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Monday, January 03, 2011
South Valley Catalyst
By Richard Metcalf
Copyright © 2010 Albuquerque Journal Journal Staff Writer
U.S. Foodservices will break ground this week on a $45 million, 135,000-square-foot distribution center in the South Valley, the biggest new industrial building to go up in the metro since Schott Solar's 200,000-square-foot plant was built in 2008 and early 2009.
"We believe in the local market and the strength of the economy," said Albuquerque division President John Szurek. "Since we're an established company, we wanted to put ourselves in the position to meet demand as the market grows."
The company, which has about 125 employees, plans to move into the state-of-the-art building in October, marking the 20th anniversary of the opening of its Albuquerque operation. Over the years, the company has operated under the Kraft and Alliant names, reflecting changes in ownership at the corporate level.
The company's cold storage space will double in size to a total of 81,000 square feet, including 27,000 square feet of freezer space. The distribution center will have 19 high-speed loading dock doors. It will have capacity for 8,000 fresh, frozen, dry and nonfood products.
The building will meet the company's storage needs for the next five years, with the 42.8-acre site at 3700 Prince SE offering plenty of room for expansion in the future.
More than 50 community leaders, employees, suppliers and government officials are expected at a 2 p.m. groundbreaking ceremony on Wednesday at the site less than one mile north of Rio Bravo.
Groundbreakings have been rare over the past three years on new industrial buildings of 100,000 square feet or more due to the recession, said Jim Smith of CB Richard Ellis, who represented the company in its search for a new location.
The motivation for U.S. Foodservice to expand into a new building of its own was the need for more cold storage, which is one of the main reasons why the project cost is $45 million, he said.
"They lease right now," he said. "The thought process was 'We don't want to invest that much money into a building we don't own.'"
A 'monumental' project
The new distribution center will be on the site earlier proposed for a 400,000-square-foot regional mail-processing center by the U.S. Postal Service.
Once viewed as a potential catalyst for economic development in the South Valley, the Postal Service abandoned plans for the mail-processing center in early 2002. The U.S. Foodservice distribution center is a worthy replacement, said Art De La Cruz, chairman of the Bernalillo County Commission and a South Valley native.
"This groundbreaking is monumental," he said. "It will create a whole new draw for the area. The people who work at this facility will eat in the area and shop in the area. There's a multiplier effect."
De La Cruz sponsored U.S. Foodservice's industrial revenue bond application for a total of $53 million to be spent in two phases, which was approved by the county commission. The company's application says the pay range for U.S. Foodservice employees is $47,000 to $55,000 a year plus benefits, he noted.
The move to the South Valley is not just big news for the community, Szurek said, "This is very meaningful to our customers and supplier partners as well. Our employee base is thrilled."
The Albuquerque operation has more than 1,300 customers in New Mexico, West Texas and southern Colorado. Its local customers include Presbyterian Healthcare Services, University of New Mexico hospitals, Fort Bliss Army base, El Pinto Restaurant and High Finance Restaurant.
While delivering wholesale food to customers is the core business, the company provides related services such as food safety and quality assurance.
"We do things like menu planning, menu cost analysis, inventory control. We give them market updates," Szurek said. "We do training with the services staff and food preparation staff."
The distribution center is a design/build project by ESI Construction, an out-of-state company.
"They will be using upwards of 80 percent local contractors for the construction project," Szurek said.
While U.S. Foodservice is not seeking any kind of green-building certification of the building, it will have energy-efficient, environmentally friendly elements like xeriscaping and low-flow plumbing features, heat-reflecting insulated roof, centralized zero-emissions refrigeration and high-efficiency lighting. Fuel cell technology will power the warehouse vehicles.
The company currently leases 144,954 square feet at 5600 2nd NW, a 400,000-square-foot, multitenant building where it originally opened in October 1991. Only about 105,000 square feet is functional for the company's current operation, Szurek said.
U.S. Foodservice leases the oldest portion of the building on 2nd Street, which dates back to the early 1970s and was expanded over the years, said Erick Johnson of Johnson Commercial Real Estate, which is in the early stages of marketing the space for lease or sale. Previous tenants have been the food distribution arms of Winn-Dixie, Western Growers Inc. and Super Valu.
Planning for the future
Since its joint purchase in 2007 by private equity firms Kohlberg, Kravis, Roberts & Co. and Clayton, Dubilier & Rice, the Chicago-based company has spent about $500 million on new facilities and equipment at its more than 60 distribution centers nationwide.
A new facility for the Albuquerque operation has been in the works about two years, Szurek said. The company purchased the 42.8-acre site a year ago after looking at potential locations throughout the metro.
"We're in distribution, so what's important to us is good access to the main (traffic) arteries," he said. "The location we selected will do that."
Prior to the purchase, the land was marketed at an asking price of $3.9 million – a discount of more than one-third from the 2007 price – by Grubb & Ellis New Mexico.
The 42.8 acres traces back to the Schwartzman family, which arrived in Albuquerque in the late 1880s. The family established a vertically integrated meat-packing operation in the upper South Valley that closed in the early 1980s.
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