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Bethlehem Steel site purchase holds promise of business park ; Locals get 160 acres in $3.5 million deal

A local investor and development group paid $3.5 million Monday to buy the former Bethlehem Steel plant in Lackawanna, with plans to turn the sprawling 160-acre site into a multitenant business park.

Great Lakes Industrial Development LLC bought the former Bethlehem Steel Galvanized Products Division complex on Route 5, including the idle Bethlehem Cold Mill, from global steelmaker ArcelorMittal, which had shut the plant down in May 2009 after it curtailed U.S. steel production.

The new owners said they plan to convert the property at the Lackawanna-Hamburg border into a business park that could accommodate a range of uses, including heavy or light manufacturing, warehousing and distribution, equipment storage and back-office space.

The company has not yet drafted any specific site plans but expects a "multiphase effort" that would involve reusing existing structures while demolishing others to make way for new development, according to a news release about the deal. Initial work is expected to start next year.

"We are very excited to have made a significant investment in our own backyard," David Franjoine, Great Lakes Industrial Development's CEO, said in the news release. "We believe this site has great potential to create new jobs and be a live, contributing piece of the local economy."

Great Lakes is a Buffalo-based development group whose businesses include commercial development, demolition, industrial salvage, equipment sales and moving, and storage, according to the news release and commercial real estate broker James R. Militello, who is acting as the group's spokesman.

Militello said the group owns "a lot of property in Buffalo," including historic buildings along Mississippi Street in the Cobblestone District that were recently converted into multitenant Class A office and commercial space. They also have investments and business across the country, he said, without citing specifics.

"They don't really flaunt their investments, but their holdings are pretty substantial," Militello said.

Besides Franjoine, Great Lakes is controlled by his brother, Dennis, who is the group's vice president, and Robert W. Zuchlewski, chief operating officer. All are Buffalo natives.

"I've enjoyed working with them, and I've done some work with them elsewhere," Militello said. "They're just three solid Buffalo guys, very successful businessmen. They go about their way, but they say something and they do it."

The group is working with Militello, of J.R. Militello Realty, to market the property, and with environmental attorney Craig A. Slater, a partner at Harter, Secrest & Emery, who called the property "a very clean site" whose "environmental integrity has been well-maintained."

The former Cold Mill complex includes multiple buildings that date back as far as the 1940s, but the galvanizing plant was built by the now-defunct Bethlehem Steel Corp. in 1982. The property was purchased by International Steel Group in 2003. Mittal Steel took over in 2005 and, a year later, merged with rival Arcelor.

"It was an opportunity to buy this site, and they're buying it more as a real estate play," Militello said. "They really want to put it back into the market."

The property includes nearly 2 million square feet of existing structures, several of which "are very unique" and can be adapted for light manufacturing or storage, Militello said.

Some of the mill buildings are 2,000 by 100 feet, with 45-foot ceilings and no columns to obstruct the open space. The heavy steel-frame buildings also have cranes that run the length of the facilities, as well as rail coming onto the property.

"It's very expensive to replace the superstructure of these mill buildings," Militello said. "These are heavy steel structures with a lot of load-bearing capacity and cranes running along the inside of the building. The roofs are all in good shape."

For now, the group is trying to "fine-tune" its plans and determine the best way to proceed with all of the space and the various buildings, Militello said. He noted that while it's a heavy industrial site, it's "clean" and has no issues with zoning or neighbors, so "there's a lot you can do."

Militello said his firm "has some folks that we believe would be a good fit, so they're still trying to get their minds around what's going on." Besides reusing the existing buildings, he said, the group will "wind up with a good block of land" and could do a "build-to-suit" project if it fits.

"But they're not going to sit around. We expect some things to happen in early 2011," he said. "These guys are in a position to do something right away, so if it warrants it, they'll do it quick. They've got a lot of ideas, and they're anxious to make an investment and get it going."

e-mail: jepstein@buffnews.com

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