Massive Expansion Coming at Walmart Distribution Center

Story originally published in The Mankato Free Press.

MANKATO — Walmart’s already mammoth distribution center is going to grow nearly one-and-a-half times in size in a construction project about to get underway on Mankato’s east side.

An expansion topping 600,000 square feet will add nonrefrigerated food products to the distribution center that serves Walmart stores throughout Minnesota and other parts of the Upper Midwest. The existing 425,000-square-foot facility has been supplying frozen and refrigerated groceries to stores since 2015.

The new project appears poised to far exceed the $75 million price tag for the original facility. The site preparation work alone for the upcoming expansion has been valued at $37 million in a grading permit application filed with the city of Mankato.

“The actual building permit will follow this summer once the grading work is completed,” Mankato Community Development Director Paul Vogel said.

The building permit will cover the cost of the new structure plus all of the surrounding pavement, which totaled more than 1 million square feet of concrete in the original project, and is destined to be well more than double the price of the grading work. The machinery, robotics and electronics in what is anticipated to be a highly automated warehouse will push the value of the work even higher, said Ryan Vesey, business development director for Greater Mankato Growth.

“There’s probably going to be another 20-30% investment in the equipment,” Vesey said.

The original distribution center was a major driver of the largest construction year in the history of the Mankato area — $402 million in construction projects in 2015 in Blue Earth and Nicollet counties. Vesey expects the expansion could contribute to another record-approaching if not record-breaking year for construction in 2024, definitely threatening the $347 million second-place year of 2022.

“It’s interesting that Walmart will be part of two of the biggest blockbuster years,” Vesey said.

A long trip, with detours and delays

The upcoming project is the culmination of two decades of effort by local governments and GMG. Walmart’s first glance at Mankato as a possible site for a regional distribution center came precisely 20 years ago. And while the development was delayed and then downsized, this year’s project will bring the initial concept to fruition.

“The plans by Walmart for their distribution site conform to the overall project that was originally proposed in 2004 and approved by the Council in 2005,” said Vogel, who was heavily involved in the recruitment and negotiations process.

Walmart purchased the 150-acre site in the northwest quadrant of the Highway 14/Blue Earth County Road 12 intersection that year, publicly announcing details of the project the following April. Officials with the Arkansas-based retailer said they intended to build a $60 million to $100 million 880,000-square-foot facility to store and distribute both frozen/refrigerated food products and dry goods to stores in a five-state area. The project was expected to bring 500-700 new jobs to the local economy.

But even as the company began forking over about $500,000 a year in land payments, property taxes and special assessments for the Mankato property, it put construction on hold.

“They shared with us that they saw some economic headwinds coming,” Vogel said, recalling the company’s assurances that the project would not be canceled. “It wasn’t IF they would be constructing but WHEN.”

The Great Recession followed, and the start of construction was delayed until the spring of 2014. When the development finally began, it had become a smaller phased project, although Walmart officials were once again offering assurances.

“They told us at the time that they would be pursuing the dry box — or the area that is nonperishable — later,” he said.

This year’s expansion means not only that the original project will be fully realized, it will actually be larger than originally planned. Rather than 880,000 square feet, the combined buildings will total 1.025 million square feet, according to engineering plans dated March 29.

The new nonperishable food facility is slated for the land east of the refrigerated building and, when truck maneuvering and unloading areas are included, will stretch nearly to County Road 12 and to the westbound on-ramp to Highway 14. The two parts of the distribution center will be connected, making for what will likely be Mankato’s largest privately owned indoor facility. River Hills Mall, including anchor stores, totals less than 800,000 square feet.

The distribution center is just a portion, however, of the growth on Mankato’s northeast side that was spurred in part by investments in the road network by the city and Blue Earth County, aided by appropriations from state and federal governments. A key piece was the construction of a new freeway-style interchange at Highway 14 and County Road 12.

“Since 2005, approximately 900,000 square feet of industrial development has occurred in the area in addition to the existing Walmart distribution center and planned expansion,” Vogel said.

Fifth smallest to second biggest

A Walmart spokesperson reached by The Free Press Thursday said only that the company will be releasing more information about the expansion in coming weeks.

But it appears Mankato’s facility will be going from one of Walmart’s smallest to one of its largest. A report by MWPVL International — a supply chain, logistics and distribution consulting firm — listed Walmart as operating 50 food distribution centers in the United States as of the first quarter of 2024.

Only four of the 50 are smaller than Walmart’s current Mankato facility. If it is expanded to just over 1 million square feet as planned, the Mankato site will move into second place among Walmart food distribution centers, trailing only a 1.2 million-square-foot facility in Belvidere, Illinois, according to statistics in the MWPVL report.

The Mankato facility also appears to be serving Walmart stores in a broad region. While there’s a large food distribution center 193 miles east of Mankato in Tomah, Wisconsin, the nearest center to the south is 400 miles away in Moberly, Missouri. To the west, the nearest is 498 miles away in North Platte, Nebraska.

Walmart’s food distribution centers typically range from 850,000 to 1 million square feet and employ 750-800 “warehouse associates,” according to MWPVL.

Walmart said nine years ago that it would be hiring 400 workers for Mankato’s half-sized distribution center with wages starting at $16.25 per hour. As of Thursday, online job listings showed the Mankato facility offering an hourly wage of $26.70 for workers hired to fill a 4 a.m. to 2 p.m. shift, Tuesday through Friday.

Workers already in short supply

Traditionally, job creation was at the heart of most economic development work — something that has changed in the Mankato area and other places where a thriving economy and demographic trends have created a labor shortage. Vesey doesn’t believe, however, that the Walmart expansion plan will be seen as bad news by other employers seeking to fill job vacancies.

That’s because the often physically demanding work in a distribution center can attract younger workers who later progress into other jobs in the region.

“The warehouse work can be a good introduction into the manufacturing environment,” Vesey said. “… To an extent, it’s a stepping stone to filling some of those other positions.”

Plus, he said, the short-term competition for labor that comes with something like the distribution center expansion is largely offset in the minds of most business owners by the good news that the local economy continues to flourish. Walmart’s decision is also a demonstration of faith in both the Mankato community and in the quality of the workers and top managers at the distribution center.

“It’s just a combination of a great community and great leadership,” Vesey said. “… We’re just really excited to get this.”

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