N.E. Phila ex-Budd site sold for $18M and will be used for warehouses

One of Philadelphia's largest vacant factory properties has been sold for a planned warehouse center.

Commercial Development Corp., a St. Louis, Mo., developer that specializes in scrapping and upgrading heavy industry locations that were once the source of American industrial might, has bought 138 acres of the former Budd Co. railcar plant location on Red Lion Road in far Northeast Philadelphia. Commercial paid drugmaker Teva Pharmaceutical $18 million for the site, says Richard Gorodesky, a Colliers International broker who handled the sale.

Commercial plans three large warehouse buildings, totaling more than 1.6 million square feet of office space, an area larger than each of the Comcast and Liberty Place office towers that dominate the Center City skyline.

The Philadelphia Industrial Development Corp. and city officials have been trying to lure new users to the site since Budd successor Transit America shut down in 1987, followed by years of environmental remediation work.

Former owner Teva, an Israel-based company whose U.S. headquarters is in North Wales, Montgomery County, had proposed building a  $300 million drug warehouse complex on the property with state assistance, but canceled the plan amid cost-cutting moves in 2012. The site was also home to the partly completed Island Green golf course, after Transit America sold neighboring land for housing development.

Commercial Development's plan calls for relocating ponds to the edges of the property and elevating the warehouse sites with construction fill. "We don't have special clients in mind right now, but we feel there is demand from the market," said Steve Collins, executive vice president at Commercial. With many city distributors in aging facilities, and landlords lately asking above $5 a square foot, double what similar properties fetched ten years ago, brokers say "it makes sense" to build now, he added.

The site "is uniquely suited for 'big box' warehousing and distribution," broker Gorodesky said: Teva had the site approved as a Keystone Opportunity Zone, where corporate users can qualify for state and local tax breaks if they create jobs, and it is a short drive from I-95, the Pennsylvania Turnpike and bridges to New Jersey.

Warehousing has replaced heavy industry as a blue-collar employer across much of Pennsylvania and New Jersey's highway corridor. But Philadelphia has up until now missed out on the modern warehouse construction that has followed the growth in digital logistics and online "direct" sales.

Amazon, Walmart, QVC, Urban Outfitters and other big shippers have preferred to locate their 1,000-worker distribution centers in the Lehigh Valley and in relatively low-wage areas away from big urban centers. They tend to be served by free interstate highways and be close to smaller factory towns, such as Hazleton and York, Pa., and Middletown, Del.

Commercial and its affiliate, Environmental Liability Transfer, have demolished and remediated property, overseeing the removal or processing of toxic and industrial waste, at such landmark former factories as the ex-Bethlehem Steel plant at Sparrows Point, near Baltimore, and the American Smelting and Refining (ASARCO) works in Perth Amboy, N.J.

Local Commercial Development projects include the demolition of the steel works at the 425-acre former Claymont Steel (Phoenix Steel, CitiSteel, Evraz) property, which stretches along the Delaware River just south of the Pennsylvania-Delaware state line; the 65-acre former Congoleum site in Hamilton Township, near Trenton; and the 20-acre former ICI Glidden paint plant in Reading.

Commercial has sold the two-story brick former Claymont office building to Gaudenzia, the recovery program operator.

Budd's plants at Red Lion Road and its earlier works on Hunting Park Avenue ranked among Philadelphia's largest industrial employers in the mid-1900s, when the city was still a center of specialty metals, electrical, rail equipment and textile manufacturing.