Trader Joe's coming to Middleboro

Trader Joe’s takes over large, vacant warehouse
By Christine Legere

MIDDLEBOROUGH - A sprawling warehouse built seven years ago off the traffic rotary here, from which delivery trucks have direct access to Interstate 495 and Routes 44 and 24, is already on its third tenant.

Trader Joe’s is the latest to take over the 123,000-square-foot space, recently abandoning its warehouse operation in East Bridgewater and subletting the Middleborough facility at 30 Commerce Blvd. for the next four years. Already, some are wondering whether the food store chain will enjoy more success there than its two predecessors.

The warehouse was originally built by Cirelli Foods Inc. in 2004 for $13 million to accommodate corporate offices, a cash-and-carry store, and distribution center, which family members had operated successfully in Brockton for six decades. Company officials at the time predicted the modern facility and prime location would allow Cirelli to achieve $100 million in yearly sales by 2010.

Instead, Cirelli Foods foundered financially following its move to Middleborough and was acquired in late 2010 by Perkins Paper Inc., a Taunton-based distributor. As part of the deal, Perkins signed a five-year lease for the warehouse, but Cirelli retained ownership.

George Cirelli, who worked for Cirelli Foods at its Brockton location and retired before it moved to Middleborough, said members of the family “were not happy’’ with the way the relocation turned out.

“I think it should have stayed in Brockton, since it had been there since 1946,’’ Cirelli said. He believes the location change lost the family some business. “I think that, and the economy going south, is what hurt them,’’ he said. “But none of us thought we’d ever see it close.’’

Middleborough Town Manager Charles Cristello said the state pulled back the tax incentives Cirelli received under the Tax Incentive Financing Program even before the sale to Perkins.

“The company didn’t meet the employment requirements they had promised,’’ Cristello said. That led the town also to withdraw its 20-year tax reduction deal with Cirelli.

Perkins Paper’s chief executive, Gary Perkins, said his company had believed Cirelli was bringing stronger sales figures to their deal.

“Normally when you negotiate, the other company will say their promised sales,’’ Perkins said. “We found out afterward they had limited sales by the time the deal closed, and they were on the verge of bankruptcy.’’

Jay Cirelli, an officer at Cirelli Foods, did not return calls seeking comment.

Perkins said his firm had planned to use the warehouse at the Middleborough location to accommodate the additional business picked up from Cirelli. As it turned out, there wasn’t enough business to warrant use of the facility. “We had expected to boost sales by $50- to $80-million,’’ Perkins said. “It turned out to be $15- to $20-million.’’

Perkins Paper decided to shutter the Middleborough warehouse, though it still had to pay the rent to Cirelli, and move its remaining assets to its home base in Taunton. It has kept the 17,000-square-foot cash-and-carry store open in Middleborough as it had promised, but that has been the company’s only involvement with the property. The store has continued to operate under the Cirelli name.

Now that Trader Joe’s is taking over the warehouse, Perkins will shut down the cash-and-carry store.

Cristello said that loss is unfortunate. “That was a nice amenity I’m not sure Trader Joe’s will offer,’’ he said.

The deal with Trader Joe’s doesn’t mean Perkins is in financial trouble, asserted its chief executive.

“We thought the purchase of Cirelli’s was going to be a home run, but it turned out to be a single,’’ Perkins said. The company has acquired 20 other firms over the last 20 years.

The sublease with Trader Joe’s relieves Perkins Paper of its five-year lease responsibility for the facility, although the company will again be asked for payments if Trader Joe’s bails before the lease runs out.

A Trader Joe’s representative said she could not comment on the move, because it’s against company policy.

Middleborough Board of Selectmen chairman Alfred Rullo said local officials viewed Cirelli’s move to Commerce Boulevard as an economic boon for the town, since they hoped other businesses would follow. The expectation has been met, to some extent.

“The industrial park isn’t built out completely, but it’s doing well in this economy,’’ Rullo said. “Compass Medical is the newest business to open, and we have a large electronic firm there. We were sorry to see Cirelli close, but it’s nice to see another company with a good reputation like Trader Joe’s come in and take over the warehouse.’’

Middleborough Assessor Barbara Erickson said the Cirelli property is valued at just under $11 million. “Based on this year’s tax rate, the town should get about $152,000 in property taxes,’’ she said.