News Article | 3/10/2004

Stater Bros. Moving To Norton Site

Riverside Press Enterprise03/10/04

STATER BROS. MOVING TO NORTON SITE SAN BERNARDINO: The grocery’s consolidation will boost the former base’s redevelopment.

By PHIL PITCHFORD and ADAM EVENTOV / The Press-EnterpriseStater Bros. Markets is in the final stages of negotiations to consolidate its distribution system and company headquarters at the former Norton Air Force Base in San Bernardino, where company President Jack Brown has scheduled a news conference for Friday. The supermarket company, headquartered in Colton, has been negotiating with Hillwood, the Dallas-based firm that serves as the base’s master developer, according to sources close to the negotiations. The 157-acre project would be the largest development at Hillwood’s new industrial park, dubbed AllianceCalifornia. Stater Bros. is the Inland Empire’s largest private employer, with 12,600 of its 14,400 Southern California workers based in the two-county area. Brown has said the new facility would employ about 2,000 people, an increase of about 400 jobs. “It’s important for San Bernardino, because it shows now a growing economic base there,” Inland economist John Husing said by phone Tuesday. “You really are now beginning to see real life out there. This completely confirms the viability of that site.” The company is expected to consolidate its distribution system, now spread in several buildings in and around Colton, with a headquarters at a three-building campus at the former base. The 1.6 million-square-foot project, which could be expanded to 1.9 million square feet, would have a building for frozen and refrigerated items, a second building for dry goods, an office building for the company’s corporate headquarters and parking for employees and company trucks, according to real estate industry officials. Park taking shape The project would be the third developed by Hillwood at the former base. The company has built a 650,000-square-foot distribution center for Kohl’s department stores on Mill Street and is building a 1 million-square-foot facility for toy maker Mattel north of the proposed Stater Bros. site. The 1.25 million-square-foot, 40-acre Mattel distribution center was estimated to cost $30 million. The Stater deal, which involves more land, is estimated to cost in excess of $100 million, according to industry officials. Neither Stater Bros. nor Hillwood officials would comment on the deal. Brown said in mid-January that he would pick a site for a new company headquarters and distribution center within 60 days. The company’s public relations team said Brown would not comment until Friday, but he has asked friends of the company and media to join him at the San Bernardino International Airport terminal. The site emerged as the company’s favorite during several months of negotiations between Stater Bros. and the Inland Valley Development Agency, a group of local governments that oversees the base’s transition to private development. The two sides recently have been discussing land south of Harry Sheppard Boulevard and east of Tippecanoe Avenue. The Stater Bros. project will be among the largest distribution centers in the Inland Empire, according to Mary Sullivan, regional manager of research and client services for Grubb & Ellis, a commercial real estate brokerage. Target, Costco and Kmart each have single buildings of about 1.5 million square feet. Wal-Mart has more than 3 million square feet of industrial space leased or owned throughout Riverside and San Bernardino counties. With the development of AllianceCalifornia, future truck traffic around the former base is a major concern for San Bernardino city officials. The city plans to widen Tippecanoe Avenue once an In-N-Out restaurant is relocated in the next year, but the on- and off-ramps at Tippecanoe and Interstate 10 are more problematic. Caltrans is responsible for the interchange, but state officials have told the city that they do not know when they will get the funding for the project, said Colin Strange, project manager with the city’s Economic Development Agency. Colton bypassed San Bernardino’s gain will be a loss for Colton, which was unable to compete for the project. “It makes sense for him (Brown), rather than being scattered throughout Colton, to have one area, one place to do his business out of,” City Councilman John Mitchell said. The city tried for years to find a suitable site to keep Stater Bros. in town but was blocked by the federal government’s efforts to protect the endangered Delhi Sands flower-loving fly. “We’ll be sad … to see them leave,” Mitchell said. “They have been very good family members with the city.” These are heady days for Stater Bros., which has been in Colton for 55 years. Parent company Stater Bros. Holdings Inc. reported net income of $34.6 million from Oct. 1 through Dec. 31, the first quarter of its 2004 fiscal year – nearly 1,100 percent more than the $2.9 million reported during the same period last year. The company’s markets were the main option for Southern California shoppers who wanted to honor picket lines during the recent strike and lockout of grocery workers at competitors Vons, Albertsons and Ralphs. Both the San Bernardino Economic Development Agency and the Burlington Northern Santa Fe Corp. anticipate that the project will not need a rail spur brought to the base for the Stater Bros. project. The railroad, which has tracks that pass by Stater Bros.’ warehouses in Colton, said the grocer was not a customer, according to Lena Kent, spokeswoman for the railroad.Founded: In 1936 by twin brothers Leo and Cleo Stater. Supermarkets: 157 as of December 2003, including 47 in San Bernardino County and 41 in Riverside County. Employees: 14,400. Headquarters: Colton. Sales (2003): $2.75 billion. Ownership: Held by La Cadena Investments; Jack Brown (left) is majority owner and controlling partner, voting 100% of the stock. Leadership: Brown is board chairman, president and CEO.