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Shipping giant FedEx Corp. is looking to build an enormous distribution center on part of a former Bethlehem Steel Corp. property in Hamburg that could employ more than 500 people after full build-out, according to real estate sources and a town official.

The Memphis-based package delivery company wants to buy a 50.1-acre property near the intersection of Route 5 and Bayview Road, across from the Dock at the Bay Restaurant, sources say. The parcel is on the north side of a 129-acre parcel the steelmaker owned but never built on. It is now owned by Tecumseh Inc.

The property, just south of the Ford Motor Co.’s Buffalo Stamping Plant, was acquired by the Town of Hamburg through a land development corporation nearly three years ago. No agreement has been signed with FedEx, but the proposed contract calls for the company to pay the town $25,000 an acre, or $1.253 million.

FexEx then plans to build a distribution center of more than 300,000 square feet to accommodate a significant increase in its shipping business because of online sales, sources said. The company has four office print and ship stores in the area and currently maintains its big ground transportation operation in Cheektowaga. In the meantime, it’s temporarily seeking to lease some additional space elsewhere in the area for “overflow” work.

Michael J. Bartlett, executive director of the Hamburg Industrial Development Agency, would not identify FedEx by name, saying, “We have a confidentiality agreement with the company we are working with on that site.” But “it’s going to be big,” he said.

Other real estate sources confirmed that the company is FedEx, though the company itself would not comment.

“FedEx continuously evaluates opportunities that can enhance our ability to serve our customers, but, as a matter of policy, we don’t have further information on specific proposals under consideration,” said spokesman David Westrick.

Bartlett said it’s not a done deal, either. “There are some issues that have to be resolved,” he said. “It’s not a slam-dunk.”

In particular, the town and company will be seeking access to the property from Route 5, through the state Department of Transportation. Bartlett said he expects the project would qualify but that it could take a year or more.

“We’re hoping to expedite that,” he said.

Bartlett said he also expected the company to seek tax benefits from the Hamburg IDA and, possibly, from the state Empire State Development Corp.

“It’s not a done deal. It looks good. It’s moving along, but anything can happen,” he said. “I’m optimistic, but I’m cautious.”

FedEx looked at the site “several times” before contacting Hamburg officials. So far, the town has dealt mostly with a corporate site selection firm and more recently an out-of-town developer that was hired by FedEx to handle the project.

Orchard Park-based Krog Corp., an industrial developer that has specialized in former brownfields redevelopment projects, had been the “designated developer” for the site, but that status has expired. Benderson Development Co. also was rumored to be interested in the work, as is contractor R&P Oak Hill.

Though it was owned by Bethlehem Steel, the property was never used for anything industrial, and an environmental review turned up nothing problematic on the site, Bartlett said.

Meanwhile, FedEx Trade Networks Transport & Brokerage Inc., the company’s custom brokerage operation for its international ground service, is in the process of consolidating its operations from Kenmore Avenue, Ensminger Road, and Cooper Avenue in the Town of Tonawanda to Riverview Solar Park in Tonawanda, where the company is investing $5.2 million in a new 88,000-square-foot facility that will create 82 jobs, in addition to the 926 workers it already has.

email: jepstein@buffnews.com