If you sit down with local community leaders and ask them what makes their town or city tick, they’ll likely talk about steady paychecks and a strong tax base provided by businesses that invest in the region. And for generations, that model was prevalent across the country. Many American towns and small cities centered around the local factory, where family and neighbors built their careers.
But when that business shuts down or leaves, the side effects can feel like the beginning of the end for many communities. As such, what happens to the vacant property matters a great deal. Industrial redevelopment may seem like just another real estate transaction, but, in reality, the impact is far more profound.
Plant Closures Have Ripple Effects
The loss of manufacturing jobs has a larger impact than other sectors. Every 100 jobs lost in durable goods manufacturing contributes to the elimination of 744 other jobs somewhere else in the economy, according to the Economic Policy Institute. For comparison, the loss of 100 retail jobs only creates about 122 indirect job losses.
For example, an economic analysis of the 2012 closure of a Whirlpool plant in Fort Smith, Arkansas showed that the loss of about 1,000 jobs upon closure resulted in the overall loss of 1,550 jobs statewide.
Studies have also measured the impact beyond employment. A study from the University of Wisconsin – Milwaukee revealed that when brownfields remain undeveloped, nearby home values drop by more than 11% within about 4,000 feet of the site.
Blight Remediation Extends Well Beyond Property Lines
The damage caused by an industrial facility closure doesn’t have to be permanent. One National Bureau of Economic Research study on EPA-funded industrial cleanups discovered that remediating brownfield sites raised the value of nearby homes between 5% and 15%. An EPA report on 48 cleaned-up brownfield sites also showed that those sites went on to generate between $29 million and $97 million in additional local tax revenue in only one year.
Phoenix Investors has seen this play out many times, such as in Flint, Michigan. When the Delphi East plant closed in 2013, almost 300 people lost their jobs. After Phoenix renovated the facility, it added or maintained about 350 full-time jobs. Local agencies also leveraged a $50,000 donation from Phoenix Investors to obtain a $500,000 grant that facilitated the removal of a crime-ridden trailer park next door to the site.
“Most often when we complete a major industrial renovation, nearby businesses and neighborhoods begin to improve. We’ve found that our renovations are often inspiration for other investments and increased economic activity,” says Frank P. Crivello, chairman and founder of Phoenix Investors, in an interview with the Lansing State Journal.
Legacy manufacturing sites are also finding new purpose for new industries. For example, a former Federal-Mogul plant that had been vacant for more than 15 years is being converted into a data center that is expected to bring $500,000 annually in economic impact taxes for the city. The location will add 30 jobs by 2034, as well as 500 to 800 construction jobs during the course of the project.
Creating Stability from What Already Exists
Revitalizing neighborhoods and communities starts with recognizing what the area already has to build upon. Even if an older industrial facility has fallen into disuse and disrepair, or has developed environmental contamination, it likely still has power, water, transportation access, and established industrial zoning — things that can take years to set up at a greenfield site.
Returning these sites to productive use bolsters the local tax base, elevates surrounding property values, reduces crime, and ultimately gives residents a reason to stay in the community.
Phoenix Investors specializes in bringing blighted and brownfield sites back to life. To see how we can help you find a brownfield that’s right for your project, please contact us.
About Phoenix Investors
Founded by Frank P. Crivello in 1994, Phoenix Investors and its affiliates (collectively “Phoenix”) are a leader in the acquisition, development, renovation, and repositioning of industrial facilities throughout the United States. Utilizing a disciplined investment approach and successful partnerships with institutional capital sources, corporations, and public stakeholders, Phoenix has developed a proven track record of generating superior risk-adjusted returns while providing cost-efficient lease rates for its growing portfolio of national tenants. Its efforts inspire and drive the transformation and reinvigoration of the economic engines in the communities it serves. Phoenix continues to be defined by thoughtful relationships, sophisticated investment tools, cost-efficient solutions, and a reputation for success.
Mr. Frank P. Crivello began his real estate career in 1982, focusing his investments in multifamily, office, industrial, and shopping center developments across the United States. From 1994 to 2008, Mr. Crivello assisted Phoenix Investors in its execution of its then business model of acquiring net lease commercial real estate across the United States. Since 2009, Mr. Crivello has assisted Phoenix Investors in the shift of its core focus to the acquisition of industrial real estate assets throughout the country.
Given his extensive experience in all aspects of commercial real estate, Mr. Crivello provides strategic and operational input to Phoenix Investors and its affiliated companies.
Mr. Crivello received a B.A., Magna Cum Laude, from Brown University and the London School of Economics, while completing a double major in Economics and Political Science; he is a member of Phi Beta Kappa. Outside of his business interests, Mr. Crivello invests his time, energy, and financial support across a wide net of charitable projects and organizations.