(Read more on the industrial market.)
PHILADELPHIA-Rotem USA Corp., a maker of rail cars, has signed a 20-year lease for all of the 290,000-sf industrial building at 2400 Weccacoe Ave. Since setting up shop in a 110,000-sf building in the Philadelphia Naval Business Center in March 2003, the company's business has increased substantially, requiring it to relocate and expand its US headquarters.
Rotem USA is the American subsidiary of Seoul-based Rotem Co., a division of Hyundai Motors Group. After months of evaluating sites elsewhere, it decided to establish a new US headquarters in the vacant Weccacoe building, which locally based Rimas Properties acquired for $8.2 million in third-quarter 2006. It is located on 11.5 acres and contains 25,000 sf of office and 265,000 sf of manufacturing space.
Patrick Green, EVP, and Mike Mullen, associate in the local office of CB Richard Ellis, arranged the transaction between Rotem and Rimas. Sammy Benakmoume, president of Rimas, declined to disclose the value of the lease, but says the rent is below-market rate. “As Philadelphia residents ourselves, we felt it was critically important to secure 300 new jobs here in the city,” he says.
“We didn't want just a warehouse,” Benakmoume tells GlobeSt.com, “and this was an opportunity to see the property become a US headquarters.” He says Rotem plans to invest between $10 million and $13 million in the property. According to third-quarter data from the local office of Cushman & Wakefield, market rate for manufacturing space in Philadelphia County is $4.10 per sf, and office service industrial space is $7.75 per sf. The industrial vacancy rate here is 8%.
Rotem has a contract to make 120 new Silverliner V passenger rail cars for the Septa regional rail system here. The contract has a “buy America” provision that requires final assembly of the cars to be completed in the US and also requires that 60% of their content to come from US suppliers.
Since acquiring that contract, the company was also awarded a contract to make 121 rail cars for the Southern California Regional Rail Authority's Metrolink commuter rail service. Citing the inefficiencies of operating on both US coasts, Rotem decided to fulfill both contracts from here. It expects to begin production in 2008 while pursuing additional contracts throughout the country.
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