A developer, with the state’s support, is attempting to lure Amazon to a large warehouse under construction near New Castle.
Site work began more than a year ago near Route 40 and Route 273 just south of the Wilmington Airport. A long building with skinny windows and dozens of holes for loading docks has since sprouted at the property.
It’s inspired months of questions about what’s going there that found few answers. The developer, Stoltz Real Estate Partners of Bala Cynwyd, Pennsylvania, was building the warehouse speculatively, meaning without a tenant locked down.
At a state transportation infrastructure meeting Wednesday, state officials and representatives of the developer revealed Stoltz is targeting Amazon.
The developer responded to a request for a proposal from Amazon and is hopeful it will soon begin negotiations for the nearly 900,000-square-foot building.
“We are engaged with Amazon,” Stoltz’s Mike Hagan said. “We’d love to see something happen with Amazon. It may not happen.”
The e-commerce and technology giant already has a considerable presence in Delaware, having expanded significantly during the throes of the pandemic. Last year, Amazon was Delaware’s fourth-largest employer.
Its crown jewel 3.8 million-square-foot robotics-aided warehouse opened in 2021 at the former General Motors site near Newport. The company soon after become a tenant in Stoltz’s industrial development at the former Blue Diamond Park along Route 13 near New Castle. Amazon also has two smaller facilities off Route 273 just east of Route 13 and the Stoltz site.
All of the facilities are within about 5 miles of the Stoltz site.
They also all provide access to Delaware’s highways, which can connect companies to many population centers within short drives. Location is a large part of what’s made Delaware a key player in the construction boom of distribution centers that started before the pandemic and then skyrocketed.
The state also has put millions of taxpayer dollars into attracting developers and businesses in the warehouse space. The pitch to Amazon for Stoltz’s New Castle-area warehouse is no exception.
Attracting Amazon
At the Wednesday meeting, representatives from Stoltz made a pitch to the Transportation Infrastructure Investment Fund Council for more state money.
The fund provides state grants to businesses to offset the costs of transportation improvements. The projects are supposed to provide a “public benefit” and produce a “significant number” of direct, full-time jobs.
A Stoltz subsidiary in 2021 received a grant of $2.5 million. Then earlier this year, the company reached a new agreement that would provide them a total of $5 million with the second $2.5 million contingent on landing a tenant.
Stoltz returned Wednesday to ask for an additional $400,855 and the removal of the contingency.
Shawn Tucker, an attorney representing Stoltz, said the company needs to know the highest amount it can receive from the state so it can know how low it can go in lease negotiations with Amazon. If the state can provide more money, he said, Stoltz will be able to offer lower rent and be more likely to secure Amazon.
“We see this as an opportune time to know the guardrails we can negotiate inside of,” Tucker said.
The council awarded the additional money but did not remove the contingency. The amount above $2.5 million won’t be provided until after one year.
Company representatives said they did not know their competition, but expect that Amazon received several responses to its RFP in the tri-state area. Should Stoltz miss out on Amazon, Hagan said there has been interest from other businesses, noting that another company recently toured the site.
“It’s not a question of if it will lease, it’s just a question of when it will lease,” Hagan said.
Cost per job created
Stoltz, which has partnered on the project with Prudential, previously received a $1 million grant through the state’s site readiness fund. That fund is to be used to prepare commercial and industrial sites for development.
Altogether, Stoltz could receive $6.4 million in taxpayer dollars toward the warehouse project.
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The company and state officials would argue the investment is worth the return in terms of jobs created and state and local tax revenue.
Using the Blue Diamond Park facility as a model, state officials estimated that should Amazon take over the Stoltz warehouse, the company would employ about 225 people.
Of those, 206 would earn between $25,000 and $40,525 annually and 19 would earn between $86,376 and $164,925 annually. The wage for most workers would be below the county’s $63,189 per capita income in 2021 as measured by the U.S. Bureau of Economic Analysis.
“We’ve replaced auto factories with distribution centers,” Jim Butkiewicz, an economics professor at the University of Delaware, previously told Delaware Online/The News Journal. “Wage levels have gone down. We’ve seen a lot of building in Delaware — a lot of distribution centers. They’re raising their wages, but their wages still aren’t enough.”
The estimates also included an employment impact figure calculated by dividing the infrastructure fund’s investment by the jobs expected by year three (225). It came out to $24,003.80 per job. The fund also produces a public benefit by improving roads, state officials argue.
The warehouse will produce an annual state and local tax collection increase of $3,944,926, according to the estimates. Stoltz said it plans to invest about $100 million in the project.
“We should be doing what we can to support this project, understanding the fact that this is a lot of taxpayer money, but these are improvements that need to happen,” said TIIF Council Member Mona Parikh.
Delaware has given millions of taxpayer dollars to projects involving Amazon in the past.
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The state in 2020 gave Amazon $4.5 million in grants through the Delaware Strategic Fund for the Boxwood Road mega-warehouse. A Kansas City company called Northpoint Development received $3.9 million through the fund in 2019 for its Delaware Logistics Park project.
Amazon was a tenant of one of four warehouses built next to the Delaware City Refinery between Route 7 and Route 72, but Amazon never opened the facility.
Stoltz previously received a $1 million site readiness fund grant for its Blue Diamond development, which Amazon moved into in 2021. Its investment arm received a roughly $4 million transportation infrastructure grant Wednesday for the later phases of the industrial park’s development. Plans submitted to the county include more than 1.5 million square feet of warehouse space.
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Contact Brandon Holveck at bholveck@delawareonline.com. Follow him on Twitter @holveck_brandon.
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