$4B Mixed-Use District Breaks Ground in South Philadelphia

Aerial view of the transformation of the former refinery into The Bellwether District. Image courtesy of Hilco Redevelopment Partners

Hilco Redevelopment Partners, of Chicago, has begun construction on the first phase of its $4 billion, 1,300-acre Bellwether District project in South Philadelphia.

The first building in this initial phase will be about 326,000 square feet and is expected to deliver late next year or early in 2025. The second building will be about 727,000 square feet and should be underway within two or three months.

Both are speculative developments as of now. Hilco CEO Roberto Perez told the Construction Review that these two buildings will be versatile enough to be used for warehouse/distribution, cold storage, light manufacturing or a combination.

The location is along the east side of the Schuylkill River in South Philadelphia, barely 3 miles from Philadelphia International Airport and its expanding cargo facility.

READ ALSO: What’s Ahead for Industrial?

Over a timeline of up to 10 to 15 years, the district is set to include a 14 million-square-foot campus, divided into two main areas: 250 acres dedicated to life sciences and 750 acres to industrial and logistics facilities, which are expected to total a whopping 10 million square feet. Preparatory site work, road enhancements and utility installations for the life science phase will begin next year.

Fiery history

Hilco acquired the 1,300-acre former Philadelphia Energy Solutions refinery out of bankruptcy in June 2020 for $225.5 million. The area had been the location of one or more refineries stretching back more than 150 years, and the history had included massive pollution and multiple fires.

The latest was a series of explosions in June 2019 that resulted in a massive fire.

In June of this year, Hilco celebrated the milestone of having demolished 93 percent of pipes, 89 percent of storage tanks and all of the process units at the site, while recycling more than 190,000 tons of material.

In what is presumably a nod to climate risk, regrading of the Bellwether District site will involve more than 2 million cubic yards of earth. This will be used to raise the whole site above the 100-year floodplain and all planned buildings above the 500-year floodplain.

A combination of very low demand from retailers and wholesalers and a steady delivery of new product has pushed metro Philadelphia’s industrial space market to a vacancy of 4.7 percent, 130 basis points higher than 12 months earlier, according to a second-quarter report from CBRE.

And though average asking rents rose over the same period, CBRE cautioned that this trend seems to be cooling, particularly with regard to Class A product.