on the history and quality of the area manufacturing workforce.
John Lenio, an economist and managing director of the Economic Incentives Group with Los Angeles-based CBRE, also said the facility location and access to transportation infrastructure will aid in the effort to find new economic activity for the Whirlpool property. He said the key for all involved is to gather detailed info on the property and the community and get the info to as many site selection consultants as possible.
“Really all they can do is make sure that site selection consultants have this building and have Fort Smith top of mind,” Lenio said. “The trick of the trade is to match geographic attributes and the structure with the companies that need something that large.”
Lenio said being near a navigable waterway like the Arkansas River “opens up the number of potential users.”
He also said officials with the Fort Smith Regional Chamber of Commerce have been “pretty proactive” in communicating early with site selection companies and global real estate companies about the Whirlpool property.
“The chamber has a good team that gets economic development,” Lenio said.
Another advantage, according to Miller, is the continuing “migration” of manufacturing operations in the northern United States to the south and southeast. He said owners of smaller, outdated manufacturing operations may see all or a portion of Whirlpool’s Fort Smith plant as a cheaper alternative to building a new plant.
Lenio and Miller said several outcomes are likely with the property. Those include:
• Purchased by one investor or investor group for a single use;
• Purchased by one investor or investor group to then be subdivided for multiple tenants; and,
• Property divided into several units and sold separately.
Lenio said there is a clear bottom line issue when it comes to selling the property.
“It really comes back around to cost at the end of the day,” he said.
Michael Tilley with our content partner, The City Wire, is the author of this report. He can be reached by e-mail at email@example.com.