Business & Real Estate

Macy’s leases big chunk of former Campbell Soup plant for distribution center

Sacramento’s former Campbell Soup plant is transforming into a distribution center.
Sacramento’s former Campbell Soup plant is transforming into a distribution center. Sacramento Bee file

Macy’s Inc. signed a lease Thursday for a big chunk of the former Campbell Soup plant in south Sacramento.

The retail giant – which owns both the Macy’s and Bloomingdale’s brands – plans to retrofit more than 385,000 square feet of Campbell’s former warehouse space to distribute its wares to online customers and department stores, said Ryan DeAngelis, vice president with commercial brokerage CBRE in Sacramento.

“Primarily what they’ll be distributing there is their wedding business – their gift registry,” across the Western United States, DeAngelis said. He and his colleague Michael Lyons helped broker the deal.

Macy’s will spend $10.5 million to upgrade a portion of the sprawling plant, now called the Capital Commerce Center and owned by Hackman Capital Partners, a Los Angeles-based investment firm, Sacramento County said in a news release.

Hackman purchased the 1.6 million-square-foot former Campbell plant in 2013 after soup production ceased.

The Campbell Soup plant operated in south Sacramento for 66 years. Its closure cost the area 700 relatively high-paying jobs and further eroded the region’s food processing legacy.

While Campbell said the plant was outdated, Hackman cited its significant assets, including on-site water wells, inexpensive power and the ability to process massive quantities of water. Buying the plant five months after its closure, the firm said it would seek tenants in the manufacturing, warehousing and food processing sectors.

With Macy’s signing on, about 650,000 square feet – or half the usable space in the plant – is now spoken for, DeAngelis said. Other recent occupants include Orora North America, a company that manufactures and distributes cardboard boxes and shipping supplies, and Silgan, which produces metal and plastic food containers.

Macy’s will create at least 100 full-time jobs and the equivalent of 175 full-time positions including part-time workers, the county said.

The county said it competed with several locations throughout the country to land the Macy’s distribution center and agreed to expedite entitlements and provide incentives. County spokeswoman Karen Doron said she could not provide additional information about those incentives Thursday.

“This is the first step toward bringing those jobs back to the neighborhood,” said county Supervisor Patrick Kennedy, who represents the district that includes the former plant. “We’re just thrilled they decided to locate in Sacramento.”

Kennedy, who just took office this month, said he and his predecessor, Jimmie Yee, have been working for months on attracting Macy’s to south Sacramento. He declined to get into specifics about the incentive package offered to the retailer, except to say that the county would pay Macy’s a “revenue rebate” based on revenue and jobs created by the operation.

The incentive package will go to the Sacramento County Board of Supervisors on Tuesday for approval.

Macy’s said in the county press release that the distribution center is part of its strategy to speed delivery of goods to customers, many of whom are ordering online.

Garrick Brown, research director at commercial brokerage Cassidy Turley, said major firms are looking at Sacramento as a prime shipping site for e-commerce because of its proximity to the Bay Area, where warehouse space is limited and costs twice as much.

Companies such as Macy’s are trying to keep up with Amazon in providing speedy home delivery, Brown said.

“Everybody wants to have next-day shipping capability, if not same day,” he said.

Call The Bee’s Hudson Sangree, (916) 321-1191.

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