McGowan quoted in Philly Inquirer: U.S. Steel’s once-mighty Fairless Works gets epic makeover to become e-commerce warehouses

by Katie Park and Jacob Adelman, Posted: November 7, 2020

U.S. Steel’s once-mighty Fairless Works gets epic makeover to become e-commerce warehouses

NorthPoint Development wants to redevelop the expansive, environmentally degraded Bucks County steel plant site once known as Fairless Works into a massive warehouse-and-distribution campus, making it the region’s latest obsolete industrial property to be eyed for a makeover for the e-commerce age.

The Kansas City, Mo.-based developer plans to complete its purchase of the property in Falls Township, which totals more than three square miles, from owner U.S. Steel as soon as next month. NorthPoint proposes to create “the largest e-commerce, logistics, and multi-modal industrial project on the East Coast,” company documents say. It aims to develop 10 million square feet of new development in 18 buildings over the next seven years and suggests that could be expanded to 15 million square feet over 10 years.

The overhaul, which will include environmental remediation, is projected to create more than 5,000 jobs and cost NorthPoint more than $1.5 billion, according to its master sketch plan.

“It’s not cheap to get somebody to buy the property and to go in and remediate the site,” said Ruth Olson, a spokesperson for NorthPoint.

NorthPoint’s plans for the 1,800-acre site follow a similar template as those being pursued by Chicago-based Hilco Redevelopment Partners at the former Philadelphia Energy Solutions refinery site in South Philadelphia, which is also being redeveloped into an e-commerce and logistics hub.

In Conshohocken, meanwhile, the printing plant property being sold by The Inquirer is likely to attract industrial interest because of its rail access and proximity to the Schuylkill Expressway, I-476, and the turnpike. Its immediate neighbors include a FedEx distribution center and a GlaxoSmithKline Plc. pharmaceutical complex.

While many formerly industrial properties, such as the Fairless Works and South Philadelphia refinery sites, pose major environmental and other challenges, their highway access and other transportation links make them attractive to warehouse developers, said Kevin McGowan, of McGowan Corporate Real Estate Advisors in Allentown.

An overview of the plans for the revamped Keystone Industrial Port Complex.
COURTESY OF NORTHPOINTAn overview of the plans for the revamped Keystone Industrial Port Complex.

The Fairless Works site’s proximity to population centers in southeastern Pennsylvania, New Jersey, and New York make it especially central, McGowan said.

“A lot of the facilities that exist in the market, their days of best use have passed them by,” he said. “You’re seeing them converted into what the market demands, which is these distribution facilities.”

Indeed, online retail sales, which were already hot, rose more than 44% in the second quarter compared with the previous year, according to the U.S. Department of Commerce.

NorthPoint presented a rudimentary proposal to the Falls Township Planning Commission on Oct. 27. A more formalized plan for what it calls the Keystone Trade Center is expected soon.

If it’s approved, construction would proceed on an “aggressive timeline,” said NorthPoint, which has leased space on its other properties to major businesses that include Amazon, Walmart, UPS, FedEx, Lowe’s, and General Motors.

The company said initial redevelopment at the complex would start next spring with two buildings totaling 1.5 million square feet of space, or about the size of a Center City skyscraper.

NorthPoint has not yet picked its tenants, but the company said that, historically, it has secured leases for properties before they were fully built.

The property was a Keystone Opportunity Zone, which gives various state and local tax breaks, but that designation lapsed this year. It’s unclear what, if any, tax breaks this project will receive.

Once NorthPoint finishes redeveloping the complex, it expects to attract between 5,000 and 10,000 employees, approaching the number of workers who toiled there decades ago when the open-hearth furnaces were at full force.

The project represents a new phase for the Fairless Works, which opened in 1952 along with many of the homes of nearby Levittown. By 1970, the plant bustled with around 7,000 workers. U.S. Steel operated a steel mill, chemical plant, and a fuel production plant to power steel production.

But the Pittsburgh-based company closed most of the plant in 2001. And “[b]y 2009, only 100 U.S. Steel employees worked at the site in the galvanization line,” where zinc is applied to steel to prevent corrosion, NorthPoint said in its master sketch plan.

Steelmaking left a site that was heavily laced with polycyclic aromatic hydrocarbons, known as PAHs, from coke production, and trichloroethylene, or TCEs, which dirtied the groundwater, according to the Western Pennsylvania Brownfields Center. Heavy metals and naphthalene — the latter helps produce plastics and dyes — contaminated the soil, the center said. By 1993, the Environmental Protection Agency had a “consent order” with U.S. Steel to clean up all of the property. By 1998, remediation had begun.

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By this year, U.S. Steel has received a release of liability on about 70% of the property through the state’s Act 2 program, NorthPoint said. The firm will cover cleanup costs for the remaining 30% of the property, and is expected to invest $25 million into cleaning up the contamination there, documents show.

Of the 1,800 acres at the complex, NorthPoint would own the lion’s share of the land, save for a couple hundred acres owned by other companies. The site is already home to employers such as Kinder Morgan, which operates the property’s port; Morton Salt; the Toll Bros. home building firm; Ethos Cannabis, a marijuana growing facility; and GMA Garnet Group, which prepares garnet stones as abrasives for industrial use.

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