Food distributor gets bigger

Hey there, time traveller!
This article was published 18/01/2010 (5928 days ago), so information in it may no longer be current.

One of the province’s largest food distributors has been swept up in the building boom in southwest Winnipeg.

Sysco Food Services of Winnipeg is in the midst of a $20-million, 100,000-square-foot expansion of its warehouse/office complex at 1570 Clarence Ave.

The project, which got underway last July and should be complete this summer or fall, will nearly double the size of its current 131,000-square-foot facility.

Sysco Winnipeg, part of the Houston-based Sysco Corp., distributes food and non-food products to more than 2,000 commercial customers in Manitoba and northwestern Ontario, including restaurants, hotels, resorts, golf courses, universities and colleges.

Sysco Winnipeg president Kim Doherty said the expansion was necessary because the company outgrew its facility about five years ago, and its business volumes have increased significantly since then.

Among the options it considered were selling the Clarence Avenue property and buying a bigger building elsewhere in the city, or selling it and building a new facility.

“But when all was said and done and we looked at all of the economics… it made the most sense to stay here and expand,” Doherty said.

The commercial real estate agent who worked with them at the time, Harry DeLeeuw of Shindico Realty Inc., said the company made a wise decision.

DeLeeuw said the Fort Garry area has become even more desirable as a business location because of the explosion in retail and residential development in the southwest quadrant of the city in the last 10 years. People want to work near where they live and shop, and a lot of people now live and shop in southwest Winnipeg.

In addition to all the new retail and office buildings that are being built, DeLeeuw said a number of older buildings in the area also have been upgraded or converted to other uses in recent years. A good example is the 56,000-square-foot warehouse on Buffalo Place that National Leasing purchased and spent about $8 million on converting into its new corporate headquarters.

Doherty said the company also likes Fort Garry because it has excellent transportation links and many of its 300-plus employees live in the south end. Company officials worried that if Sysco moved to another part of the city, it might lose some of those workers.

Officials also liked the fact that property values in the area are increasing, and are likely to continue climbing because of all the development taking place. So Sysco should have a better chance of recouping its investment if it ever decides to sell.

Wayne Johnson, a commercial and leasing specialist with Royal LePage Dynamic Real Estate, who publishes a twice-a-year report on commercial real estate transactions and rental rates in Winnipeg, agreed property values are climbing. But he said the company would have to wait quite awhile to recoup all its money.

That’s because it spent about $200 a square foot ($20 million divided by 100,000 square feet) to expand the building, and the going rate for good-quality, used industrial space right now is about $60 to $70 per square foot.

“So it will take awhile for the market to catch up,” Johnson said, although he noted a portion of the new space is office space, and that can fetch up to $200 a square foot.

Project manager Dave Derksen said having all that space will not only enable the warehouse staff to work more efficiently — they won’t have to move products around as much — but it will enable the company to consolidate all its local operations under one roof.

Right now, it has about 30 office employees working in leased space on Buffalo Place, and its transportation department works out of a trailer on the Clarence Avenue site.

Doherty said the extra office space at the front of the building will enable it to offer additional services to its customers, including more cooking classes for the employees of restaurant customers, and more sales-and marketing sessions.

Know of any newsworthy or interesting trends or developments in the local office, retail, or industrial real estate sectors? Let real estate reporter Murray McNeill know at the e-mail address below, or at 697-7254.

murray.mcneill@freepress.mb.ca

Chew on this

Details about food distributor Sysco Winnipeg and its expansion:

What kind of company is it? One of the province’s largest food distributors, distributing products to more than 2,000 corporate customers in Manitoba and northwestern Ontario, more than half of which are restaurants. It carries more than 7,900 products.

How many people does it employ? More than 300 in Winnipeg and another 30 in a satellite operation in Thunder Bay.

How long has it been here? Since 2002, when Sysco Corp. purchased SERCA Foodservices (including its Winnipeg operations) from Sobeys Inc. But SERCA’s roots in Winnipeg dated back to 1885.

How long has it been at its current location? Since 1993.

How big is its existing facility? About 131,000 square feet.

How much space is being added? About 100,000 square feet — about 23,000 square feet of office space and about 77,000 square feet of warehouse space.

What kind of warehouse space? It includes more than 21,800 square feet of dry-storage area, more than 8,500 square feet of cooler-storage area, and more than 12,200 square feet of freezer-storage area.

What else is being added? More than 11,500 square feet of dry-dock and cooler-dock area.