September 21, 2015 | Green Street
Redevelopment of the former Carondelet Coke site in St. Louis is far enough along to begin referring to it by its new name: River City Business Park.
Site work is underway for the first of five planned buildings on 54 acres at the city’s southern tip.
The tract next to the River Des Peres is the site of the once heavily polluted Cardondelet Coke complex. It is one of St. Louis’ largest pieces of vacant ground and for years redeveloping it has been a top priority for city officials.
Ridding the site of asbestos, hazardous chemicals and residues from dozens of furnaces that “cooked” coal to produce coke, a fuel used in steel production, took six years and cost $13.2 million, mostly paid for with brownfields tax credits from the state of Missouri.
Where steelmaking began in 1870 — followed decades later by coal gasification and coke production until 1987 — developer Green Street St. Louis plans an approximately $70 million makeover. Phil Hulse, Green Street’s managing principal, said the first building of 125,000 square feet will be completed next year.
Financing that $14.7 million project, including $5.27 million for the building’s shell, was completed last month. The final bit came from a nearly $2 million equity investment by U.S. Bancorp Community Development Corp. of St. Louis in the form of federal New Markets Tax Credits from Central Bank of Kansas City.
Steve Kramer, U.S. Bancorp CDC’s senior vice president, said the New Markets contribution was key to getting the River City project underway. New Markets, typically used to fill gaps in conventional financing, are intended to spur job growth. Kramer said redeveloping the Carondelet Coke site has been a goal of city officials since he worked for the St. Louis Development Corp., the city’s development arm, in the late 1990s.
In addition to New Markets, financing for River City Business Park is coming from about $7 million in tax-increment financing and $59 million in private equity. Protective Life Insurance is Green Street’s overall project financial partner with Midland States Bank, which is providing construction financing.
Hulse said workers already are prepping the site with streets, sewers and other
infrastructure. Next comes construction.
“We’ll have foundations in for the first building in 30 days,” said Hulse, adding that the structure will be ready for tenants early next summer.
River City will return manufacturing, warehousing and jobs to what had long been an unproductive part of the city, he added.
Green Street’s plan last year was to begin construction when it had a tenant lined up. Instead, the first building will go up on spec. Hulse said this week the St. Louis area’s industrial market is strong enough to allow Green Street to finance the building’s construction before finding a tenant.
Recent reports by commercial real estate firms show that the recession is a faded memory in the region’s industrial market.
Colliers International reported that in the second quarter of 2015 average rental rates were $4.11 per square foot, the highest since 2010. Low vacancy in the area’s 264 million square foot industrial market is prompting new construction. Six projects totaling more than 2 million square feet of space are planned or under construction, Colliers said.
Hot spots for spec construction are Gateway Commerce Center in Edwardsville and, in Hazelwood, at the former Ford plant site renamed Aviator Business Park.
Colliers and other commercial real estate firms, including CBRE, JLL and NAI Desco, report a downward trend, currently at 6 percent, in the vacancy rate in the region’s industrial markets. That’s a number Hulse is happy to see because it pushes up demand for new space.
“It’s a good time to be building,” he said.
Green Street projects filling River City Business Park with buildings containing more than 700,000 square feet of manufacturing, warehouse and office space.
For years, the site languished. A state audit released last year criticized the state’s Natural Resources and Economic Development departments for failing to hold polluters responsible for environmental cleanup costs at some sites, including Carondelet Coke. A Post-Dispatch investigation in 2012 showed that taxpayers bore cleanup costs at Carondelet Coke despite the state’s insistence in 1996 that the site’s previous owners pay the costs.
The investigation also found that city and state did not require a public bidding process for the cleanup, letting the project consultant, Environmental Operations Inc., solicit bids and then award most of the work to itself. The state authorized $6.7 million to pay the firm for the cleanup even though officials were told more testing was needed. The firm told city and state officials it could obtain insurance to cap the cost at $6.7 million, but was unable to do so, putting taxpayers on the hook for another $5.6 million.
Laclede Gas built a plant there in 1915 to burn coal and produce coke and other chemicals for gas lighting. Great Lakes Carbon bought the site in 1950. Carondelet Coke Corp., owned by J. Donald Crane of Elma, N.Y., bought it in 1980. The plant closed in 1987 and the city of St. Louis became owner through a tax foreclosure sale in 1992.
Much later, the city awarded the site to Green Street as the environmental cleanup proceeded. The developer added 12 acres to improve access to the original 42-acre site.
Hulse said the first River City building is designed for as many as four tenants but could be configured for a single occupant. He said he hopes to announce a tenant in about 60 days.
“We’ve got several people we’re in conversation with on the first building,” he said.
Originally posted on the St. Louis Post-Dispatch, written by Tim Bryant.
