Summary
A 60-acre site was purchased at 30% of market-rate – saving 70% on land.
Colliers negotiated incentives and expense reduction of $6.6 million that included permit fees, the extension of utilities, property tax abatement, sales tax rebate on construction materials, relocation assistance for management, and funds for recruiting, hiring, and training.
Incentives and expense reduction equaled 16% of the total project investment for the new Texas Distribution Center.
OBJECTIVE
Aldi’s Texas expansion began with its retail footprint in Houston. Over a five-year period, Aldi planned 93 new stores and a 540,000-square foot food-grade distribution center was required in Houston, including dry, refrigerated and freezer storage areas.
CHALLENGES
Despite the national recession 2008-2010, Houston maintained strong economic growth due to the oil “boom” and led the country in job growth in 2010 and 2011. Good distribution sites were hard to find, especially those central to the metro area from which it would be cost efficient to service retail stores. Land costs were high, usually between $3.00 and $5.00 per square foot, much higher cost than Aldi had budgeted for the project.
SOLUTION
Colliers Site Selection Services conducted an exhaustive search of sites in the greater Houston area for Aldi’s Texas expansion. Ten viable options were identified and inspected with Aldi leadership, and five were selected for more in-depth analysis and due diligence. Colliers completed a detailed labor analysis, eliminating two (2), which failed to meet the client-defined labor union profile. A 10-year Investment and Operating Cost Analysis was completed comparing the remaining three (3) sites on:
- Total capital investment for land, site development and building construction
- Wages and benefits, and the character of the workforce
- Real estate, personal property and inventory taxes
- Utility expenses
- Outbound transportation costs to each store
Two sites were selected for real estate and incentive negotiations.
