Philly finally gets a million-square-foot warehouse – but not the thousands of jobs: UPS on Red Lion Rd. will be ‘highly automated’

It hasn’t been announced by the company, but the Inquirer has confirmed that United Parcel Service plans to build a million-square-foot facility on the 138-acre former Budd Co. property at 1 Red Lion Rd. in Northeast Philadelphia, one of the biggest available industrial properties in the city.

Plans call for 950 parking spaces, and UPS had told city officials they were planning a facility that could employ 1,000, including shift and part-time workers. But UPS has told state officials it is committed to hiring a more modest 352 full-time workers by the time it opens in 2022, and has separately said new plants in Philadelphia and other Pennsylvania cities are part of a wave of “highly automated” facilities that won’t create as many jobs per box as earlier ones.

UPS and its competitors such as Amazon and FedEx have been adding automation equipment to save labor. “We are early in the planning and feasibility phase of the new facility, so additional project details are not available at this point,” UPS spokeswoman Kim Krebs said.

Nearby residents and storekeepers, including owners of upscale houses built since Budd closed, will have to get used to renewed truck traffic.

“Large 18-wheel tractor trailers will enter and exit by using Sandmeyer Lane, with the smaller UPS delivery trucks using the Red Lion Road entrance,” wrote Jack O’Hara, head of the Greater Bustleton Civic League, in a note to residents, confirming he’d gotten word of the plan from developers.

Some neighbors have started calling the property “Mount Somerton,” for the vast mound of cleaned dirt that Meyer Contracting Co. has piled there from road projects around Philadelphia for owner and developer Commercial Development Corp. of St. Louis. That firm will use that dirt to cap the building site, which has been subject to environmental remediation projects to clean up toxic materials left over from its railcar construction days.

The site is in a city and state Keystone Opportunity Zone, said city Commerce Department spokesman Kevin Lessard. That means UPS will qualify for state and local income and business tax exemptions. UPS won’t need zoning variances or waivers for the industrial-zoned site, but it will need a stormwater management permit, Lessard added.

Developers and the quasi-public Philadelphia Industrial Development Corp. had sought and failed to locate projects for the site since the successor to the Budd Co. railcar plant closed in 1987. A golf course developer and Teva Pharmaceuticals USA had each announced and then canceled redevelopment plans for the site. Commercial finally bought the property for $18 million from Teva two years ago.

reported UPS was looking at the site last September after UPS and other sources confirmed the company had hired local contractors to draw up plans.

Commercial Development has hired a local team of big-project specialists for the UPS job: real estate lawyer Carl Primavera of Klehr Harrison Harvey Branzburg LLP; Blue Rock Construction, owned by Steve Kettelberger, which specializes in Eastern Pennsylvania and New Jersey warehouses; and Watchdog Real Estate Project Management, headed by Stephen Fean, whose local clients include Campbell Soup, FMC, and PNC.

Gov. Tom Wolf said last month that he planned to give as much as $9 million in public training and incentive funds to UPS, the largest nonretail private employer in the state, with nearly 20,000 workers, plus thousands of pre-Christmas temps, to help it build additional facilities somewhere in Philadelphia and in three other counties.

The company operates sorting hubs across the region, plus one of its six main U.S. air hubs at Philadelphia International Airport. But, like Amazon, UPS had mostly preferred to build its larger one-million-square-foot-sized facilities in former farming, mining, or factory districts away from the major cities, such as in Gloucester County and the Lehigh Valley. The company plans its sixth U.S. “super hub” in Harrisburg.

According to Wolf, UPS will create a total of 1,721 new, full-time jobs at Philadelphia and three other Pennsylvania sites, and agreed to “retain” more than 6,000 of the workers at its remaining facilities.

The Pennsylvania taxpayer subsidy offered to UPS, which collected more than $4 billion in after-tax profits last year, includes “$2.7 million in Job Creation Tax Credits to be distributed following the creation of the new jobs, $5.6 million in Infrastructure and Facilities Improvement Program funding, and $659,400 in grants for workforce training and development,” according to state spokesperson Casey Smith.

When it bought the property in 2018, Commercial Development said it planned to build up to 1.6 million square feet of industrial space, larger than the tallest Center City office buildings.

O’Hara said the UPS facility would cover one million square feet. Although Northeast Philadelphia Airport is nearby, O’Hara added that the airport “will not be involved” with the Red Lion Road facility.

Commercial Development is used to moving mountains, or at least hills and swamps, to accommodate new construction. The company is filling and replacing wetlands to redevelop the Claymont Steel site on the Delaware-Pennsylvania border. That is so Media-based developer Greg Lingo can proceed with plans to build 1,200 townhomes along the Delaware River, next to a planned $54 million SEPTA train station. Lingo’s company, Rockwell Custom, is also building homes along the Delaware farther south, at the former Fort DuPont State Park near Delaware City, Del.

Like its rivals, UPS has been using robotics and experimenting with airborne drones to speed package movement. Automation would not displace jobs at older UPS locations, spokesman David Graves said after a demonstration at the company’s new plant near Swedesboro last year.

According to O’Hara’s letter, Commercial Development plans “a series of community outreach meetings” in March or April to provide more of the project’s final details. He said neighbors in Philadelphia’s Bustleton and Somerton sections and in Lower Moreland Township will be notified of the meetings.

O’Hara said PennDot and the Philadelphia Streets Department are conducting a traffic study. He said the results and planned road improvements should be presented at the community meetings this spring.

*Article courtesy of the Philadelphia Inquirer

For more information about Philly industrial space or other Philadelphia commercial properties, please contact the team at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly industrial space at  215-799-6900.

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