A massive regional distribution center for toy company Lego Group is on its way to Virginia, with the plant to accompany a $1 billion factory it's also building in the commonwealth.
The Danish company plans to invest $366 million to build and operate a 2 million-square-foot facility near Richmond. The project is a strategy used by other manufacturers — having a shipping warehouse in proximity to a factory — to cut down on costs.
Construction is expected to start later this year on the plant at 8800 Wells Station Road in Prince George. The goal is to have it operational via a third-party logistics partner by 2027. The location is expected to create more than 300 jobs.
Building the regional hub fits into Lego's strategy of locating distribution centers and factories where its products are physically made close to one another, and near major markets, to shorten supply chains and get goods to customers more quickly.
"The regional distribution center will bring greater flexibility to our network, ensuring we are well positioned to support long-term growth in the Americas," Lego Chief Operations Officer Carsten Rasmussen said in a statement.
The new distribution center builds on the company's growing supply chain after it opened a new factory in Vietnam in April and disclosed plans to expand three existing factories in Hungary, China and Mexico to meet future demand worldwide. The company opened its second regional distribution center within Europe in Belgium last year and plans to officially open its second such facility within Asia in Vietnam later this year.
Amid trade battles between President Donald Trump's administration and countries such as China, the White House said this month that some companies have looked to bolster their operations within the United States.
A spokesperson from Lego said via email that further information about the regional distribution center will be shared "in due course," but did not respond to a request from CoStar News asking how the company may be affected by tariffs on imported goods from China.
In its latest annual report, released in March, the company said it continues to closely monitor "inflation, trade limitations and tariffs, and their potential impact on the business."
Other companies also locate distribution centers in conjunction with or near manufacturing sites. Coffee giant Starbucks has its largest distribution center in York, Pennsylvania, where it said it also roasts more than 3 million pounds of coffee every week. Earlier this year, food and beverage company Nestle announced it was opening a factory and distribution center in Glendale, Arizona.
Lego also did not answer in its email response whether its other factories' products would get routed through the upcoming Virginia distribution center.
Lego expansion
A build-to-suit lease for the upcoming distribution center was signed with Crosspointe Commerce Center, a joint venture between Hillwood Investment Properties and the Silverman Group, Lego said. The companies did not immediately respond to an email request for comment.
The site is expected to support a future factory, which the toymaker said would be its first in the United States. That 1.7 million-square-foot plant is underway outside of Richmond and is expected to create more than 1,700 jobs after its completion. Last year, the company announced it appointed a joint venture between construction groups Gray and Hourigan for general contracting services for the factory.
Lego also uses a facility at 1600 Ruffin Mill Road as an external packing facility, according to its website. The company previously said such a temporary site would exist.
The future distribution center will be the second for the company in the United States, joining an existing facility in Fort Worth, Texas.
Virginia Gov. Glenn Youngkin approved a $2.53 million grant from the Commonwealth's Opportunity Fund to assist Prince George County with the project, according to a statement from his office. The company is eligible to receive other benefits from another grant program, it added.
Meanwhile, a Lego Discovery Center, a small version of the Legoland theme park, opened in Northern Virginia in 2023.