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Logistics booms in Delaware as companies meet strong demand from ecommerce

Delaware Public Media
Amazon's new 3 million square-foot warehouse at the old GM Boxwood Road auto plant in Newport is close to opening

There’s a steady stream of warehouses and fulfillment centers coming to the First State.

Amazon’s new operation at the former GM Boxwood Road plant is the most notable, but many more are up and running or on the way.

Contributor Jon Hurdle takes a closer look at this burgeoning logistics boom.

Amazon is about to open a 3 million square-foot warehouse at the old GM Boxwood Road auto plant in Newport; another 2 million square feet of distribution space is planned at Delaware City, and a developer is looking to add a second building on a Smyrna site where there has already been strong interest from warehousing and other tenants at a newly constructed business center.

Even more land is slated for warehouse development at the intersection of Route 301 and Jamison Corner Road north of Middletown where at least 3.3 million square feet of logistics space is planned over multiple buildings.

It’s not clear when the new warehouses will be built, but it’s likely to be as soon as they get county permits, predicted Preston Schell, president of Ocean Atlantic Companies, which is selling a total of 356 acres for the developments.

“Given the seemingly insatiable demand for these warehouses right now, they will be built as soon as they get approvals from New Castle County,” he said.

Credit Delaware Public Media
At least 3 million square feet of logistics space is planned on land at Route 301 and Jamison Corner Road north of Middletown

The logistics business is booming in Delaware as developers scramble for space to meet surging demand from movers and storers of an avalanche of goods ordered online.

Delaware is joining nearby states in marketing itself as a distribution hub that’s at the heart of the populous northeastern market where millions of customers can be reached within a few hours’ drive.

"Given the seemingly insatiable demand for these warehouses right now, they will be built as soon as they get approvals from New Castle County." - Ocean Atlantic Companies president Preston Schell

The First State’s boosters note the proximity of I-95, allowing distribution companies easy access to northeastern markets, as well as Routes 1 and 301 which connect southern areas of the state with regional transportation arteries.

And while other states including New Jersey, Pennsylvania and Maryland are also benefiting from the logistics boom, Delaware can claim to be a low-tax environment where costs for starting a fulfillment center can be lower than some of its competitors.

In May, a national study by the Tax Foundation and the accounting firm KPMG found Delaware to have the country’s second-highest corporate tax favorability for new firms, and the third-highest rating for mature firms.

In Kent County, the state’s business-friendly policies are helping to fuel strong demand for logistics space, said Linda Parkowski, executive director of Kent Economic Partnership, an economic development agency.

At least 50 percent of inquiries recently made to the agency have been in logistics and warehousing, meaning that a dozen or more such projects are “in the queue” said Parkowski.

She attributed the strength of demand to the boom in e-commerce, which was already strong before COVID-19 hit, and sharply accelerated when the pandemic forced people to buy consumer goods from their homes rather than going to a store.

“To be close to the population that they’re serving, they need to have warehouses and distribution centers in more locations,” she said, referring to logistics companies.

Inquiries to Kent County are either for land where a new warehouse could be built, or for existing warehouses, Parkowski said. And the demand for new centers is fueled by the fact that there’s already a shortage of “large” warehouses – those over 100,000 square feet -- anywhere in the state, she said.

But the demand won’t necessarily result in a rash of new warehouses in Kent County or elsewhere unless tenants can be found in advance for the new buildings, Parkowski said. Because a new warehouse is a costly proposition, not many developers will build them speculatively, she said.

Still, she’s also seeing good interest from tenants, and is working to link the two sides so that new warehouses will be built.

Credit Delaware Public Media
DART Container, the maker of Red Solo cups, was the first tenant in the 2 million-square-foot Delaware City Logistics Park near Delaware City

On the south side of Dover, Jack Lingo Asset Management, a Rehoboth Beach developer, is planning to build two warehouses totaling between 275,000-300,000 square feet over the next couple of years, said Doug Motley, a principal with the company.

The project is in the early planning stages, and needs permits from local officials, but aims to be ready for occupancy in the first half of 2023.

It’s the company’s first venture into logistics development, and it decided to branch out -- in partnership with another developer which has long experience in the field -- because the market conditions were favorable, Motley said.

The companies looked at the warehouse-distribution industry in central and southern Delaware and concluded that not much had been recently built in the space although the local population has grown over the last 10-20 years.

“So as you have more consumption shifting to online shopping, there needs to be that last half-a-day transportation support and infrastructure,” Motley said, referring to the last stage of shipping for an item purchased online. “We saw an interesting opportunity to meet that demand with this project.”

When permits are issued, the Dover warehouses will be built on a 30-acre site currently occupied by farmland near the junction of Routes 1 and 13. That will provide easy highway access for trucks, and avoid the congestion of local roads that riles residents near some new warehouses in New Jersey, where some communities are fiercely opposing the developments.

The new buildings, costing an estimated $30 million, would be well-positioned to serve up to 1 million residents of the Delmarva Peninsula south of Dover, but could also become a hub for wider regional distribution, Motley said. And the new buildings could serve any civil aviation expansion of the nearby Dover Air Force Base, as being discussed by the City of Dover and the military, he said.

"As you have more consumption shifting to online shopping, there needs to be that last half-a-day transportation support and infrastructure." - Jack Lingo Asset Management's Doug Motley

Projects like the Dover development are expected to fuel recent strong employment growth in the logistics sector. Data from the state Department of Labor show that jobs in “Transportation, Warehousing and Utilities” rose to a seasonally adjusted 21,300 in July from 17,900 in July 2019. While the sector doesn’t yet match the state’s biggest employers in health care, retail and finance, it’s expected to grow for some time, observers said.

“We’re in a transition where we are shifting from brick-and-mortar retail to online retail, and that transition is going to bring about a lot of growth in one area and perhaps some decline in the other,” said Jim Butkiewicz, a professor of economics at the University of Delaware. “At some point, it’s going to slow down because overall consumer spending is going to grow at the same rate as personal income. But during the transition, you have much more rapid growth in online spending.”

Butkiewicz expects continued growth in logistics, fueled especially by younger consumers who are comfortable with online shopping and see no reason to visit traditional stores. And he said Delaware communities seem untroubled by the appearance of giant buildings and hundreds of trucks serving the centers.

In the case of Amazon’s big new plant at Boxwood Road, people there are used to cars and trucks coming in and out of the complex, and they are grateful that it’s finally being reused after being empty for about a decade. “I think Delaware is happy to get these jobs,” he said.

Steve Kelly, a spokesman for Amazon, said the company now employs some 4,500 people in Delaware, and has invested about $4 billion in the state since 2010. He said the Boxwood Road fulfillment center will open “soon” and is expected to add another 1,000 jobs by the end of the year.

The company tries to avoid any local concerns about traffic congestion resulting from its warehouses, Kelly said. “We are always working with local community leaders and follow all city permits and guidelines to ensure our Amazon site does not disrupt the community, such as staggering breaks to avoid rush hour and working directly with our community partners, neighbors and other stakeholders to help manage traffic,” he said.

Over the last decade, employment in the warehousing and transportation sector has risen by 50 percent, said John Taylor, director of economic research for the Delaware Prosperity Partnership, an economic development agency.

The growth is now being fueled by projects such as Amazon’s Newport and Seaford fulfillment centers, Taylor said. National developers including Pennsylvania-based Dermody Properties and Missouri-based NorthPoint scored a “major win” for Delaware when they entered the state a few years ago, and their supply of new buildings has been absorbed by Amazon and other operators, he said.

And potential new entrants in logistics and other industries may find government incentives including the Transportation Infrastructure Investment Fund and the Site Readiness Grant Program, said Kurt Foreman, president of the Prosperity Partnership.

While Delaware’s cities and counties compete for the economic boost that the booming logistics industry brings, the state as a whole will benefit from the sea-change in consumer behavior enabled by ecommerce, said UD’s Butkiewicz.

“They became comfortable with it, and now find that they prefer it,” he said, referring to shoppers’ switch away from brick-and-mortar retail. “So we now have to find ways to distribute those goods.”


Jon has been reporting on environmental and other topics for Delaware Public Media since 2011. Stories range from sea-level rise and commercial composting to the rebuilding program at Prime Hook National Wildlife Refuge and the University of Delaware’s aborted data center plan.