Grocery chain Albertsons Cos. is looking to expand the size of its already-formidable distribution center holdings in Orange County and shed some big industrial properties it owns in Los Angeles County and Oregon.
The Boise, Idaho-based company, which runs 31 grocery stores in OC under the Albertsons name, recently filed preliminary plans with the city of Irvine to expand its Spectrum-area distribution center by an additional 203,113 square feet.
The existing Albertsons property, located at 9300 Toledo Way, currently runs 1 million square feet. It’s one of the four largest industrial facilities in the county and the largest in South OC, according to market tracker CoStar.
A time frame for the proposed expansion hasn’t been disclosed. Representatives of Albertsons executives could not be reached for comment.
There hasn’t been a warehouse or distribution center in excess of 200,000 square feet built in Irvine in more than a decade—a period that has seen the city’s rapid development favor other property types.
In many cases, particularly in the area around John Wayne Airport, existing industrial properties have been razed to make way for apartments and other development.
Irvine’s industrial base now runs about 22 million square feet. It was closer to 25 million a decade ago, according to brokerage data.
Change of Plans?
An expansion plan at the Irvine facility appears to mark a big shift for Albertsons’ local operations. The property’s long-term future as a hub for the grocer’s Southern California operations appeared to be in doubt as recently as two years ago.
The grocer was rumored at the time to be considering a consolidation plan that called for it to vacate the distribution center in Irvine. The center was one of 174 properties it acquired as part of a $3.3 billion deal for assets of Eden Prairie, Minn.-based grocery store operator Supervalu Inc. earlier that year.
Albertsons officials never confirmed that plans for closing the facility were in place; a spokesperson told the Business Journal at the time only that the company “was simply considering options” for the property.
The Irvine facility is on about 74 acres, near the southeastern edge of the former El Toro Marine base and the future campus of Irvine-based chipmaker Broadcom Corp. The industrial property has an assessed value of $84.6 million, according to CoStar records.
At the time of the 2013 speculation, Albertsons had also put its Southern California division headquarters in Fullerton up for sale, with plans to vacate the building.
That sales plan was later shelved, and Albertsons still occupies the 131,250-square-foot Fullerton building.
There are currently no plans to vacate the Fullerton office, the Irvine industrial facility, or another 1.2-million-square-foot distribution facility the company owns in Brea, according to sources familiar with the grocer’s local operations.
Safeway Sale
Another company that operates under the Albertsons corporate umbrella is taking steps to slim down the size of its distribution center holdings on the West Coast.
A portfolio of three distribution centers—including two in Los Angeles and another in Oregon—totaling about 3 million square feet were recently listed for sale.
The portfolio features centers used by Safeway Inc. and its affiliated companies. It includes a 78-acre site in Santa Fe Springs and a 92-acre location in El Monte, as well as 54-acre site in Clackamas, Ore.
The two L.A.-based properties represent “the largest industrial redevelopment and reuse opportunity in Southern California,” according to marketing materials from the Irvine office of JLL, whose brokers have the listing for the three properties.
Safeway would lease back the properties under a short-term deal, while the new owner of the properties completes the necessary entitlements for redevelopment, according to the JLL marketing package.
An asking price for the three facilities was not disclosed. JLL officials declined to comment about the portfolio sale.
A private equity consortium led by New York-based Cerberus Capital Management owns Albertsons Cos., following a string of acquisitions made over the past nine years.
Big Deal
Its largest deal took place earlier this year, when it completed a $9 billion acquisition of Safeway Inc.
That deal created the second-largest grocery-store chain in the U.S. behind Cincinnati-based Kroger Co.
Other grocery store brands that now fall under the Albertsons corporate umbrella include Vons and Pavilions. The combined operations of the company, totaling more than 2,200 stores, posted sales of $57.5 billion last year.
The combined companies operate 30 dedicated distribution centers in the U.S., according to regulatory filings.
