Vacant gas stations a challenge for Philly-area developers

Every town seems to have one: The shell of an old gas station, sometimes recognizable as a former Exxon, Sunoco, Mobil, or Texaco.

From Glen Mills to Mullica Hill, they often sit empty for years, patches of gravel showing where aging underground tanks came out, a succession of "available" or "for sale" signs on display.

That was the case at Ridge Avenue and Hermit Street in Philadelphia's Roxborough neighborhood after a Mobil station on that corner closed in the early 2000s.

The usual assumption is that the cost of environmental cleanup delays redevelopment of these properties, but that's not generally the case, developers said.

"When you see the closed gas stations, they can be on a great corner, but they are just too small to do anything," said Jerry Holtz, vice president of the Provco Group, a Villanova real estate firm that bought the Roxborough Mobil location four years ago.

Provco has signed up a TD Bank branch with drive-through lanes to go in there. Construction is set to begin this month.

To make the Ridge Avenue site big enough for the bank, Provco bought two adjacent houses last year for an additional $850,000. Some neighbors are not thrilled to lose the circa-1885 houses for another bank, but they figure that's better than a vacant service station.

It's one of many - nobody knows exactly how many - former stations that have languished for years on the regional market, fallout from major oil mergers a decade ago and the rise of Wawa as a force in gasoline retailing.

When Exxon and Mobil merged in 1999, a condition was the sale of 1,180 Mid-Atlantic gas stations to Tosco Refining L.P.

Tosco paid $1.13 million for the Ridge Avenue station in 2000 and sold it in 2004, when it already was closed, as part of a bulk deal to Getty Petroleum Marketing Corp. for $1.75 million.

Provco bought it three years later for $900,000.

After Chevron and Texaco merged in 2001, Shell Oil Products U.S., which had been in a joint venture with Texaco, converted about 100 of the Philadelphia region's estimated 250 Texaco stations to its brand.

The era of big-oil mergers led to many station closures, but no one monitors the number currently shuttered. Even Ross DiBono, director of the Pennsylvania Gasoline Retailers Association & Allied Trades, agreed that it seemed like a statistic that would be tracked.

The Pennsylvania Department of Environmental Protection knows how many sites have inactive underground storage tanks - at least 7,294 now in Philadelphia and the four neighboring counties - but it does not distinguish between gasoline stations and other operations with such tanks.

Across the country, the number of gas stations has been trending down for a long time - from 195,455 in 1995, to 177,809 in 2000, to 159,006 last year, according to National Petroleum News.

Many stations have stopped selling gas but continue as auto-repair shops.

Still others, such as one in Eddystone where new tanks are waiting to go in the ground, find new life - as gas stations.

For a small business, the cost of reusing a site for a gas station can be prohibitive.

The average price for putting in new tanks, pumps, and pipes is more than $200,000, said Sal Risalvato, executive director of the New Jersey Gasoline-C-Store-Automotive Association. "It can easily go over $1 million if soil needs to be remediated."

That's why developers look for deeper-pocketed clients.

First choice is a drugstore, said Jim Kahn of Kahn & Co., which has 40 years' experience redeveloping gas stations.

Drugstores pay the most rent, which allows for the easiest payback of the costs to remove storage tanks and clean up the soil, if needed.

If a drugstore doesn't work out, the next choice is a bank, Kahn said. Beyond that, developers turn to fast-food chains.

Among developers filling their portfolios with gas stations was Daibes Enterprises of Edgewater Park, N.J., which bought many former Shell and Texaco sites in the Philadelphia area with the goal of redeveloping them into gas stations or some other type of retail operation.

But throughout the region, a number of Daibes locations remain closed, painted the same shade of "battleship gray," as Joe Garufi, zoning officer and fire marshal in Somerdale, described it. A Daibes property sits on a wedge of land at North Warwick Road and East Atlantic Avenue there. Its last inspection as a gas station was in 1999, Garufi said.

It's not that Daibes - which did not respond to three requests for comment last week - didn't try to bring new businesses to old gas stations in Langhorne, Mullica Hill, and Somerdale.

A Dunkin' Donuts was proposed for the Somerdale site but went to nearby Glendora. It is not clear why. John Aubry, owner of Somerdale Cold Cuts across the street, blamed town politics.

In Langhorne, at the intersection of Routes 413 and 213, Daibes proposed a Starbucks with a drive-through window at an old Texaco station that has been closed for seven years and is now painted with a landscape mural.

The borough's zoning board rejected the Starbucks drive-through in 2007 because it was "not safe for pedestrians," said council president Bill Gilmore.

Local officials are hoping for a building that will "blend in with the architecture of the town," he said.

In 2008, Daibes told the Harrison Township zoning board that it wanted to redevelop a former Shell station in Mullica Hill into a convenience store with gas, said Sue Champion, township construction and zoning officer.

"They got permission to do it, but they haven't done anything," Champion said.

Joanna J. Galante, who works in a real estate office across Main Street, said she would be glad if the site reopened as a station because there is no place to buy gas in Mullica Hill.

"You have to drive a little ways to get gas. It's a little frustrating," she said.

Find more coverage of the region's commercial real estate market at www.philly.com/commercial

 EndText