IKEA Napa Valley warehouse to close, 147 employees affected

The IKEA fulfillment center in the south Napa County city will close, according to a statement from the company.

“In order to provide seamless service to our customers, optimize our resources and position ourselves for growth, we’ve made the decision to consolidate our customer fulfillment network setup on the West Coast and close the American Canyon customer distribution center (CDC) when our lease ends in February 2025,” said the statement.

The center, which is not a retail store, is located at 1 Middleton Way in American Canyon. IKEA was the largest tenant of the development, known as Napa Logistics Park. Other neighbors include Amazon, Biagi Bros. and PG&E.

In 2017, after months of speculation about the tenant for the mammoth warehouse building, IKEA opened a distribution center in American Canyon. The 646,000 square-foot building stretches over 16 acres.

“We’re really excited about IKEA coming in,” and operating a distribution center to fulfill online sales orders, Ernie Knodel with Orchard Partners said at the time. Orchard Partners is the developer of Napa Logistics Park.

Initially, IKEA hired more than a dozen people for leadership positions, according to Knodel. IKEA then hired dozens of warehouse workers.

In part to help alleviate traffic congestion, IKEA planned to operate two shifts, with the first starting at 5 a.m. and ending at 2 p.m. The second would follow right after the first shift.

The IKEA departure means that 1 million square feet of commercial space will become available at Napa Logistics Park. Another building not connected to the Swedish home goods store, No. 4, totals 365,000 square feet and is currently for lease.

IKEA’s announcement of their impending departure is unfortunate, said Valerie Zizak-Morais, president/CEO of the American Canyon Chamber of Commerce, “but not entirely surprising given the planned conclusion of their lease next spring.”

The underlying business conditions of the Napa Logistics Park (and the broader Green Island industrial Area) remain stronger than ever, wrote Zizak-Morais.

The American Canyon Chamber of Commerce has wide-ranging connections with local businesses in the area and is convening re-employment opportunities, and “fortunately, opportunities abound nearby,” she wrote.

Brooks Pedder with CBRE is one of the commercial leasing agents that represents Napa Logistics Park.

The most likely tenant for that space is probably wine-industry related, said Pedder. “Case good wine storage is probably our strongest target market; and other logistics uses that want to tap into our local labor,” he said.

Some experts say Napa County suffers from a labor shortage. “But all over Northern California there are labor shortages,” said Pedder. “We have a pretty good regional labor pool in the Napa Solano area.”

There are an estimated 2,300 warehouse jobs in Napa County, reported the state Employment Development Department (EDD). According to the EDD, that number remained unchanged both year-over-year and from January to February.

Pedder couldn’t comment on IKEA's plans or any specific replacement tenants.

“But there has been and will be strong demand for these spaces,” he said. “They are state-of-the-art facilities. They have high ceiling clearance, excellent truck staging, and parking. There’s a lot of things about these buildings that don’t exist in other facilities.”

It’s a valuable piece of real estate. In late 2018, the IKEA warehouse sold for $91 million. The seller was DWF IV Napa Logistics Center LLC. The buyer was RAR2—Napa Logistics Park LLC.

The IKEA statement noted that the American Canyon Customer Distribution Center (CDC) “has played a crucial role in getting our products to our customers in the West, and we’re incredibly grateful to the co-workers who help make this happen. We understand the impact this decision has on our co-workers, and we’re committed to supporting them during this transition,” said the statement.

“The volume currently handled by the American Canyon CDC will be redistributed,” to other regional units,” said the statement.

According to a CBRE commercial leasing report, in the first quarter of 2024, the vacancy rate for industrial space in American Canyon stood at 1.3%. The average asking rate was $1 per square foot. The total vacancy rate for Napa city was 3% with an average of $1.20 per square foot.

“Vacancy has increased industry-wide,” said Pedder. “But Napa is still very tight by comparison. There’s just a limited supply of land and therefore a limited supply of new buildings. It’s not that easy to find entitled land that you can develop commercially in Napa County.” It took years to develop the Napa Logistics Park, he noted.

Pedder and his colleagues are already exploring new tenants for the IKEA space.

“We got nine or 10 months to find a replacement tenant,” he said. “We’re not too concerned.”

Other commercial space will also be available in the south Napa County city.

In March, the American Canyon City Council adopted a warehouse approval measure to approve the new Giovannoni Logistics Center in the city.

Development of the Giovannoni center is to take place on 163 acres of a 208-acre site in Green Island Business Park. The complex could ultimately have up to 2.4 million square feet of space.