Keystone snatches up empty Laich site

By STAN BULLARD

6:00 am, August 28, 2006

article-image.jpgLooming alongside Interstate 480 in Brook Park like an aircraft carrier docked in port, the empty, 3-year-old former home of Laich Industries Corp. soon will get a new owner and new use as a multitenant warehouse.

 

Keystone Realty Investments Ltd., a real estate investment partnership operated by the Asher family of Solon and longtime industrial broker Kevin Callahan, has agreed to buy the 400,000-square-foot building from Geis Cos. of Streetsboro, according to both parties in the transaction.

 

The mammoth white building was emptied late in 2005 following the closing and Chapter 11 bankruptcy filing of Laich Industries Corp., a West Side plastics manufacturer. Laich had consolidated its operations from three buildings into the new one that Geis constructed for it three years ago on a build-to-lease basis. Court records show the bankruptcy reorganization is still under way.

 

Greg Geis, who heads the family-owned industrial development concern with his brother Fred, said the developers got the lease nullified and gained control of the building in Bankruptcy Court proceedings earlier this year.

 

There are plenty of prospective users for the building, but Mr. Geis said the company wanted to put the property behind it.

“Frankly, it left such a bad taste in our mouths we wanted to move it out of the portfolio,” said Mr. Geis, who described the bankruptcy proceedings as a nightmare. “We want to free up cash for buildings we want to build next spring.”

 

On the flip side, the Asher family’s Weston industrial real estate concern, which manages Keystone’s properties along with the company’s family-owned portfolio, is focused on owning and managing multitenant industrial properties.

 

T.J. Asher, Weston president and a managing member of Keystone, said he sees “a lot of opportunity” for the here.

“It’s a state-of-the-art building in a great location,” Mr. Asher said. “And the market (for industrial property) is tightening up.”

 

Mr. Callahan, Keystone managing director, said the building has 30-foot-tall ceilings that are prized by distributors because they allow for the storage of more goods than buildings with typical 20-foot ceilings. Mr. Callahan said the property also benefits from its proximity to Cleveland Hopkins International Airport.

 

In a buying mood

 

The purchase of Laich continues a buying binge for Keystone. In the last three months alone, Keystone has snapped up three other industrial buildings in Macedonia, Solon and Twinsburg for more than $12 million in total.

Mr. Callahan said the Laich building can be easily sliced for as many as three tenants and has 24 loading docks. The prospective new owners said they have a tenant in the wings for 45% of the building, but declined to identify the company because they haven’t yet inked a deal.

 

Neither party would disclose the proposed sale price. Geis and Laich three years ago estimated constructing and outfitting the structure would cost $13 million, according to Brook Park city records.

The proposed sale makes the best of a bad situation in the view of Vince Adamus, Brook Park commissioner of economic development.

 

“Our first interest is typically in having an end user buy the building,” Mr. Adamus said. “Weston is a close second. They have a good track record for finding tenants and working with communities.”

 

Market tightens up

 

Laich filed for Chapter 11 reorganization under the federal Bankruptcy Code May 5, 2005. At the time, it told Crain’s sister publication Plastics News it had been socked by rising resin costs and Asian competition.

Keystone may be buying the building empty, but it’s a good market for such a gamble, outsiders say.

 

Howard Lichtig, a CB Richard Ellis vice president who has worked the industrial markets in the southwest suburbs and western Cleveland for 20 years, said the area where the building sits is “historically one of the lowest vacancy parts of the city.”

 

CB put the vacancy rate in the southwest suburbs and western Cleveland at 7.5% as of last Wednesday, Aug. 23, down from 8.4% a year ago. Industrial vacancy in the region fell to 9.3% as of June 30 from 11% a year ago, CB reports.

 

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