Construction of Alaska Cold Storage Project Expected to Begin This Fall

Joe Jacobson and Rob Gillam
Joe Jacobson (left and Rob Gillam. Photos courtesy of McKinley Capital Management LLC.

A $200-million cargo and cold storage facility at Ted Stevens Anchorage International Airport that’s projected to take two to three years to complete, is now expected to begin construction in the autumn, a year later than initially anticipated.

The exact start of construction depends on when permitting is approved and all negotiations with tenants have been completed.

The joint venture of McKinley Capital Management LLC in Anchorage and Los Angeles industrialist Chad Brownstein should be in a position to break ground this fall, but it depends on having an anchor tenant ready to go, according to Joe Jacobson, vice president of private equity for McKinley Alaska Private Investment. Brownstein is the founder of Rocky Mountain Resources, which has amassed an industrial portfolio throughout the Mountain West.

Jacobson is overseeing development of what is to be 32.5 million cubic feet of warehouse space that includes state-of-the-art technologies from climate-control zones to a ground source heat exchange and an oxygen reduction fire-suppression system.

Phase one is expected to be roughly 190,000 square feet. Phase two is projected to include up to 525,000 square feet of quick cargo transfer and air-cargo storage.

McKinley Capital Management Chief Executive Officer and Chief Investment Officer Rob Gillam noted early on that one of the facility’s main purposes would be to aid global exports of Alaska seafood, one of the state’s biggest industries.

When complete, the facility is expected to serve as a cold-storage gateway between the Americas, Asia and Europe, further integrating Alaska into the global cold chain, Gillam said.

Both the permitting through the U.S. Army Corps of Engineers and discussions with many potential tenants are complex, time consuming and unpredictable, particularly regarding the Corps’ timing on permits, Jacobson said, in a status update in June. Much also will depend on the needs of whomever the anchor tenant will be, he said.

He added that the overall demand for cold storage exceeds that which is available, and that interest in such facilities is growing.

Anchorage’s role in trade between North America and Asia is not changing, as most of the goods moving through Anchorage are coming from Asia to North America. The bulk of cargo would move through Alaska between North, Central and South America and Asia, but it’s expected that more Alaska importers and exporters will take advantage of the facility to increase imports and exports via air cargo, he said.

Planning the Project

When the project was first announced in the summer of 2021, the plan was to begin construction that winter and for discussions with potential tenants to determine the specific size and features of each section of the facility. Those discussions are still in progress.

“There is always optimism going into any project that it will go faster than you think,” Jacobson said.

This one being on wetlands at an airport “involves dealing in a slow, conservative, deliberate manner,” he explained. “You always want to go faster, but this project is moving along nicely and we have a number of parties we are working with right now.”

The partnership has submitted its wetlands permitting application to the Corps. “We are in the process of getting our wetlands permit and other relative permits to begin construction in the fall,” he said. “Permitting takes longer than you think. There are always delays.” 

Tom Findtner, chief of public affairs for the Alaska District of the U.S. Army Corps of Engineers, said the Corps received a Section 404 permit application from the project managers on May 24 and sent a letter to the applicant requesting additional information on June 9.

“These details are necessary to continue the evaluation process,” he said. “Topics that need further clarification include the plan drawings, project description, plan alternatives, wetlands data and on-site PFAS contamination.”

“Once a complete application is in place, we will issue a public notice for the proposed project,” he added. “In accordance with regulatory guidelines, we will follow the required process to make a permit decision that balances reasonable development with the protection of aquatic resources.”

Still beginning construction this fall and building during the winter will be more economical, considering that this facility is to be built on wetlands, Jacobsen said, adding that if the ground is frozen, it would be easier to work.

Seafood processors in the Anchorage area note that when they are importing product from outside of Alaska, either domestically or overseas, that they have been able to store goods in cold-storage facilities in Los Angeles or the Seattle-Tacoma area. Both regions have numerous cold storage facilities, some of which also provide custom processing.

Alaska, though, has been notoriously behind in providing similar available cold storage, according to a manager at one of the smaller, long-term independent seafood processors in the Anchorage area. The processor also has has limited cold storage facilities on the premises.

For that reason, smaller importers have continued to utilize other West Coast storage facilities near airports and seaports, and then have product transported to Alaska when needed as less-than-containerloads.

Doug Thomas, the president, chief executive officer and co-owner of Bellingham Cold Storage in Washington state, said that for close to a year now his company’s facilities have been at capacity or near capacity due to the impact of the global COVID-19 pandemic and supply-chain backups in Oakland, Calif., Tacoma, Wash. and around the Pacific Rim.

More companies are looking for extra space because they are trying to make sure that their supply chain doesn’t get shorted because of lack of available inventory.

“This has put tremendous pressure on warehouse capacity in general, not just cold storage space,” Thomas remarked. He added that since the current supply of cold-storage space is not adequate, his company has been looking outside of its current area of operation, and is in preliminary discussions to expand into central Puget Sound.

Currently, Bellingham Cold Storage is in the process of assembling the necessary information for the expansion and will begin construction of new facilities within the next three to four years, although it could be sooner.

“We want to select the right location, the right property,” Thomas said. “Permitting and feasibility takes quite a while.”

While there is a significant amount of demand for seafood, there is also demand for space for other products. “There has been no drop in the demand on the seafood side of our business,” he added. “Seafood is a desired protein.”

Thomas noted that the requirements for handling seafood safely and properly have increased dramatically and companies that have figured out how to do this will be in higher demand. He added that Bellingham Cold Storage has had no issues with intentionally mislabeled seafood, including the illegal practice of mislabeling lower value seafood as higher value.

“We tend to try to attract customers who have the same core values as we do,” he said. “We don’t try to attract people who want to cut corners. We are not interested in those kinds of people.”