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New warehouse to kickstart First State Crossing

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First State Crossing First Industrial Realty Trust warehouse in Claymont, Delaware

This 385,000-square-foot spec warehouse will kickstart development at the long-planned First State Crossing in Claymont. | PHOTO COURTESY OF FIRST INDUSTRIAL REALTY TRUST

CLAYMONT – After seven years of planning and working through post-COVID changes, the massive redevelopment of the former Evraz steel mill is about to make a major step forward after a Chicago-based developer invested in the plan.

First Industrial Realty Trust, a top publicly traded real estate investment trust, bought the 28-acre parcel of land where the former steel mill stood for generations in a nearly $11.5 million deal in October. It bought the land from St. Louis-based Commercial Development Company (CDC), which acquired the 425-acre site in 2015 and has been planning an ambitious mixed-use redevelopment of the site that would bring new life to a community that was long dependent on manufacturing jobs that have dried up.

The value of the total First State Crossing project is expected to exceed $1 billion and represent the largest economic development project in the state, according to Brett Sadler, executive director of the Claymont Renaissance Development Corp.

The First Industrial Realty Trust warehouse will attract new attention and employers to Claymont, alongside other projects. | PHOTO COURTESY OF FIRST INDUSTRIAL REALTY TRUST

First Industrial announced plans Thursday to build a 385,000-square-foot speculative warehouse on the south side of Naamans Road near the Ridge Road intersection. No potential tenant has been identified yet, and construction is likely to begin in about a month with an opening eyed for late summer, according to Stephen Collins, executive vice president of CDC.

The deal with First Industrial, a vertically-integrated developer, owner and manager of industrial facilities, had been about two years in the making, Collins told Delaware Business Times. While they have never worked on a project together, the firm is well-known and regarded in the industry, he added.

The First State Crossing facility, which will feature 68 dock door positions, parking for 241 trailers, a 40-foot clear height, and LED lighting, could serve a single tenant or multiple.

The warehouse is adjacent to another redevelopment project where New York-based developer KPR will raze the former Tri-State Mall and build a 525,000-square-foot distribution center. It also joins a rush of warehousing projects throughout New Castle County, which are taking advantage of lower building and land costs here while tapping into major interstate corridors.

“The I-95 Corridor is a critical distribution corridor and northern Delaware, as part of the greater Philadelphia industrial market, has seen strong tenant demand due to its infill location and favorable business climate,” said John Hanlon, executive director for First Industrial, in a statement announcing the project. “Our project offers efficient highway access to I-95 and I-495 and a strong local labor pool. We are excited to bring this state-of-the-art facility to serve businesses in this high-barrier market.”

The new warehouse will be located virtually on top of where the old Evraz steel mill was located. | MAP COURTESY OF CDC

The First Industrial warehouse will join the relocated Claymont Transit Center, a $70 million project that will bring Amtrak and SEPTA service to the site along with DART Transit bus service, as the first pieces of First State Crossing. The station is expected to open in August.

But while CDC had originally planned to build more than 100,000 square feet of office space near the train station as its first major project at the First State Crossing site, Collins said that the pandemic’s effects had changed their plans and turned their focus toward closing this deal.

With work-from-home trends still continuing post-pandemic, many office buildings are dealing with rising vacancy rates as employers shed space, which has convinced CDC to pursue additional industrial space. They are currently negotiating a deal for another roughly 300,000-square-foot industrial warehouse on the site.

“I don’t anticipate a lot more industrial. I think we’re going to have these two buildings and maybe a few smaller ones. We still believe the office market will eventually come back,” Collins explained, estimating that they’d like to still build half of their originally proposed 1 million square feet of offices.

CDC also has plans for about 1,200 apartments and townhomes on the site, primarily along the Delaware River, which CDC would likely co-develop with a local firm, Collins said. They hope to break ground on that phase in early 2024.

Once some residential is established, CDC expects to be able to bring new retail offerings to the site. Collins noted that one retail group is very interested in the site, “but they need to see some rooftops” before they will commit.

Despite the changes to their master plan, CDC, which specializes in the redevelopment of environmentally tainted sites known as brownfields, remains as bullish on the site as when they first invested, Collins said.

“With our proximity to Interstate 95, the Philadelphia International Airport and local ports, there’s just not a lot of good industrial sites left south of downtown Philadelphia until you get to us,” he noted.

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