Closed bases, open doors

Nation's Business, Sept, 1997 by Steve Bates

In 1993, when the federal government announced that it would close the 1,600-acre Charleston Naval Complex in South Carolina, many business people, politicians, and other local residents envisioned their world crumbling. The news that 6,000 jobs and a massive amount of related business would be lost "hit the Southern city like a bombshell," says Ben Cole, president and CEO of the Charleston Regional Development Alliance.

Two area business men who frequently did manufacturing and repair work for the Navy installation sat down in a restaurant one evening to assess not only their futures but the region's as well. "We said: What's the button to make this place work?" recalls Richard Gregory.

Instead of seeing empty dry docks and rows of aging buildings with peeling gray paint, Gregory pictured a bustling complex where large industrial equipment would be made and repaired -- even though such a business would be vastly larger than his current one.

His soon-to-be partner, Danny Rowland, recalls looking at Gregory and saying, "You're crazy." But Gregory would not relent: "Who's better suited to do this [than us]?" he asked.

Four years and $5 million worth of capital investments later, the two watch their leased blue-and-yellow cranes -- huge machines once operated by Navy workers -- move tons of equipment across docks and into their leased buildings adjacent to piers at the heart of the former base.

Several businesses have followed, providing technical assistance to Charleston Marine and Manufacturing Corp., a consortium formed by Gregory, Rowland, and another business owner. Other, unrelated firms have set up shop on the property since the Navy completed its departure early last year.

The companies were attracted by the ample space, excellent location, and existing equipment, and they were recruited through an aggressive push by the regional development agency to revitalize the former base.

More than 2,400 jobs have been created on the installation, and surrounding counties also have experienced rapid economic development.

Charleston is breathing new life into an old military base, turning a potential loss into a gain. But it is not alone. Across the country, at a majority of the roughly 115 major bases that have closed in the past decade, business people are finding attractive niches to establish or expand enterprises. And the best is yet to come, say officials of the federal government, officials of base-redevelopment agencies, and business people.

"It's a significant source of opportunity to business. And it's only likely to get riper in the next two to three years" as more bases recently identified for deactivation open their doors to entrepreneurs, says John H. Alschuler Jr. of the New York City office of Hamilton, Rabinovitz & Alschuler, Inc., a consultant to several base-redevelopment agencies.

Impact In All Regions

Four rounds of base closings -- announced in 1988, 1991, 1993, and 1995 -- and other actions by the Pentagon have reduced the ranks of active-duty U.S. military personnel by about 600,000 in the past decade.

No region of the country has been spared by the downsizing. Thirty-two states have lost at least one major base, with California giving up two dozen.

There are plenty of opportunities for renovation on installations recently deactivated, at locations across the country. For the most part, local redevelopment agencies -- set up by locally elected officials and the military branches -- are responsible for finding new uses for installations that the Defense Department has decided to vacate.

Some communities have moved aggressively to obtain government approval to issue short-term leases to businesses -- sometimes years before the local agency gets a deed to base property and sells parcels or leases them for longer terms.

"We don't sit around and paint pretty pictures and wait for Walt Disney to come in," says Jack Sprott, executive director of the Charleston Naval Complex Redevelopment Authority, which focuses on the base property while the Charleston Regional Development Alliance markets sites across the region.

Unheralded Opportunities

Former bases such as Charleston's are providing a wealth of opportunities for businesses -- particularly start-ups and small, growing enterprises. Some base-redevelopment agencies are structuring deals to give companies free rent for a year or two if they sign a five-year lease.

But there is risk. Some tenants pay the same rent they would pay for a similar property off base, and few have a guarantee that their lease will be renewed after the Defense Department sells the land to the local authority. Nonetheless, many such redevelopment agencies boast about how many jobs they have created, and they want companies that will stay and grow.

Still, few entrepreneurs are aware of the opportunities that exist on closed defense bases near them, says Brad Arvin, resident of the National Association of Installation Developers (NAID), an organization based in Washington, D.C., that is trying to spread the word.