Renewed demand for manufacturing space — especially for a facility equipped to take in immense amounts of electrical power — makes the soon-to-be-vacated Twin Creeks Technologies building in Senatobia a strong bet to attract a buyer or tenant.
So say economic development specialists and real estate professionals in assessing the future of the 85,000-square-foot solar-panel plant built with a $16-million loan from the Mississippi Development Authority.
The MDA’s bet on Twin Creeks went south after the California-based start-up company failed to reach market with its solar photovoltaic panels. A Boston company that bought Twin Creeks’ assets won’t take over its agreement with Mississippi, the Associated Press reports.
Twin Creeks had agreed to invest at least $132 million and create at least 500 jobs in exchange for loans, tax breaks and other aid.
While the likelihood is strong the state can find a buyer or tenant for the Twin Creeks plant, the approximately $10 million in specialized manufacturing equipment is unlikely to draw much interest, said Ed Bee, a New Orleans-based certified economic development specialist who specializes in the energy sector.
In selling or leasing the building and seeking a buyer for Twin Creeks’ equipment, Mississippi must compete with other failed solar plants and equipment on the market, said Bee, president and founder of Taimerica Management Co.
For instance, Germany’s Schott Solar is shopping a fully equipped 200,000-square-foot factory it opened in Albuquerque, N.M., in 2009 but abruptly closed in July. The plant employed 250 people and had been expected to grow its workforce to around 500. It made PV and concentrating solar power modules and components.
“They probably have the same situation you have in Mississippi,” Bee said, referring to New Mexico economic development recruiters who provided Schott with $16 million or so in infrastructure improvements as an incentive for opening the plant.
It will be a challenge for both Schott and the MDA to find takers for their abandoned solar panel manufacturing equipment, Bee said. “I’d say it’s kind of remote, unless you just basically give it away.”
On the other hand, the Senatobia building should draw ample interest, Bee said. “There could be a real demand for the building. There is a real shortage of good quality industrial buildings around the Southeast.”
The new user need not be in the solar power business, he noted. “The opportunity for marketing the building for some alternative users could be pretty strong.”
The building’s ability to accommodate a huge amount of power usage makes it especially attractive, according to Bee.
With the recession, very few buildings of the kind built for Twin Creeks have been constructed in recent years, creating a dearth of inventory, he said.
Bee added the building’s 85,000-square-foot size adds to its attractiveness, with current demand being strongest for buildings sized from 60,000 square feet to 100,000 square feet.
Its proximity to Interstate 55 and approximate 30-mile distance to Memphis International Airport further increase its appeal, he said.
Senatobia Mayor Alan Callicott said he thinks the building will get a lot of interest and noted having Northwest Mississippi Community College as a resource for training a company’s workers should add to the appeal.
Though custom-made for solar panel manufacturing, the building “is perfect” for just about any kind of technology company, Callicott said.
A group of business people from San Francisco noted that potential on a visit a couple of weeks ago to look over the Twin Creeks equipment. “They were standing in the lobby and looked around and said Hewlett-Packard could move in here next week.”
Callicott said he thinks the highest and best use would be a single user rather than several tenants sharing the building.
Patrick Burke, a senior vice president with the CB Richard Ellis commercial real estate firm in Memphis, is marketing a nearby 200,000-square-foot BMW parts distribution center. Interest in industrial space overall has picked up in the past six months, he said, but added prospects want lease discounts and other incentives.
The MDA or Senatobia may have to put more incentives on the table to attract a user, Burke predicted.
The main thing, though, is that national and international manufacturers seem to be on the hunt for space, he added. “People are ready to do business, based on the interest we’ve had.”
Lee Katz, an Atlanta-based specialist in finding buyers for distressed commercial properties, said he thinks the “real estate funk” of the past four to five years is slowly lifting. Though it is still difficult to find takers for large vacant properties, “for the right price there are people who are interested,” said Katz, chairman of turnaround firm Grisanti, Galef & Goldress.
Katz, who is marketing the vacant Roberts Walthall Hotel in downtown Jackson, said dollars unavailable to buyers four years ago are now available. “It’s just a matter of finding the right match,” he said. “Some very good mortgage financing is out there.”
While Callicott may have his fingers crossed that another solar panel maker will take over the Twin Creek’s plant, Taimerica’s Bee would advise him not to get his hopes too high.
The sector is in a sustained slump that has pushed down both demand and prices for its products, he said, citing the low cost of natural gas and the emergence of converting shale oil to crude as a viable option.
What’s more, the Chinese are undercutting prices worldwide, added Bee.
A few years ago when Mississippi and others made their bets on solar, everyone expected the per watt price to go from $7 to $15, Bee said. “Instead, it’s now going for $3.”