Sept. 28, 2023

Owens & Minor Inc., a Fortune 500 global health care company, will share a new building in Sioux Falls with Avera Health to create an integrated service center.

The 330,000-square-foot building will start site work this fall at Foundation Park.

Virginia-based Owens & Minor designs, manufactures and sources health care products. The company has provided medical supplies to Avera since 2012, and “having this key supplier in Sioux Falls will prove advantageous for both Avera Health and Owens & Minor,” Sara Henderson, vice president for supply chain at Avera Health, said in a statement.

“This project will result in a lot of shared efficiency and reduced carbon footprint as we distribute supplies to our numerous health care organizations.”

Owens & Minor is leasing 175,000 square feet and also will serve other regional health care clients from the facility. About 50 people are expected to work there.

Avera is leasing 155,000 square feet to create an integrated service center hub for managing and coordinating medical supply logistics.

It will house numerous Avera services, including:

• Centralized pharmacy services.
• Supply chain, serving as central distribution for supplies for Avera hospitals, clinics and long-term care centers.
• Biomedical engineering, the department that maintains medical capital equipment, including patient monitors, beds, diagnostic technology and more.
• Home medical equipment distribution center.
• Print shop.
• Courier operations.

For Avera, centralizing services aims to reduce cost and maximize efficiency, Henderson said.

“These services are currently housed separately at eight different locations,” she said. “Moving them to one center at Foundation Park will help us gain many efficiencies, reduce our cost to serve and leverage each of our departments’ strengths to serve our patients effectively across the entire footprint.”

Avera serves more than 72,000 square miles.

With Owens & Minor sharing the space, the two will build on their long-term supply chain relationship, both said. They just renewed an agreement for another 11 years.

The new facility means core product needs now will come from Sioux Falls instead of Minneapolis, bringing the medical supplies four hours closer and eliminating complications such as winter weather.

“As longtime partners of Avera Health, we’re proud to collaborate and support this exciting new phase of Avera Health’s supply chain growth, while also strengthening our ability to support health care throughout the region,” said Peter McCullough, senior vice president of operations for Owens & Minor.

Avera and Owens & Minor will lease the space from North Carolina-based Brookwood Capital Partners, which bought the 23-acre property from the Sioux Falls Development Foundation and is hiring an Atlanta-based general contractor to construct the building.

The infrastructure in place at Foundation Park, along with its proximity to interstates, “really makes it attractive,” said Joe McSweeney, a partner in Brookwood Capital. “And it’s the other tenants located there — FedEx and Amazon and other tenants. You see national tenants, and they love being around other national tenants because it’s a proven site.”

The land is “really served with utilities, and it’s ready to go, and I would credit the Foundation with that because they anticipated the demand and had the vision to design roads and start roads and bring utilities, so when a tenant comes along, they’re ready to close on the land and have everything you need there,” McSweeney said.

For the Sioux Falls Development Foundation, the deal is significant because it’s the first land sale north of the railroad tracks, said Dean Dziedzic, vice president of economic development. He compared it to the first logistics project at Foundation Park, now Lineage Logistics, which helped serve as a catalyst for future deals.

“Warehouse distribution has been very good for Foundation Park, and we’re excited by this latest project,” he said.

“Owens & Minor is a big player in the industry, and being able to accommodate Avera’s needs with medical suppliers I think is a good fit both for the park and for these organizations. We’re continuing to see steady interest from larger projects, so we’ve moved swiftly to add infrastructure north of the tracks and open up land for those new prospects.”

The city of Sioux Falls and the Development Foundation have delivered a streamlined process, McSweeney added.

“We’re based in Raleigh, and you never know when you go into a new market who’s who and how hard is the municipality and how long does it take for permitting,” he said. “This is our first experience there, so maybe it’s like that with every site, but it’s somewhat a breath of fresh air. Everybody has been super helpful and business-friendly. Not knowing a ton about Sioux Falls before this project, we’ve been impressed with the activity around there.”

The opening for the center is planned in spring 2025.