Construction of warehouses is beginning at South Philly refinery destroyed by fire

On the western edge of South Philadelphia, what was once the East Coast’s largest oil refinery is no more.

The vast infrastructure of storage tanks and piping — which erupted into an inferno in 2019 — was dismantled by the end of last year. The demolition resulted in 190,000 tons of scrap metal.

Now Hilco Redevelopment Partners is beginning construction on the opening phase of what promises to be a very long transformation into industrial space and life sciences labs.

On Tuesday, ground was broken on the first of the 54 new buildings planned for this 1,300-acre site. A 326,000-square-foot warehouse is expected to be completed by the end of the year, with a 726,000-square-foot warehouse projected for completion by the beginning of 2025.

Both are being built without a designated tenant.

“The fact that we’re building these buildings on spec underscores how bullish we are on this market in Philly and how we believe that this is an incredibly sound investment,” said Amelia Chasse Alcivar, executive vice president of corporate affairs with Hilco. “There has already been significant interest among household-name tenants.”

This first phase of new construction will be on the three-quarters of the site below West Passyunk Avenue slated for manufacturing, last-mile warehouses, and uses that will cater to its proximity to the airport and PhilaPort. Fourteen buildings are slated for this section of the project, although Hilco emphasizes that projected building totals may change as plans unfold.

Above West Passyunk will be what the company calls the innovation campus, where life sciences laboratories and manufacturing facilities are planned in proximity to University City and the Pennovation District. Forty much smaller buildings are projected for this part of the site.

The Bellwether District is colossal in size and by far the largest redevelopment effort in a generation. The northern edge is at 35th Street, just across the Schuylkill from Bartram’s Garden, while the southernmost tip extends beyond the George C. Platt Memorial Bridge.

“Very rarely can you acquire this much land in such a great city to be able to transform it,” said Andrew Chused, Hilco’s chief investment officer. “But we have to put in all new infrastructure. It needs everything.”

Currently the sprawling site is a moonscape of broken soil, jagged with concrete and twisted pipes, and water pools in the newly excavated ground. Hilco’s team works out of a clutch of trailers in between the two prospective campuses. The company uses a small fleet of mud-spattered Chevy Tahoes to navigate the site’s rough terrain. “They don’t last long,” noted Chused.

On the northern end of the Bellwether District, where the innovation district will be, earthwork hasn’t progressed as far and there is still marsh grass and occasional deer or groundhog sightings. The southern end, where the industrial campus will be, is more barren, and little dust devils swirl around the pitted land.

Far from the leveled ground where the foundation of the new warehouse is being dug, closer to the airport, the bracing smell of petrochemicals lingers as remediation continues. (The company likes to note that when it took the refinery offline, Philadelphia’s carbon emissions fell by 16%.)

Hilco projects that their plans will generate 28,000 construction jobs over the lifetime of the project and 19,000 permanent jobs — many of which will not require college degree. The refinery employed 1,000 people in its final decades.

“We’ll need to see the mix of tenants that comes in, but the types of state-of-the-art facilities that would locate near a major city with an East Coast port are going to be higher rent,” Alcivar said. “They will be higher throughput, higher volume, and so you do see higher wage jobs.”

The city’s political, business, and labor leaders have embraced Hilco’s efforts.

At a mayoral forum on development last year, when asked to name the most transformative development project in Philadelphia since 2000, all the candidates agreed on Hilco’s Bellwether District. The eventual victor, Mayor Cherelle L. Parker, remains a cheerleader of the project.

“I am super excited by the size and scale of the Hilco project. I’ve toured it and seen it firsthand,” Parker said. “Not only are they transforming a huge piece of the city with an unmatched vision, but their success will mean that Philadelphia is a whole lot closer to being the number-one city in the country for biotech and life sciences.”

The city’s influential building trades unions see the potential for a lot of work for a long time. That’s especially welcome as Philadelphia’s construction permitting has slowed to a trickle given the heightened interest rate environment.

“We believe the Hilco site will give our members millions of man hours,” said Ryan Boyer, business manager of the Philadelphia Building & Construction Trades Council. “It gives us a great space given that traditional office may be a little different now since COVID, and the things that Hilco is trying to bring will be quite resilient even [with these] interest rates.”

Hilco has been meeting regularly with representatives of the surrounding neighborhoods, offering token outreach such as $250,000 in scholarships and 18 turkey giveaways in 2023, while also negotiating with local civic groups on a community benefits agreement (CBA).

Many neighbors backed Hilco’s bid for the property because it was the only applicant that didn’t propose continuing to use the land for fossil fuel-related purposes.

But some community members have been frustrated by the lengthy engagement process and fear the project will generate a huge amount of traffic.

“In terms of community benefits, we meet, we meet, we meet, we meet,” Barbara Capozzi, president of the Packer Park Civic Association, wrote in an email. “There is no CBA at this time, or even the hint of one, but not for lack of meetings!!!! Honestly, it has been tedious, painful and to date, extremely time-consuming for little advance.”

Capozzi and her allies are calling for a Special Services District like the one created to manage the sports stadium area to ensure planning and engagement around the Bellwether District into the future.

Hilco officials said formal discussions on a community benefits agreement began last spring, and they anticipate finalizing the agreement this summer.

This isn’t Hilco’s first experience with a project of this magnitude. The Bethlehem Steel facility at Sparrows Point near Baltimore was once the largest steel mill on the East Coast. In 2012 at the end of its long decline, Hilco purchased that site, which is far larger than the Bellwether District, and transformed it into a distribution and warehouse hub.

The Sparrows Point analogy isn’t exact. It is eight miles outside downtown Baltimore, as opposed to the Bellwether’s 0.8 miles from Center City Philadelphia. It also doesn’t have the life sciences space that Hilco is leaning into due to the proximity to University City.

But boosters of the Maryland project point to an example of a long build-out that resulted in 12 million square feet of industrial space and 13,000 jobs.

“It’s impressive that people would commit that type of resources and believe in Philadelphia,” said Boyer of the Building Trades Council. “Their campuses are just filled with possibility, and that’s why I’m so, so excited.”