Hy-Vee Backs Off Plan to Build Minnesota Distribution Center

Hy-Vee Inc. has officially pulled out of a project to build a new distribution center in Austin, Minn., after more than a year of delays and much anticipation by the community.

The distribution center would have been the retailer’s first outside of Iowa. Hy-Vee currently operates distribution centers in Chariton and Cherokee, Iowa, with a third perishable operation in Ankeny, Iowa.

Despite the fallout, it does not appear that Hy-Vee is giving up on the Minnesota market by any means, having recently expanded its pharmacy presence in the state with the purchase of all 10 local Weber & Judd pharmacies and actively opening new stores. 

Pete Hosch, a Hy-Vee assistant VP, said the retailer is “stepping away from the project at this time” but is not saying it will never revisit building a facility in Austin, according to a report from the Austin Daily Herald.

Exploratory plans for the distribution center were first revealed in 2016, and the facility would have sat on 150 acres of land standing at 1 million square feet at the edge of the city, which is also home to Hormel Foods, according to The Des Moines Register.

At the time of the announcement Hy-Vee officials cited Austin’s “centralized location in the company’s eight-state territory interstate access as well as the community’s ample workforce” as the reasons behind its interest in building a facility there, according to a statement from Hy-Vee acquired by the Register.

Related:A Tour of Hy-Vee's Fast & Fresh Grocery-Convenience Hybrid

Hy-Vee, which had planned to build the facility in phases, never went through with purchasing the property. In November 2017, the retailer revealed that it would be delaying its plans, which had been set to break ground this year, and would need to reconsider the need for a third distribution center "within the next several years,” Tina Pothoff, VP of communications for Hy-Vee told the Minnesota Post Bulletin at the time.

While several Austin citizens were opposed to the facility, largely due to a perceived lack of transparency about the project from the city, Pothoff told the Post Bulletin that outcry was not a factor in the delay, instead citing its desire to focus on its then in the works Fast & Fresh concept, which saw its first two stores in Iowa this year, as one of the reasons.

Austin Mayor Tom Stiehm said in a statement obtained by the Daily Herald that Hy-Vee has been a great partner and the length of the project thus far “only [makes] the news that much harder to take.”  

“We’ll still be ready should Hy-Vee reconsider, but we know other companies will take note and I feel strongly there will be other projects that come our way because of the solid ground we put forward as a community,” he said. “We’ve shown businesses that we’re ready to partner with them on economic development ventures.”