Evening star., 1938-10-01
USE FOR OBSOLETE
PLANTS EXPLORED
Realty Magazine Finds Small
Firms Are Best Bet for
Old Properties.

What should be done with industrial
plants when they have become Of no
further Use to their original owners?
This may happen where conditions
call Tor relocation of the industry for
which the plant was built, as for ex-
ample the mining and quarrying out
Of raw materials. Again, changes in
plans or procedure may make proper
ties valueless from an operating point
Of view. Or large holdings may be
purchased only a part of which are
found needed.
Freehold. magazine of real estate,
published by the National Association
Of Real Estate Boards. gives in its cur
rent issue some significant indications
which appear from the experience of
subsidiary companies of the United
States Steel Corp. which, in Cooper
alton with industrial realtors, are pro-
ceeding with a carefully studied pro-
gram begun two years ago for dis
posing of several hundred surplus
properties in so cities and towns in all
parts Of the country.
II the country is to 60 ahead as it
always has, an enormous demand for
modern one and two-story industrial
buildings will have to be satisfied dur
ing the next few years. This is the
conclusion indicated by contacts made
with industrial Arms of the country
In this campaign, in which during
1887 a little over $4,000,OOO worth of
property was sold. Replies to descrip-
tive letters addressed to important
manufacturing. utility and railroad
companies in the United States have
averaged from 4 to per cent and a
good percentage Of these were from
firms with definite plans for future
expansion, Freehold relates. This
showing is considered good inasmuch
As many firms purchase new property
only at rare intervals and are, there
fore, not normally in the market for
land.
Firms Outgrow Properties.
Many firms have been contacted
whose present quarters are too small
Tor their operating needs. These COM
panies will either have to expand at
their present locations or move to new
locations as soon as business condi-
tons improve.
Some conclusions as to what it is
feasible to do with abandoned plants
or operating properties indicated
by steers large-scale experiment in
cooperation with industrial realtors
are stated by the article as follows:
1T is believed that those owners
who have the courage to sell non-
operating plants Immediately are very
much better on than those who DELAY
hoping for an attractive offer. The
combined cost of taxes, carving
charges, corrosion, obsolescence, watch
man service. insurance. repairs, main
tenance. ETC., will completely eat up
the value Of the average non-produc-
tive plant in less than 10 years.
Would Explore Market.
TT has been found to be unvise tn
tear down any buildings on surplus
property until complete survey has
been made to ascertain the possibility
OF dividing up the property and selling
parcels to small companies. Usually
q large company prospect has enough
credit and resources to build a plant
10 meet its requirements. In addition
the larger companies are apt to need
specialized buildings and equipment.
On the other hand, the small COM
panies may often be able to function
emciently in buildings no longer of
use to the large manufacturing COM
panies.
The majority of distressed and
abandoned plants are entirely too large
to be used by a single new tenant
The average size of such plants pro-
hiolts the small and more versatile
corporations from being able to pur-
chase
The solution is to put in streets and
divide up the property so that space
can be utilized by many small con-
Germs. The rental income from these
tenants will pay for the improvements
that have been put in. Because the
buildings and property have been cut
up to serve the smaller industries. the
unit price for which the ground and
buildings can be sold is several times
'ne going price of the whole plant
without subdivision or improvements
Unless the seller is in a position to
oner to sell the properties on a long
Term basis and aid in the financing of
the improvements, he is very much
handicapped in the present market
Because OF the present tax situation
the prospective buyer is hesitant tn
consider any proposition which neces-
states weakening or changing his
capital structure"