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Delaware’s next warehouse hub? Jamison Corner

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MIDDLETOWN – Right now, Jamison Corner Road is a quiet stretch of country north of Middletown marked by cornfields and some rising housing developments.

Quite quickly, however, it will likely become a hotbed of industrial warehousing, as two massive projects are already proposed and a third will likely be coming on their heels, adding more than 4.5 million square feet of space aimed at the exploding e-commerce sector.

All four corners of the U.S. Route 301 bypass interchange at Jamison Corner are owned by Ocean Atlantic Companies, the real estate investment arm of prolific Sussex County homebuilder Schell Brothers.

Preston Schell, co-founder of OA, recalled that his firm didn’t even want the land when they became involved with the mixed-use Town of Whitehall development just to the north of the sites. At the time, OA was negotiating a purchase of land to build residential homes in the hamlet-style community, and the developer, Welfare Foundation, proposed they buy the roughly 400 acres of southern Business Park-zoned land as well.

After learning of a smaller-than-expected discount on the deal to not take the land, OA decided to buy it in 2016.

“Some people would have told you in 2016 that industrial land south of the canal had no value, or very limited value, so a lot has changed since the day we agreed to a price,” Schell told Delaware Business Times.

While OA could have attempted to develop its first major industrial project – and it even formed a joint venture with MRP Industrial at one point, aiming to do so – Schell was concerned that the market might shift as it got up to speed. He preferred to find stable buyers who could quickly capitalize on the opportunity.

“That’s just a developer’s dilemma, but it made more sense for us to simply, in this hot market, part with this land,” he said.

Dermody, which built Amazon’s Boxwood plant, is now aiming to build about 2 million square feet at Jamison Corner. | DBT PHOTO BY JACOB OWENS

OA now has contracts to sell the 117-acre former Scott Run Commerce Center parcel, located southeast of the interchange, to Kennedy International, a housewares import company based out of New Jersey, and the 229-acre southwest parcel to Dermody Properties, the Nevada-based developer that recently completed the enormous Boxwood Road plant for Amazon in Newport, Schell said. Both have already submitted development plans to New Castle County.

Jeff Zygler, a partner at Dermody who focuses on e-commerce projects, said the now-named LogistiCenter at New Castle County is a replacement project of sorts for what was originally planned at Boxwood before Amazon expressed interest in taking the entire site. They are proposing to build more than 2.1 million square feet of warehousing across two buildings, featuring more than 400 total loading docks.

“When we’re looking at sites, infrastructure is key and then we look at opportunities for labor,” Zygler said, noting Jamison Corner checked both boxes. “There are very few sites of that magnitude left in the Mid-Atlantic.”

Meanwhile, Kennedy International is proposing to build four warehouses totaling more than 1.8 million square feet and featuring 300 loading docks across the road from the LogistiCenter project. Kennedy International also has a sales contract for the 46-acre northwest parcel, according to Schell.

This parcel will feature four warehouses totaling nearly 2 million square feet of warehousing. | DBT PHOTO BY JACOB OWENS

The newcomer to the Delaware market was reportedly looking for 500,000 square feet for its own business, but quickly saw the potential value of developing the site themselves.

“I think they recognized that industrial was getting hotter and hotter, and that I was probably underpriced in the market. So, they figured, ‘Hey we’ll take half a million and spec build the rest,” Schell said, noting that the buyer has experience in land development.

Although the presence of the 301 bypass has undoubtedly impacted the interest of developers in building industrial in the Middletown area, Schell said he believed the tight market in northern New Castle County also played a big part.

A report by real estate brokerage Newmark earlier this year found that 5.9 million square feet of industrial space was under construction in New Castle County as of February, and 90% of it was pre-leased. That development pipeline represents nearly a quarter of Delaware’s existing industrial inventory and exceeds the combined volume of space delivered in the past 20 years.

Industrial development, much less institutional-grade projects, has been scarce in Delaware in recent years. As land dwindles in other popular regional areas like the Lehigh Valley of Pennsylvania and parts of New Jersey, however, more developers are turning their sights south.

“You might be able to find something 10 miles north of here, but you’re going to pay four times more for it,” Schell said of Jamison Corner. “There are some industrial warehousing tenants that will drive an extra 10 miles and pay a lot less being down here, then try to squeeze into the last space in a park closer to Interstate 95.”

Tractor-trailers are among the heaviest users of the U.S. Route 301 bypass, which connects 301 at the state line to Delaware Route 1 at the Roth Bridge. That expressway has helped attract industrial interest, including Dermody, which is proposing to develop the farmland seen here. | DBT PHOTO BY JACOB OWENS

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