UNFI announced plans to close its Philadelphia Commerce Way warehouse, shifting distribution activity away from Philadelphia while consolidating and repositioning their distribution network.
United Natural Foods Inc. (UNFI) plans to close its distribution center in Northeast Philadelphia and move operations to another Pennsylvania facility, a move that will eliminate dozens of jobs and bring an end to the company’s use of the Philadelphia warehouse.
The closure is expected to take place in October, according to reporting by PennLive and the Philadelphia Business Journal. UNFI, one of the nation’s largest grocery wholesalers, has operated from the Philadelphia facility for more than two decades.
The 100,000-square-foot distribution center at 2722 Commerce Way is currently occupied by UNFI. The company signed its lease on the property in 2004.
The facility’s future became clearer last month when the property changed hands for $16.4 million. Property records identify the buyer as 2722 Commerce Realty LLC, an entity tied through Pennsylvania business filings to RushOrderTees, whose headquarters is located at the neighboring 2727 Commerce Way property. RushOrderTees has been identified by industry reports as the buyer, although the company has declined to comment on the acquisition.
The sale represents approximately $164 per square foot for the 7.3-acre property. Despite the transaction, UNFI’s existing lease extends through 2030 and includes an option to exit the lease in 2027.
UNFI’s decision to move its operations means the new owner will ultimately gain control of a strategically located industrial property without having to wait for the existing lease term to expire.
Consolidation of Distribution and Expenditures
The move is part of a broader effort by UNFI to adjust its distribution network. The company has closed several facilities in the region in recent years, including locations in South Jersey and Allentown, as it has continued to evaluate its distribution footprint.
The Philadelphia closure also illustrates the changing economics of industrial real estate in the region. The Commerce Way property sits in one of Northeast Philadelphia’s established industrial corridors, where demand for warehouse space has remained strong. The $16.4 million transaction follows a series of industrial property sales and new warehouse development in the Philadelphia market.
For UNFI, the move will shift distribution activity away from Philadelphia rather than eliminate the Pennsylvania operation. The company will continue serving customers from its broader Pennsylvania distribution network, including facilities in Allentown, Manchester, York, Harrisburg and Carlisle, among others. UNFI reported 55 distribution centers and warehouses across its network as of August 2024, including several Pennsylvania facilities.
The Philadelphia facility’s closure is therefore less a withdrawal from Pennsylvania than another step in the consolidation and repositioning of UNFI’s distribution network. For the local industrial market, meanwhile, the transaction puts a long-standing grocery distribution facility into the hands of a new owner at a time when well-located warehouse properties continue to command significant values.
The number of employees affected by the closure has been reported as dozens, although a precise figure was not available at the time of publication.