DELAWARE — Industrial space is becoming harder to find in Delaware after a string of major expansions announced this year.
PPG Industries, Wieland Onda and Sam Dong have all announced new, multi-million-dollar facilities expected to bring hundreds of jobs to the city.
Now, another $12.25 million industrial project is in the works — this time without a tenant lined up.
Delaware City Council approved a 15-year, 75% Community Reinvestment Area tax abatement Monday for Sawmill Delaware Investments LLC to construct an approximately 100,000 square-foot speculative industrial building on Innovation Court near the Delaware Municipal Airport.
Economic Development Director Nic Langford told council Delaware is running short on available industrial space to market to prospective employers.
When state economic development officials approach the city about companies considering Delaware for expansions, and requesting information about available industrial space, Langford said it’s slim pickings right now.
The building rising next door provides an example of why the city wants another one ready.
Wieland Onda’s new facility is about 75% complete, Langford said. The city previously approved the same 15-year, 75% tax abatement for that building.
“[This CRA is with] the same developer,” Langford said. “The goal is to keep it at the same balance as the other one because if we did a 100%, 15-year with a pilot to the schools and then the other building wasn’t, it’d just be really hard to navigate and manage it.”
Langford said having the building available helped Delaware beat competing sites in other states for Wieland Onda’s expansion.
The new building represents an anticipated $12.25 million investment, including land, construction, tenant improvements and other project costs.
Because the building is speculative, its eventual employment impact will depend on the company that moves in. City estimates use 20 jobs as a baseline, representing about $1 million in annual payroll and $18,500 in annual city income tax revenue.
Langford said the building could ultimately accommodate 100 to 150 jobs, depending on the tenant.
Breaking down the CRA tax incentives
The CRA will exempt 75% of the value of eligible new improvements to the property from real estate taxes for 15 years.
In this case, construction of the approximately 100,000-square-foot industrial building would qualify. The underlying land will remain fully taxable, and the incentive does not take effect unless the property is developed.
The remaining 25% of the building’s taxable value will also remain on the tax rolls throughout the 15-year agreement.
Langford said the city used the same 75%, 15-year structure for the neighboring speculative building last year.
“If you’re asking, ‘Why is this one different? Why is this one 75%, 15-year?’ Well, we did the one previously last year at 75%, 15-year and it was around the time that there wasn’t a superintendent at [Delaware City Schools],” Langford said.
Langford said moving forward with that agreement ultimately helped Delaware land Wieland Onda’s expansion.
“We had to forge ahead,” he said. “I’m glad that we did, because they were able to break ground and we were able to win a relatively big deal [Wieland Onda] with this building. Had it not been there, we probably would have lost it.”
The agreement does not exempt the underlying land or personal property from taxation; it applies only to eligible new real-property improvements.
The incentive also requires no direct spending from the city’s General Fund and creates no city debt obligation, according to Langford’s presentation.
The second building is considered a separate phase of the Innovation Court development and does not change the existing CRA for the neighboring Wieland Onda project.
The building and its construction timeline
Langford said the approximately 100,000-square-foot building will be a replica of the Wieland Onda facility currently under construction next door. The entire development site spans about 13 acres.
“They’d like to break ground yesterday, I believe,” Langford said.
The city’s current timeline calls for construction to begin around Oct. 1, with completion targeted for Dec. 1, 2028.
Like the neighboring building, the new facility will initially be constructed without a tenant. Once it’s built, Langford said the developer will market the space and the city will help recruit prospective occupants.
“This is a speculative building, so its really dependent on future tenants,” Langford added. “But we’ve worked really hard to secure the other building and we believe we’ll get something similar.”
The city’s preference is to attract a company that will use the building for manufacturing or another operation that creates jobs. Langford acknowledged the facility could ultimately be leased for warehouse space if another tenant can’t be found.
He said even that scenario could benefit existing Delaware employers that need additional storage as they expand their local operations.
“We really need space, we just have nothing to pitch right now,” Langford said. “We get requests for information (RFIs) in all the time from the state and we just can’t submit anything because we don’t have the appropriate building.”
Fed One looks forward to project
Fed One is developing the project through Sawmill Delaware Investments LLC, the entity that holds the industrial park property.
David Poe, a member of the Fed One team, said he has appreciated working with the city in the past and this next project will be no different.
He pointed to Wieland Onda as an example of what having speculative industrial space available can accomplish.
“Wieland Onda was busting at the seams and was going to move,” Poe said.
Wieland Onda already operates a roughly 65,000-square-foot facility in Delaware in addition to the new Innovation Court building now under construction. Poe said Fed One is also discussing a potential expansion of the company’s existing facility.
“So, not only are they investing in the new building that is under construction now [on Innovation Court], there’s a good possibility they may expand again given what we know about their growth of business,” he said.
