Dec. 17 (Bloomberg) -- As urban ruins go, not much tops Detroit’s Packard plant, a sprawling corpse of steel and brick that hasn’t produced a car since 1956 and that became a haven for scrap thieves, arsonists and the homeless.
Where others see 40 acres (16 hectares) of devastation, Fernando Palazuelo of Lima, Peru, sees charisma, architectural challenge -- and a bargain. He paid $405,000 in a tax-foreclosure sale to obtain the industrial wreck by year-end. He plans to make it a vibrant hub of automotive suppliers, offices, shops, lofts and maybe even a go-kart track in the city that filed the largest U.S. municipal bankruptcy.
“It’s the best opportunity in the whole world,” Palazuelo, a 58-year-old developer, said in an interview in Detroit. He said he’ll use his experience restoring dozens of buildings in Lima and his home country, Spain, to begin a $350 million makeover in Detroit. He plans to live at the site.
“I am not a dreamer,” he said. “I will be very active at the Packard plant. It’s not going to be easy. It’s going to be a war. It’s going to be quite aggressive the first months.”
Among Detroit’s more than 70,000 vacant buildings, the Packard plant stands out as an icon of the decline from an industrial juggernaut and the loss of one-fourth of the population since the turn of the century. Palazuelo said his fresh ideas will help Detroit “overcome its image of disaster, corruption and bankruptcy.”
He beat tomorrow’s deadline for the final payment to Wayne County, putting the remainder of $405,000 in an escrow account last week. Pending an environmental assessment, Palazuelo will own the site and its 3.5 million square feet of buildings designed by architect Albert Kahn by Dec. 31. It would cap a tortuous attempt to unload the plant.
A county foreclosure auction in October drew a $6 million top bid from an Ennis, Texas, physician. That fell through, as did a $2 million offer by Chicago developer William Hults.
That left Palazuelo as the last, best hope.
The father of five with a passion for Ferrari sports cars is trying to secure state money to clean up pollution at the plant. He said he wants to rebuild, not demolish the place, which has been used in recent years as a warehouse, a movie set, a site for paintball games, a setting for rave parties and photography backdrop.
The plant comprises several dozen buildings whose ruins create a postapocalyptic landscape of abandonment. They are obsolete for manufacturing thanks to their multistoried design and they’re breathtaking for their concentrated decay. Bordered by a freeway on one side and a neighborhood pocked with blight and vacant lots, it’s considered Detroit’s largest vacant property.
“There’s cosmetic destruction,” he said. “The structure is intact. If you have a structure in good shape, the rest is very easy.”
The cost of merely preparing such a large property for renovation raises questions about Palazuelo’s plans, said George Jackson, chief executive of the Detroit Economic Growth Corp., a nonprofit that helps businesses.
“It’s a massive undertaking,” Jackson said. “I’m skeptical until I know what his bank account is. No one would make an investment like that and not want to make money. But more power to him.”
Converting the site for use by automotive suppliers is “a long shot, but not impossible,” said Gregory Burkart, leader of site selection and business-incentive services for New York-based Duff & Phelps Corp., a financial advisory and investment services company. The Packard plant is close to automotive assembly plants, freeways, rail lines and two border crossings to Canada, Burkart said.
First, though, the buildings must be torn down, he said. “You need to level it and start from scratch.”
The property should be used for new industry, according to Detroit Future City, a 50-year plan for Detroit’s redevelopment created by a nonprofit project. Cleared of dangerous buildings, the Packard site would be one of the largest vacant parcels for reuse in the city, according to an e-mailed statement by Dan Kinkead, the organization’s director.
For Palazuelo, who redeveloped buildings in Spain before moving to Peru in 2008, the Packard plant is the ultimate challenge. He said his great-grandfather owned a Packard.
Palazuelo said he’d never heard of the site, or Detroit’s mounting financial crisis, until he read about the city’s record $18 billion bankruptcy filing July 18. Then, he read all he could find about it.
“I thought Detroit was like the rest of the U.S., like Miami or Boston, a town without problems,” he said. “I realized Detroit could be a place to repeat one more time the model of Lima.”
Palazuelo began real-estate redevelopment in the mid-1980s, buying cheap properties where he saw growth potential in Madrid, Barcelona and Majorca.
The economic crash of 2008 ruined his opportunities for more real-estate projects and he closed his company there, he said. He said he filed for bankruptcy that year and moved to Lima, where he saw a stagnant city on the verge of economic revival. His company, Arte Express, refurbished 22 buildings into offices for government and companies in other countries that found labor and costs cheaper in Peru.
A Lima newspaper dubbed Palazuelo “El conquistador del centro” -- the conqueror of downtown -- for his work.
Palazuelo said rejuvenation of the Packard plant will revive Detroit’s east side, which shows the effects of the city’s decline from a population of 1.8 million in the 1950s to around 700,000. He talks of luring light industry and artists.
“It would be great in Detroit to create a kind of high technology hub like Silicon Valley,” he said.
He plans to revive the old Packard company coat-of-arms as his project’s emblem. By living at the site, he’ll prove his commitment.
“I have to show the rest of the town that if Fernando Palazuelo lives there, has a garden there and rides his bicycle there, it will be the best example for the rest of the tenants and customers, to the rest of the town,” Palazuelo said.
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