U.S. Steel, which stopped most work at its Fairless Works in Falls Township, Bucks County, back in 2001, is finally selling nearly three square miles of the property.
The steel giant’s sales agents are telling potential buyers that the aging industrial site, now an industrial park, could support up to eight million square feet of new warehouse, factory, and office space, and thousands of jobs. The site, which sits across the river from Trenton, is seeking a buyer at a time when Amazon, Walmart, UPS, and other big companies are building million-square-foot logistics centers, among other potential tenants.
William Hinckley, head of real estate for U.S. Steel in Pittsburgh, other company officials, and Tom Golarz, the Colliers International broker handling the sale, declined to comment on plans for the property. Hinckley pointed out that U.S. Steel chief executive David B. Burritt “is often quoted saying it’s a public company and everything is for sale.” The Inquirer learned about the proposed sale from area developers, who have been solicited to bid.
“I would absolutely welcome a new owner. That site has been poorly managed,” said Bob Harvie, a Bucks County commissioner who until last year was an elected supervisor of Falls Township.
“It’s nothing like what could be if it were marketed and managed effectively,” Harvie added. “It’s the furthest upriver deepwater port on the Delaware. It’s got fantastic railroad and highway access — and every trade in the [regional] labor pool. There are infrastructure challenges. It goes back to the 1950s. But it needs imagination, and it could be so much more.”
The 1,751-acre property includes 1.5 million square feet of industrial space — as big as a Center City skyscraper — and is home to industrial employers including Kinder Morgan, which operates the port on the property; power systems maker Starwood Energy Group; Covanta Metals; Morton Salt; the Toll Bros. home building company; and GMA Garnet Group, which carries on one of Pennsylvania’s oldest industries, preparing garnet stones, as abrasives for industrial use. Port workers are members of the United Steelworkers union, rather than the Longshoremen or Teamsters as at other Delaware River terminals.
The businesses on the site, which U.S. Steel calls the Keystone Industrial Port Complex, generate $11 million in “net operating income” — rents minus expenses — according to a company document.
Companies on the site employ an estimated 1,000 workers — a fraction of the 7,000 who once filled Fairless Works. U.S. Steel, which still maintains a galvanizing mill employing about 100 at the site, is under financial pressure. The company invested more than $1 billion in its Pittsburgh-area and Slovakia plants in hopes that the Trump administration would make good on its plans to boost U.S. infrastructure spending and Navy construction. But the Pittsburgh-based company faces soft demand, analysts at Moody’s Investors Service warned last year.
Harvie noted that the site has enjoyed sales and property tax breaks as a Keystone Opportunity Improvement Zone. He said he had supported that designation as a local official but has been disappointed by the results.
That tax-break designation expired at the beginning of this fiscal year, according to financial documents posted by the local Pennsbury School District. The U.S. Steel property is currently assessed at about $6 million for real estate tax calculation purposes, trailing only a neighboring landfill and Oxford Valley Mall, among Pennsbury school district properties. Tax assessments in Bucks County are typically a fraction of market values.
Update Feb. 12: U.S. Steel and affiliates paid $1.1 million in taxes to Pennsbury schools this year on properties whose opportunity zone tax exemptions expired, said Christopher M. Berdnik, business manager for the school system. The company was assessed additional taxes by the county and township. The property levies reduce U.S. Steel profits from rents at the site and make a sale more attractive.
An Environmental Protection Agency survey found the site included mostly “low level” lead, naphthalene, benzene, and other metals and organic contaminants in mill sites and flooded pits.
An effort to bring in “green energy” companies in the 2000s has been only modestly successful. Windmill maker Siemens Gamesa has agreed to sell its former assembly plant at the site, to an as-yet-unidentified buyer, says Bucks County industrial real estate broker Frank Roddy.
One of Pennsylvania’s most successful real estate investors is familiar with the Fairless property. Ira Lubert is a board member of Keystone NAP LLC, which operates a data center in the complex, and is a partner in MLH Explorations LLC (Solterra), which last year won a state permit to grow marijuana there. He didn’t respond to an inquiry about his or his partners’ interest in the property.
Broker Roddy said that large building sites have become scarce in the Philadelphia area, making redevelopment at Fairless more attractive.
The largest area industrial site recently advertised on broker Colliers’ official list is the 1.5 million square foot former Cardone Industries auto parts rebuilding plant in North Philadelphia. Once the largest industrial employer in Philadelphia, Cardone has relocated production to South Texas and Mexico, citing China competition and the difficulty of finding enough factory workers in Philadelphia.