Popular grocery store chain Trader Joe's is building a gigantic distribution center in a desert city north of Los Angeles as grocery sales are expected to keep growing after the pandemic boosted demand.
The Monrovia, California-based grocer bought a roughly 117-acre development site in Palmdale, a city roughly 60 miles from downtown Los Angeles, for about $15.8 million, according to a statement by GFI Realty Services, which was involved in the deal. That's where Trader Joe's is building a roughly 1 million-square-foot distribution facility that it expects to open in 2024.
The facility will be Trader Joe's largest in the United States, according to CoStar data. A representative for Trader Joe's didn't respond to an emailed request from CoStar News to comment on why it's opening the giant facility.
The next largest Trader Joe's distribution center is in Irving, Texas, where it occupies roughly 728,000 square feet, CoStar data shows. The company has more than 540 U.S. grocery stores and is "among the fastest growing" supermarket chains in the country, according to a company statement.
The new facility will be Trader Joe's first in Los Angeles County, according to the GFI statement. The grocer has other similar facilities in Fontana and Stockton.
The groundbreaking comes as U.S. grocery retail sales are expected to grow 5.6% in 2023 to $1.5 trillion, according to Supermarket News. That comes after the pandemic's early months fueled demand for grocery stores due to restaurant and other eatery closures.
Trader Joe's is the latest grocer to open a massive U.S. industrial warehouse. WinCo Foods is planning to move into a 1.1 million-square-foot warehouse in Ellensburg, Washington, roughly 100 miles southeast of Seattle.
Multiple Buildings
The Palmdale Trader Joe's facility is expected to feature an 827,000-square-foot hub building, a 211,000-square-foot freezer building and a 6,000-suqare-foot accessory building, according to a statement by the city of Palmdale. Trader Joe's expects to employ roughly 1,000 people at the distribution facility.
Palmdale has about 169,000 residents that largely commute out of the city for work. Only two companies occupy more than 150,000 square feet of industrial space in the city: Lockheed Martin and Northrop Grumman, according to CoStar data.
In fact, there's only one industrial property that's more than 1 million square feet in Palmdale, according to CoStar data. That's the 1.7 million-square-foot Lockheed Martin facility at 1011 Lockheed Way.
Trader Joe's likely selected Palmdale for its distribution facility due to the low cost of land in the desert city, said Rafael De Anda, associate director of market analytics in CoStar Group's Los Angeles office.
The Antelope Valley industrial market, which includes Palmdale, has a 2.2% vacancy rate, lower than the greater L.A. average of 3.7%, according to CoStar data. The market's average rent is $16.28 per square foot, lower than the greater L.A. average of $19.16 per square foot.
For the Record
GFI Realty Institutional Advisory's Joshua Peck and Susan Annis were involved in the deal.