Redevelopment near upgraded SEPTA stop in Delaware shifts from offices toward warehouses

Almost a decade after its Russian owners shuttered the steel mill in Claymont, Del., a new industrial use is coming to this 400-acre site just over the border from Pennsylvania where I-95 and I-495 intersect.

The St. Louis-based Commercial Development Co. acquired the site in 2015, cleared it of the heavy industrial past, and prepared it to accommodate a mixed-use complex of offices, residential buildings, and warehouses. In 2018, the company teamed up with the Delaware Transit Corp. to place a modern transit hub on the site as a replacement for the then-overwhelmed Claymont train station.

But times have changed in the last four years. What was originally planned to be a million square feet of office space on the property is being pared back to about 600,000, while the half-million square feet of industrial space is being increased to 800,000.

Earlier this month the developer announced the sale of 28 acres to First Industrial Realty Trust, which plans a 358,000-square-foot warehouse and distribution center for its slice of the property. (The company declined to speak on the record about its plans.)

This speculative warehouse project would be the first new private-sector building at the former Claymont mill site. An office project was put on hold after the pandemic softened demand for that kind of space.

“We did have an office [development] about three years ago that was looking pretty good, and then when COVID hit that project went on the back burner,” said Stephen Collins, executive vice president with the Commercial Development Co. “That project is now in second position, or maybe even third position, behind this industrial project.”

First Industrial Realty Trust’s project will feature parking for 241 trailers and 68 docking door positions for large cargo trucks. The building will be able to accommodate either a single tenant or multiple users. They expect to break ground next month and finish the building by October.

Collins said another industrial user is expected to buy 300,000 square feet more of the property in the next six months. Other development plans include 1,200 housing units on the site, half rental and half owner-occupied, but no residential development partners have been selected.

The $84 million Claymont transit hub redevelopment is underway, with construction beginning last year and expected to open to users of SEPTA trains and DART buses in the fall.

Given the industrial and warehousing uses that Commercial Development Co.’s site is tilting toward, with its heavy emphasis on truck usage, the future of the transit station as a commuter hub for workers at the site is in question.

Overall regional ridership in Delaware is still half what it was before the pandemic, although Claymont remains the most heavily used train station.

“I don’t know exactly what the future holds for commuter rail,” said John Sission, CEO of the Delaware Transit Corp. “SEPTA is looking at it a bit differently than just commuters and trying to focus on providing better transportation options for the all-day market. I think the redevelopment of the site is going to still be big.”

Despite the slowing economy and Amazon’s pullback from its pandemic warehousing peak, Commercial Development Co. argues that the success of the industrial sections of its site shows the strength of this site as a logistics hub.

“There’s going to be strong demand here in spite of the fact that the market is slowing down, just because it’s such a strong location,” Collins said.

The developer has no plans to shift more square footage from office to industrial tenancy, he said.

“The real estate market is somewhat fluid,” Collins said. “We do think that when the train station opens, it’s going to make this an attractive location for office, or medical or lab type uses, maybe pharmaceutical uses. Really the market will decide how much [of the site] will be office space.”