Temecula food distributor buys Menifee warehouse for $40.5M, will spend $25M on cold conversion
Southwest Traders, a Temecula-based foodservice distributor, has closed a $40.5 million purchase of Gateway at Menifee, a 229,934-square-foot industrial building at 33520 Zeiders Rd., according to ConnectCRE reporting on the Colliers-brokered deal. The buyer plans to invest about $25 million more to retrofit part of the building into a refrigerated distribution center — bringing total commitment near $65 million on a single owned facility.
The timing inverts the prevailing IE warehouse story. Commodity dry-box space is soft and getting softer: brokerages put first-quarter IE industrial vacancy between roughly 8% and 10%, with Colliers counting more than 53 million square feet sitting empty and average asking rents down close to 39% from their 2023 peak. For a landlord, that glut is the problem. For an owner-user buying its own building, it is cheap entry — the soft market is what makes a $40.5 million acquisition pencil.
What Southwest Traders is buying its way into is a different, tighter segment. Refrigerated distribution is far costlier to build than dry box and remains structurally undersupplied even after a national overbuilding wave pushed cold-storage vacancy to a two-decade high near 7% at the end of 2025. The response across the sector has been a shift toward ownership: a record 31% of cold-storage sales went to end users in 2025, triple their share a year earlier, as operators choose to buy and convert rather than lease. Upgrading existing space costs meaningfully less capital than ground-up cold construction, which is the lane Southwest Traders is taking.
The operator fit is clean. The company has run dry, fresh, frozen, and minus-20-degree distribution since 1977, supplying quick-serve restaurants, coffee shops, and a heavy roster of ice-cream and frozen-yogurt accounts. Added owned cold capacity in Menifee gives a growing food distributor more controlled throughput in the segment its customer base actually demands — and does it by turning the corridor's biggest real estate weakness into the thing that paid for the expansion.