INSATIABLE DEMAND

Since 2020, 55 million square feet of warehouse space has sprung up in the Philly area. Here’s how it’s reshaping jobs, traffic, and landscapes.

On the vast expanse of muddy pools and mounded soil where an oil refinery once stood, Hilco Redevelopment Partners envisions a vast warehouse district hugging the Schuylkill.

This industrial portion of the emerging Bellwether District in South Philadelphia would fill three quarters of the 1,300-acre site, with the remainder earmarked for a life sciences campus.

If Hilco’s ambitions are realized, 14 buildings will sprawl across this new industrial park, attracting what the company projects as 10,760 permanent jobs, not counting all the construction work and employment in the life sciences campus.

From Philadelphia to South Jersey to the Lehigh Valley, warehousing is booming. Tens of millions of square feet sprang up in recent years to meet the insatiable demand for online shopping. It is altering the workforce, reshaping communities by devouring farmland, channeling truck traffic to country roads, creating environmental worries, and, more recently, sparking pushback from neighbors who say they’ve had enough.

The Bellwether District is one of the most ambitious warehousing projects in the region and has dodged much of the controversy by reusing land that had been an oil refinery for generations.

“This is an area that’s been closed off to the city and most of the citizens of Philadelphia for over 100 years,” said Amelia Chassé Alcivar, executive vice president of corporate affairs with Hilco. “We’re going to be reconnecting the land into the city, and facilitating economic and social mobility for the surrounding neighborhoods.”

The first warehouses at the Bellwether District are under construction but are being built speculatively. That means no tenant is booked in advance, which demonstrates Hilco’s bullishness on the Philadelphia market, Alcivar says. There has been interest from “household name” companies, she said.

Other analysts agree that the future of the Philadelphia area’s warehouse industry is likely bright, even with the market softening from the COVID-era boom.

Just since 2020, about 55 million square feet of warehouse space has been built or is under construction in a nine-county Philly region, according to data for Philadelphia, Bucks, Chester, Delaware, and Montgomery Counties in Pennsylvania, and Camden, Burlington, Gloucester, and Salem Counties in New Jersey from commercial real estate analyst CoStar.

That’s in addition to millions more square feet of warehousing popping up from Delaware to the Lehigh Valley — and everywhere in between — since consumers began seriously ramping up online shopping in the early 2000s with the rise of Amazon.

The Philadelphia region has 188 warehouses larger than 20,000 square feet, which is slightly bigger than a suburban Walgreens. Most lie within three miles of the heavily trafficked corridor that follows I-95, I-295, and the New Jersey Turnpike parallel to the Delaware River.

The average warehouse is about 300,000 square feet, and some are five times that, although industrial analysts say the strongest demand for new warehouses is below 200,000 square feet.

The buildings contain everything from toothpaste and clothing to smartphones and appliances. Some of the inventory will eventually land on shoppers’ doorsteps, while other items will end up on store shelves.

The deepest overall concentration of warehousing sprawls across the industrial parks and former farmland of South Jersey, accounting for 36 million square feet, or 66% of the region’s totals.

The region’s largest existing warehouse is the 1.2 million-square-foot Box Park Logistics Center on Taylor’s Lane in Cinnaminson, Burlington County — roughly the size of the Cherry Hill Mall. The owners say the building is expandable to 1.5 million square feet, or the size of another average warehouse.

However, industrial real estate analysts say warehouse construction might have peaked, at least for now.

“While debt was cheap, there was a big outlay of new construction projects [and at the same time] it looked like supply almost was never going to catch up with demand,” said Adam Gorodesky, vice president of Colliers’ industrial brokerage for the Philadelphia area. “The fundamentals are definitely still strong, but it looks like supply is definitely going to outpace demand for a while.”

For now, the recent construction boom has yielded thousands of jobs and millions in tax revenue from what are considered to be industrial facilities — albeit, industries in which nothing is made and everything is on its way to somewhere else.

The warehouses also come with headaches, such as local roads constantly clogged with truck traffic and pollution flowing in area rivers.

“New Jersey is supposed to be the Garden State, but it seems like all we’re growing are warehouses,” said South Jersey resident Kris Steinwender, an avid cyclist who recently had what he described as a too-close encounter with a tractor-trailer hauling goods out of Burlington County.

‘The Amazon effect’

Why did the United States shift to a warehouse economy? One word: Amazon.

Amazon Prime has fundamentally changed online shopping and reshaped expectations of consumers and businesses.

“It’s like the old greyhound races, where they had a mechanical rabbit that set the pace. Amazon sets the pace here,” said Peter A. Latta, chairman of A. Duie Pyle, a 4,000-worker trucking firm based near West Chester. “Everyone is doing what Amazon does, in terms of shipment velocity, speed to market. That’s having a spillover effect.”

Industry experts have coined a term for this shift: “the Amazon effect.” Consumers expect a quick and easy online shopping experience, with real-time package tracking, ultrafast doorstep deliveries, on-demand customer service, and flexible, free returns.

“With the Amazon effect, a prospect comes to a warehouse with the question: What’s my cutoff time to give you an order today that you can find a transportation provider, put the product on that provider, and have it ready the next day?” Latta said.

The cutoff used to be noon, he said. Then it shifted to 3 p.m. Now it’s 5 or 6 the day before delivery.

Meeting that demand requires warehouses to be increasingly close to customers.

In 1996, the year Amazon opened its first branch warehouse in New Castle, Del., A. Duie Pyle “made a decision that if we wanted to stay in business, we needed to expand our geography. That year we still were just the one terminal here in West Chester. We will soon have 34 [small load] facilities, including 18 warehouses.”

A. Duie Pyle also has added warehouse distribution in Westampton, N.J.; Hagerstown, Md.; Westfield, Mass., and near Camp Hill, Pa. The company ships farm produce, food products, alcohol and other beverages, retail goods, and building, medical, chemical and industrial supplies.

The company’s sales topped $700 million last year.

Over the last three years, other retailers have rolled out membership options that, like Amazon Prime, entice shoppers with promises of speedy delivery at no extra charge. In 2020, Walmart launched Walmart Plus which comes with unlimited delivery on groceries and other items. Last year, Best Buy started My Best Buy Plus, which includes two-day shipping, and Target unveiled Target Circle Plus which advertises same-day shipping on some items in as little as an hour.

“A lot of people want that instant gratification — the sooner they can get it, the better,” said Lawrence Duke, interim head of the marketing department at Drexel University’s LeBow College of Business

While U.S. consumers are cutting back on some discretionary spending, such as Starbucks lattes and subscriptions to multiple streaming services, Duke doesn’t see people ditching their memberships to Amazon Prime or Walmart Plus en masse any time soon: “People see value in that offering” of fast shipping.

And retailers need warehouses to keep customers happy.

The region’s epicenter of warehousing

No county around Philadelphia can compete with Burlington for the sheer amount of warehouse space built or under construction: 22 million square feet, according to the CoStar data. New Jersey Turnpike Exit 6A for Florence put western Burlington County on the map as a logistics hub.

Demand for warehouses is driven largely by the massive amount of cargo arriving at the Port of New York and New Jersey, the busiest container port on the East Coast. Town by town, exit by exit, warehouse development bulldozed its way south from built-out locations in North and Central Jersey.

“It was only a matter of time before we got major warehouse development here,” said Thomas A. Sahol, who has been administrator of Florence Township for 33 years.

“In 1991 or ’92, we had our first sniffs from a warehouse developer,” he said. “They predicted that this area — from Bordentown south, basically — would be the next hub. They said we were sitting on a gold mine.”

Florence, a riverfront community of 12,000, once was defined by the mighty Roebling Steel plant, which made cables for the Brooklyn Bridge, and the enormous Griffin Pipe foundry, manufacturer of fire hydrants and water and gas mains. Both closed in 1981.

Now, Florence is synonymous with the warehouse boom.

Massive buildings have risen on onetime industrial sites and former farms. Their often windowless walls loom above highway interchanges and, in some places, over residential neighborhoods. The structures carry familiar names such as Amazon, Subaru, and Express Scripts, or cryptic arrangements of letters and numbers.

“I appreciate the jobs warehouses bring,” Steinwender said. “But a lot of farms are being covered over.”

Warehouse development ramped up a decade ago when the New Jersey Turnpike was widened from six to 12 lanes between exits 8A and 6A. Burlington County’s access to the regional and national highway network was bolstered again in 2016 by the completion of a “missing link” between I-95 and the Pennsylvania Turnpike in Bucks County.

Minutes from Philadelphia and just off U.S. Route 130, the region’s warehouse behemoth, Box Park Logistics Center in Cinnaminson, markets its easy access to the roadways that parallel the Delaware River. The owners have identified a labor pool of 158,000 people within a 30-minute drive and have land to expand by 300,000 square feet.

“The warehouse boom came really quickly, and some of the local towns weren’t prepared for it,” said Tom J. Stanuikynas, supervising planner for Burlington County. “Trying to shut the barn door [after the fact] is a hard position to be in.”

Municipalities have authority over most land-use matters within their borders, while the state and county generally have advisory roles, he said. But some towns don’t have the resources or workforce to cope with the unprecedented demand from developers and landowners for large, complex projects.

“Exit 8A was the hot spot 20 years ago,” said Tim Evans, research director of New Jersey Future, a nonprofit that advocates sustainable, equitable growth. “We’re going to see more and more development in South Jersey, not just in Burlington but in Gloucester and Salem Counties, as well.”

In 2022, the New Jersey Planning Commission issued long-awaited warehouse development guidelines for the state’s 564 municipalities.

“The guidance focuses primarily on rightsizing and right-locating these warehouse projects,” said Donna A. Rendeiro, executive director of the New Jersey Office of Planning Advocacy, adding that the guidance “acknowledges the importance of the logistics industry to New Jersey’s economy, and we need to accommodate that industry.”

While recent market data suggest that demand for warehouse space has likely slowed, numerous proposals are pending before local land use boards, Rendeiro said.

The goal, she said, is to make sure warehouses do not “negatively impact New Jersey’s infrastructure or environment.”

The effect on the environment

The Lehigh Valley, comprising Lehigh and Northampton Counties in Pennsylvania, was once known for its rural character and small towns but has exploded into suburban growth in recent decades. The Lehigh Valley Planning Commission expects the two counties to add nearly 100,000 people by 2025 because of migration, new jobs, and quality of life.

The growth has increased demand for consumer goods, and developers have responded by adding warehousing and distribution centers.

A year ago, American Rivers, a national nonprofit aimed at protecting waterways, named the Lehigh River one of its 10 most endangered rivers because of rampant warehouse growth.

Stormwater runoff, especially as climate change creates more powerful storms, is a major issue, said Russell Zerbo, an advocate with the Philadelphia-based Clean Air Council, an environmental nonprofit. Rainwater picks up pollution as it hits hard surfaces such as roofs, walls, parking lots and hard-packed ground at industrial sites and then drains into rivers.

“You can put all your stormwater in the river,” Zerbo said, “but if the river overflows, your stormwater system just goes in reverse and floods.”

Runoff is just one environmental impact of large industrial sites. Others include loss of farmland and green space and increased traffic and vehicle exhaust.

The Lehigh Valley has had 64 warehouses totaling 23.5 million square feet built or under construction between 2020 and April, according to CoStar data.

And an additional 2.7 million square feet, spread across 10 more warehouses, is proposed, including in mostly rural Lowhill Township, population 2,292.

There, narrow country roads lead past red barns, woods, and Jordan Creek, a tributary of the Lehigh River. Nearby, the 1,495-acre Trexler Nature Preserve, a former Boy Scout camp, is the largest park in Lehigh County.

Sue McGorry, who lives in Lowhill, is part of a group that opposes the warehouses. She and others are worried that as many as 1,300 daily trips by trucks and vehicles would be added to already busy Route 100.

“The character of Lowhill Township will be significantly changed forever,” McGorry said. “It will be destroyed.”

In Philadelphia, the Clean Air Council is monitoring multiple warehouse proposals. At least three are clustered in South and Southwest Philadelphia, including the Bellwether District at the site of the former PES Refinery.

There’s also a proposal to redevelop the old Philadelphia Coke Plant on Richmond Street in Bridesburg. Operations at the Superfund site there stopped in 1989, leaving behind 39,000 tons of soil impacted by the process of producing metallurgical coke, used in steel making. All structures have been razed, storage tanks removed, and the soil removed.

Trees have taken root on the property, which is bordered by residential streets and the Delaware River. Deer have been spotted grazing there.

BP Bridesburg LLC is negotiating with Philadelphia Coke Co. Inc. to purchase and convert the 63-acre site into warehousing. Contaminated soil that still remains would be isolated beneath caps that include buildings, parking lots, roads or soil covers.

Zerbo believes the Bridesburg and Bellwether District proposals run counter to the city’s goals of trying to revitalize waterfronts with trails and green space.

The city also is attempting to address the urban heat island effect, created when neighborhoods are void of trees but full of buildings and pavements. That can leave those neighborhoods up to 20 degrees warmer than others.

“Not only does the city need green space to calm the heat island effect,” Zerbo said, “but it needs to provide places for people to go, and that includes green spaces along our riverfronts.”

Suburban towns are pushing back

Warehouse space reached a zenith in 2020 as the pandemic hit. That year, along with 2021 and 2022, marked the height of the boom. Data show that warehousing began leveling-off in 2023.

Gorodesky of Colliers notes that although few developers are building the largest and highest-rent warehouses right now, some construction is still moving forward with their smaller counterparts.

“A lot of the continued demand has been for under 200,000 square feet, so I would say there’s been a push for smaller buildings, relatively speaking,” he said.

Yet many towns in the region are grappling with warehouse proposals in the pipeline, and residents are fighting back in communities in Bucks, Burlington and Salem Counties.

In Facebook groups and at municipal meetings, residents are complaining about noise pollution and traffic hazards posed by tractor-trailers servicing the warehouses, as well as the visual blight of windowless arrays of boxy buildings on land once graced by woodlands and farm fields.

When word got around last year that rural Pittsgrove, Salem County, was reviewing a proposal to use a scenic stretch of farmland for several million square feet of warehouse space, local residents got together to “Save Pittsgrove.”

“The reason Pittsgrove is still a beautiful place is because for decades and decades, there’s been a purposeful effort to make it be a beautiful place,” said Nicholas Mesiano, who grew up farming there.

Since 1990, Pittsgrove has preserved more than 5,000 acres of farmland from development.

“Seems like mega-warehouses are just taking over,” said Deb Shoemaker, who also grew up farming. “You can’t eat concrete. A mega-warehouse development should be in an industrial park.”

Nearby Oldmans Township, Salem County, last June unanimously rejected a proposal to build five million square feet of new warehouse space. And on May 8, Walmart announced it would close a fulfillment center in the Pedricktown section of the township.

Even in Florence, which for years struggled to attract redevelopment to its former industrial sites, warehouse developers are now eyeing farmland.

“On the left, that field used to be part of the Lounsbury Farm, and now it’s proposed as the site of two warehouses, totaling 2.4 million square feet,” Mayor Kristan I. Marter said as she gave a tour of the area.

“On the right, most of that land, which used to be a farm, is in Mansfield Township,” she said. “A developer wants to build a one million-square-foot warehouse there.”

Both projects are in litigation.

Marter’s concern about warehouse development drew her into local politics. Soon after she moved to Florence in 2011, she began to notice more and more tractor-trailers on the township’s mostly two-lane, residential streets.

An avid cyclist, Marter started documenting close calls between trucks and bicycles, and her research evolved into maps and deeply researched presentations about warehouse locations and trucks roaring through town.

Her advocacy earned her a nickname: “I became the ‘Crazy Truck Lady,’” she said.

Last November, the Crazy Truck Lady was elected mayor on a platform that included mitigating traffic and other impacts of industrial development.

Warehouse construction “is like a perfect storm,” she said. “We’re just trying to calm it down.”