Developers expand plans for GM site, prompting speculation about a single tenant
The much-anticipated plans to remake the former GM Boxwood Road plant in Newport into a giant logistics center may be accelerating.
A new player has emerged in the process, taking on a significant piece of the 142-acre site earlier this month.
Who is this new player, and what can we divine from their entry into this project? Those are questions contributor Jon Hurdle tackles in his latest piece.
Plans to remake Newport’s historic former GM plant into a giant logistics center took a new turn earlier this month when a second developer joined the project, promising to “dramatically accelerate” conversion of the site.
Dermody Properties, a Nevada-based developer of logistics and e-commerce centers, bought 88 acres of the 142-acre property at Boxwood Road, teaming up with Delaware-based Harvey Hanna & Associates, which purchased the whole site for an undisclosed sum in 2017.
The new agreement also modified and expanded Harvey Hanna’s earlier plan for multiple buildings, calling instead for a single warehouse building covering almost 4 million square feet. The new proposal has prompted speculation that a single tenant will be taking the space.
After Harvey Hanna initially said demolition and redevelopment of 3 million square feet of buildings at the old car-making plant would take about nine years to complete, the new partnership is promising a quicker turnaround, while not being specific about how long it will be before logistics tenants – or even a single tenant – are open for business there.
"Dermody's involvement, with their national and international reach, will greatly accelerate the redevelopment timeline." - Dermody statement on purchase of part of Boxwood Rd. site
“Dermody’s involvement, with their national and international reach, will greatly accelerate the redevelopment timeline,” the Delaware company said in a statement. “Both Harvey Hanna and Dermody will continue to pursue the redevelopment with the same goal in mind – creating a modern, nationally and even internationally recognized logistics campus that maximizes this property’s potential to serve as a new economic engine for Wilmington and New Castle County.”
The new plan, known as Logisticenter at I-95 Wilmington, would create a huge warehouse covering about 3.8 million square feet, some 800,000 more than the previous plan, according to county records.
A summary of the project on the website of the county’s Department of Land Use describes an application to redevelop “a brownfield site to construct one warehouse building at 3,833,950 s.f. gross floor area with associated improvements.” The five-story building would have a footprint of about 818,000 square feet, and 1,942 parking spaces.
That contrasts with an earlier application that planned to “demolish existing building and construct four buildings totaling 3,045,709 s.f. and all associated improvements.”
Even before Dermody’s entry, the project was intended to take advantage of the site’s close proximity to I-95 and rail lines, and to the soon-to-be-upgraded Port of Wilmington. The developers say it is ideally located as a distribution center because it’s at the heart of the massive U.S. Northeast market.
For almost a decade after the last car rolled off the GM production line in 2009, the site lay dormant as public officials and businesses wondered how it could be reused to regenerate some of the thousands of jobs that the plant provided at the height of its 60-year lifespan.
Hopes were raised and then dashed when Fisker, a maker of luxury cars, said it would start to build its cars in the old GM plant, but was unable to execute the plan, and filed for bankruptcy in 2013.
After its purchase of the site, Harvey Hanna tried to attract manufacturers but found that the 1940s-era buildings were unsuited to modern manufacturing needs, and so shifted its focus to finding logistics tenants to meet growing demand for e-commerce fulfillment. Local residents who had worked for GM for years welcomed the prospect of a logistics center as a way of regenerating at least some of the jobs that disappeared when the plant closed.
In 2018, Econsult Solutions, a consultant for Harvey Hanna, estimated that a logistics center would create 2,100 permanent jobs, $7.6 million a year in tax revenues, and an annual $281 million in total economic impact.
With the new joint-development plan, company officials did not say how many jobs could be created, but expressed confidence that the project will breathe new economic life into the area.
“It represents an ideal asset for today’s booming e-commerce and logistics industries,” Dermody said in a statement.
"One big employer might be the best possible outcome in terms of creating jobs for that site." - UD economics professor Jim Butkietwicz.
Dermody develops logistics-industry properties across the country. Its current list of available space includes 186,000 square feet in Union Township, PA; 1.1 million square feet in Dallas, and 615,000 square feet in East Windsor, NJ.
Harvey Hanna’s president, Tom Hanna, said Dermody’s participation in the development ensures that “a truly first-class business and distribution campus will rise” at Boxwood Road. He called Dermody a “respected, experienced, and best-in-class national developer.”
The scale of Dermody’s plans has prompted speculation that a single tenant, perhaps Amazon, might be taking the entire Boxwood Road campus. Amazon did not respond to a request for comment.
Demolition of the old GM buildings is nearly complete, the companies said. The new campus will be constructed in phases, adding green space, traffic and pedestrian improvements and improved stormwater management.
New buildings will be compatible with rail service, and will allow distribution companies to ship and receive goods, the companies said.
Jim Butkietwicz, a professor of economics at the University of Delaware, said that any decision by a single company to take all of the space at Boxwood Road could create more jobs than if multiple tenants moved in.
“One big employer might be the best possible outcome in terms of creating jobs for that site,” he said.
Still, the economic impact of logistics jobs, whether from one or many employers, will be limited by their low wage level in comparison with the auto industry jobs that sustained the Newport area for decades, Butkiewicz said.
Smaller companies are less likely to pay top-dollar than major players like Amazon, but even the higher rates are less in the logistics industry than they were in the auto industry, he said.
“Amazon announced that they were going to pay everybody a $15 an hour minimum wage but that’s a lot less than the auto workers made,” he said.
Butkiewicz said he “wouldn’t be surprised” if government at state or county level is offering an incentive to entice tenants to Boxwood Road, given the state’s record of support for job-creating plans – such the Fisker plan.
Tamarra Morris, director of economic development for New Castle County, declined to say whether her office had been involved in discussions over the reuse of the Boxwood Road site, or whether any incentives had been offered to possible future tenants.
“New Castle County is required by non-disclosure agreement to make no comment regarding Boxwood,” she said in a statement.