Industry Watch

Bigger is better: Blu Dot’s next warehouse, in Otsego

Blu Dot designs its real estate strategy

Needing ever more space, the fast-growing furniture maker gives itself room to expand

By Connor Nikolic

Many fast-growing companies need more room to grow into. But few are as hungry for space as Blu Dot, which designs and manufactures modern furniture for homes and offices around the world. Founded in 1997, the company will move from its current warehouse in Rogers, Minnesota, to a newer, bigger site in nearby Ostego this spring. Its experiences in real estate will prove instructive, perhaps, to others in need of new space. 
For a rapidly expanding business like Blu Dot, staying put is rarely an option. In April 2014, with one year left on its lease for the Rogers space, the company realized it was time to look for roomier accommodations. The current warehouse, bustling with workers and forklifts, is filled nearly wall-to-wall with hundreds of crates containing sofas, chairs, coffee tables, and more. 
“Because our current facility is almost completely full of inventory, we will be more organized and more efficient in the new, larger building,” says Craig Dansky, Blu Dot’s director of fulfillment operations. “And the additional space will allow us to scale our operation to support our growing sales.”
The company also wanted to stay close to its current site, partly to retain its current 60-plus employees. “We were looking for something close to our current facility, so we could keep the same workforce,” says Maurice Blanks, a co-founder of Blu Dot and its COO. “We didn’t want to move all the way across town and have to hire new people. So we were looking for anything within 20 or 30 miles of our current location in Rogers.” The Otsego site is about 5 miles away.
The company’s real estate search, helped along by Minneapolis-based Duke Realty, lasted only a few weeks — a remarkably short period. Blanks believes a similar search today would take much longer, given the growing demand in the Twin Cities area for industrial warehouse space. “[It’s] changed dramatically just in the last six months,” he says. “It’s a good time to be an industrial landlord right now, because there’s a lot of demand for space.” 
Josh Budish, who worked with Blu Dot on the Ostego transaction as vice president of leasing at Duke Realty, agrees. “It’s a competitive time to be renting space,” he says. “It’s not a renter’s market.” 
The new site, which will be used almost entirely for storing product, is a state-of-the-art warehouse facility with 150,000 square feet of space — nearly twice the size of Blu Dot’s current warehouse. It features 14 dock doors to speed up the loading and unloading of furniture, 50-foot column spacing (leaving plenty of room for forklifts to maneuver), and 32-foot clear heights for rack space.
Although Blu Dot won’t necessarily use all of the new space upon move-in this spring, Blanks recognizes the need to sign leases thinking about future expansion. “You can’t sign a lease on property just right for you when you move in, because your growth is just going to push you right out,” he says. “That’s always the challenge with a fast-growing company … you can’t sign one-year leases on 100,000 square feet.”
The move this spring is just the latest for Blu Dot, which started in Minneapolis with a mere 2,000 square feet in 1997 before upgrading to a space with 8,000 a few years later. Additional moves followed as various leases ended and the company found it still needed more space. In a few cases, it expanded upon existing space.
That’s an option again with the new warehouse in Ostego: Next door is an additional 116,000 square feet of space that the company could expand into. If the past is anything to go by, it too will eventually be flooded with Blu Dot furniture.