$40 million distribution center coming to Foundation Park

By Jodi Schwan

A $40 million refrigerated-food distribution center will be the first project built in Foundation Park.

The 205,000-square-foot full-service warehouse and distribution center will be owned by Win Chill LLC, a group of investors with ties to Sioux Falls-area development, transportation and logisitics.

The company is buying 54 acres with rail access in the development park, which is in northwest Sioux Falls near interstates 29 and 90.

“I can’t describe how significant this is,” said Dean Dziedzic, vice president of economic development for the Sioux Falls Development Foundation, which owns and is developing the park.

“We needed the anchor tenant to lead the way and initiate all the infrastructure.”

Win Chill includes investments from Legacy Developments and three other limited liability corporations as well as Freeze One LLC, which will provide management services for the facility.

“It really worked out to be a great partnership,” Legacy CEO Norm Drake said. “We’re not quite ready to talk about the customers yet, but we’ve had very, very strong and positive interest from several prospective clients.”

Increased demand from local and regional food manufacturers needing refrigerated storage combined with limited options regionally are driving the interest, he said. The Win Chill facility will included 7.7 million cubic feet of freezer and refrigerated capacity as well as blast freezing, tempering, material handling, and inbound and outbound rail service through BNSF Railway. The facility will be available for any trucking company to use.

Ground work has started, and interest from clients is driving an aggressive construction schedule. The plan is to open next spring.

Eight area banks recently combined to offer $16 million in financing to assist with infrastructure needs at the park.

The $5.7 million land transaction is the largest single industrial land sale in Sioux Falls history, according to Slater Barr, president of the Sioux Falls Development Foundation.

“Foundation Park was created for exactly this kind of project, requiring as it does a large site with rail service and excellent transportation connections,” he said. “Win Chill will have ample space to expand their operation as the company grows.”

Planning ahead

The building will be expandable to about 600,000 square feet, Drake said.

“And it is designed to provide better customer service and more effective service,” he added.

One unique feature is its QF+ In-Rack Freezing System, a blast-freezing technology created by Tippmann Innovations, along with high-density pallet storage and the ability to handle multiple truckloads of product daily.

“They’re the leader in this industry and have patents on their quick-freezing techniques,” Drake said. “They’ve been working closely with Gil Haugan Construction in the design of the building.”

The system will freeze pallets up to four times faster than traditional blast freezers while reducing energy consumption up to 50 percent, he added.

The building will use state-of-the-art loading docks in conjunction with high-speed doors within the warehouse to accommodate large volumes of refrigerated truckloads.

Win Chill expects to employ 30 to 35 people in its first phase.

“I like the distribution and warehousing model of the project,” Drake said. “It doesn’t make sense for these large customers to be building distribution centers. Their business is to make and manufacture products, where this facility provides a very unique opportunity at the intersection of two interstates and having rail service for export across the U.S. and internationally.”

Development catalyst

The project injects new energy into Foundation Park, now that economic developers can talk to prospects, with timelines for infrastructure established and an anchor user.

“All the infrastructure is going to be fast-tracked,” Dziedzic said. “Water, fiber (optics), sanitary sewer is all going in, and we’re going to build out rail connectivity this fall.”

The Sioux Falls Development Foundation bought the land from several farmers in 2015. The deal that became Win Chill’s project has been 18 months in the making, Dziedzic said. Other deals might come together sooner.

“The interest is fantastic,” he said. “I’ve met with multiple prospects within the last two weeks and have been able to commit to timelines. We’ve had people who wanted to acquire land from us, but we weren’t in the position to move forward with launching the infrastructure, so those are follow-up conversations I’ve been having.”

The trend has been businesses looking for larger parcels of land, he said.

“We’re seeing 80- to 100-acre asks for land.”

It’s not uncommon for megasites like Foundation Park to sit for a decade with no business activity, said Scott Stern, commissioner of the Governor’s Office of Economic Development.

“So I think the hard work, the effort, the risk that a number of parties were willing to take on this project is really coming to fruition with this first project,” he said. “When we’ve been out across the country, that’s one of the first entities we can discuss. We have a facility that can meet all your needs. Its sheer magnitude, the access to interstate, the rail capacity, those components really make that megasite a first-look opportunity for any major corporation looking to locate something in the U.S.”

Being able to offer the property puts South Dakota in discussions with projects that otherwise might not have happened, he said, adding the pipeline of activity at the state has grown significantly.

“And if there’s something that doesn’t fit there, we can put it at another location, whether it’s Sioux Falls or Brookings or Rapid City, but it gets us on the radar as a result of having that site.”

Access to a warehouse and distribution at Foundation Park also complements the state’s focus on recruiting ag production and processing businesses, Stern said.

“It’s such a clean project. It doesn’t come with a lot of wastewater demands, for example. But the ability to bring products in and ship it out anywhere in the U.S. is really pretty phenomenal. This could be a tipping point that could make the difference. That’s just another feature we can sell to ag processors.”

Making Win Chill’s construction timeline possible required a cooperative effort, Drake said. At an announcement of the project Friday, he thanked state and city leaders for coordinating the necessary road, infrastructure and funding work to make the land acquisition possible.

“This could not have been possible without the expertise and extensive resources of each and every one of my partners,” he added. “We fast-tracked this entire process so that we could meet a tight timeline to bring this project to fruition and online in an efficient and professional fashion.”

Stern agreed.

“The partnership transcends not only the relationship with the entities building this but with the city of Sioux Falls, the development foundation, the state, the banking institutions that stepped up with additional capital. That’s what makes economic development happen – the desire to work for the common benefit of what we can do for all those entities. That’s what made this project transformational — the partnerships that took place. There’s a lot of people that did all the right things to make this happen.”

$40 million distribution center coming to Foundation Park

The 205,000-square-foot full-service warehouse and distribution center will be owned by Win Chill LLC, a group of investors with ties to Sioux Falls-area development, transportation and logisitics.

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