Seventh Property Sale In Optimization Mandate
Global Food Properties (“GFP”), together with its local market partner, Colliers International-Minneapolis/St. Paul (“Colliers”) is pleased to announce the sale of a 75,496 SF former dry mixing plant in Brooklyn Park, Minnesota. The Seller is a multi-billion dollar private label food manufacturer, and this sale marks the seventh transaction in a focused cost reduction and efficiency campaign. To-date, GFP and its local market partners have eliminated over 900,000 SF of redundant space, freeing cash exceeding $15,000,000.
The Challenge of Thin Margins
Consistent with all the properties in this manufacturers portfolio, Brooklyn Park was immaculate, conforming to the most rigorous food and employee safety audits. The plant ran three production lines and seven packaging lines, producing shelf-stable rice and pasta mixes and entrees. For the products manufactured, the infrastructure was strong and finishes high, as was the efficiency of the 110 non-union workforce. The challenge, however, was the throughput limits of a 75,000 SF facility: If volume is the antidote to thin margins, profits on low-margin products is difficult to sustain in smaller plants.
Whether it be size, locations with freight penalties, or functional obsolescence, there is nowhere to hide in the plant when it comes to inefficiencies. Large and expandable buildings, linear runs with line-of-site production, and ceiling heights conducive to automation, continue to be the gold standard on the property side of the global food industry.
The Right Ingredients
As expected, GFP and Colliers were a great balance, able seamlessly to market to regional food manufacturers, as well as non-food local industry. We had an impressive roster of both food and non-food prospects, but in the end, the next-generation use will be outside the sector. But for the reasons outlined above, this was not unexpected, as the low margin food industry punishes inefficiency, beginning on the plant floor.
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