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PHILADELPHIA-The Philadelphia Regional Produce Market’s six-year search for new facilities ended Thursday with a groundbreaking ceremony at a brownfield site here, attended by Mayor Michael Nutter and other city and commonwealth officials. Essington Avenue Partners II, a development affiliate of O’Neill Properties, will begin site work later this month on a planned 667,000-sf distribution facility located in 6700 Essington Ave. in south Philadelphia, Rosemarie Console, VP of marketing and business development at O’Neill, tells GlobeSt.com.

According to a news release from state Sen. Vincent Fumo (D-Philadelphia), who was a key figure in negotiations that led to the new site, the $218.5-million project will occupy a 48.6-acre parcel of land, with another 15-acre parcel nearby to be used as a parking/staging area. The project’s landlord, the Philadelphia Regional Port Authority, will receive $152.5 million of that total from the commonwealth of Pennsylvania, according to a PRPA release.

As reported last week on GlobeSt.com, the deal calls for the PRPA to purchase 63 acres, build a 667,000 sf distribution facility and sign a 40-year lease enabling the relocation. Vendors will repay 100% of the grants and loans over the life of the 40-year lease, according to the PRPA.

Thirty-two vendors, many of whom are fourth- or fifth-generation produce distributors, will relocate from the current produce center at 3301 S. Galloway St. into the 68 units on the first floor of the new facility, Console says. A second floor will contain office space for the merchants, tenants and market associations. The new facility will feature 228 enclosed and fully refrigerated 50-foot wide dock areas, 40-foot ceiling heights, a skylight running the length and width of the building to provide natural lighting, a central walking concourse open to the public, 10 entrances to the building and one main entrance for the public, according to the PRPA. The project also includes an 18,000-sf auxiliary building for recycling pallets and food.

Console says each of the units, which are 30 feet wide and 140 feet long, will have independent access and control of its own refrigeration, allowing for customized temperature settings and adjustments due to seasonality. “This will be the first distribution center in the world that does not break the cold chain: from crate to trailer, trailer to loading dock and loading dock to unit,” she says. “At other distribution centers, there is a time when there is no refrigeration, so it’s really up to the elements. These loading docks are fully refrigerated.”

The PRPA release cites research by EConsult estimating direct and indirect economic benefit to the region and tax revenues to the City of Philadelphia and the commonwealth of $270 million per year, or $10.8 billion over the life of the 40-year lease.

Console says remediation at the site, formerly a junkyard, has already been under way for the past two years. About 400,000 tires and “several hundred auto, trailer and bus carcasses” have been removed. The site is already zoned for retail and industrial, and O’Neill Properties originally had a different use in mind. “We had initial conversations with large big-box retailers such as Wal-Mart or Lowe’s, but when the commonwealth approached us with this problem, we had a great solution.” The “problem” to which Console refers was the need to find a new location for the produce center, which had been operating in a nearly 50-year-old facility that was now outmoded. At one point, PRPM was in discussions to move across the river into New Jersey.

“This private public partnership will preserve the Produce Market right where it belongs—in Philadelphia,” says Pennsylvania Gov. Edward Rendell in a prepared statement. “Without room for expansion and new, modern facilities, the commonwealth risked losing this vital operation.”

Console tells GlobeSt.com she cannot comment on asking rents at the new produce center. Published reports say rents at 6700 Essington will be $10,000 per unit, compared with $3,200 per unit at the current facility.

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