Centralia site leased by UNFI sells for $195M amid grocer’s labor fight in Tacoma, elsewhere
The ripple effects of United Natural Foods Inc.’s Northwest reorganization continue to be felt as it makes a painful exit from Tacoma more than a year after its $2.9 billion acquisition of Supervalu.
Amid the grocery distributor’s reorganization, its new site has become one of the region’s biggest real estate transactions of the year: the sale of the UNFI Centralia distribution center for $195 million. UNFI will continue to lease the center.
All of this comes after UNFI’s February announcement of consolidation plans for Northwest operations. Those plans included expanding its Ridgefield operations, a new distribution center in Centralia and ending operations in Tacoma, Auburn and Portland.
The Tacoma closure has led to a fierce labor battle for longtime Supervalu/UNFI workers as the jobs sent to Centralia do not offer the same wage and benefits packages as those being eliminated in Tacoma, according to the union.
A labor arbitrator ruled in the workers’ favor, which UNFI later appealed, arguing that carrying over the Tacoma contracts would create a two-tiered employee status at the Centralia site.
“We must have labor agreements that allow us to be flexible and nimble in a rapidly changing food distribution environment,” Paul Green, UNFI’s chief supply chain officer, said in October.
In the meantime, Teamsters Local 117 has established a hardship fund for those workers “to assist members from UNFI’s Tacoma facility who are experiencing extreme financial hardship” as a result of layoffs.
Teamsters Local 120 in Blaine, Minnesota on Dec. 12 posted a Facebook video interview with some of the Tacoma workers describing UNFI’s move to Centralia.
It was “joy at first, actually, to get a new warehouse, you know. The Tacoma warehouse is kind of old,” said Anthony McKinney, a union representative in the video interview, who noted he had 13 years with Supervalu. “Everyone was happy ... and not too long after that we learned that they didn’t want to uphold the contract and most of our people weren’t going to be able to go down there.”
The Tacoma distribution site has served Saars Marketplace, Metropolitan Markets, Whole Foods, Marlene’s and Thriftway, among others.
UNFI has faced labor disputes in recent weeks at locations in Fort Wayne, Indiana; Green Bay, Wisconsin; and Hopkins, Minnesota.
On Tuesday, UNFI told The Star Tribune of Minneapolis that it was disappointed that Local 120 “decided to initiate an illegal labor disruption at our Hopkins distribution center in support of the illegal strike in Fort Wayne.”
The company said it was implementing contingency plans to keep the three Midwest sites in operation.
UNFI’s shareholders’ meeting is set for Wednesday (Dec. 18), and the International Brotherhood of Teamsters , in a letter, called on shareholders to reject executive compensation increases including for the company’s CEO, Steven Spinner, saying the acquisition of Supervalu has sent the company’s valuation and stock spiraling downward.
A copy of the Teamsters’ letter was posted Wednesday in a report on Supermarket News’ website.
The Providence, Rhode Island-based company earlier this month missed its earnings estimates, according to its first-quarter report.
As UNFI’s labor battles continue, local real estate deals involving the company have taken shape.
Centralia distribution center sale
On Monday, commercial real estate advisory firm Newmark Knight Frank announced the sale of the Centralia UNFI distribution center by Centralia DC LLC to Exeter Property Group. The site was developed by O’Keefe Development for UNFI on a 20-year lease term.
The sale price listed online via the Lewis County Assessor’s office was $195 million, and NKF noted the transaction “represents the largest single asset sale in the Pacific Northwest in 2019.”
The distribution center includes 606,795 square feet of dry warehouse/offices and 529,000 square feet of computer-controlled cooler/freezer space, along with a trucking maintenance and fueling facility.
“Centralia provides a tremendous centralized distribution locale for logistics tenants like UNFI who are looking to more efficiently and effectively distribute products to customers from Portland to Seattle, and throughout the Pacific Northwest. This net leased property represents an ideal long-term hold for Exeter,” said NKF co-head, US Capital Markets Kevin Shannon in a news release Monday announcing the sale.
Centralia DC LLC and O’Keefe Development are both owned by Tom O’Keefe.
“The UNFI Distribution Center represents the culmination of a unique partnership between the owner/developer (O’Keefe), the original landowner and project lender, (Benaroya Capital Company and Benaroya Holdings), UNFI, the Port of Centralia, and the City of Centralia,” said NKF executive managing director Bret Hardy in NKF’s news release.
“The project allowed UNFI to consolidate multiple regional facilities and more cost-effectively distribute food throughout the region. For Exeter, this represents a wonderful opportunity to acquire a brand-new western region industrial building, which allows for significant future expansion, and with a tenant firmly committed to the region for the long-term,” added Hardy.
Auburn property sold
One day after the Centralia sale was announced, another legacy Supervalu property was sold.
Bridge Development Partners said it had purchased an inactive property at 701 15th St. SW, Auburn.
Plans are to redevelop the site into a single, 206,155-square-foot flexible industrial building, Bridge Point Auburn 200.
“As part of its redevelopment plans, Bridge will remediate the environmentally challenged site to transform this once-desolate plot of land into an economically productive facility that will provide significant benefits to both future users and the surrounding community,” the developers announced in a news release.
“This property presents an extraordinary opportunity for us to provide much-needed industrial space to the booming Seattle region, which is continuously attracting users in the technology, e-commerce, shipping and creative industries,” said Justin Carlucci, partner of Bridge’s Northwest Region in the release.
An agent for CBRE Tacoma represented Supervalu in the sale.
UPDATE, DEC. 18: Those who wish to contribute to UNFI Tacoma workers’ assistance fund can send donations to Teamsters Local 117, c/o UNFI Hardship Fund, 14675 Interurban Ave. S. Ste. 307, Tukwila, WA 98168
This story was originally published December 18, 2019 at 6:00 AM.
