The 34,200sq m warehouse and 12,000sq m yard in Back Beach Rd — formerly called "D Shed" — is now under Fonterra’s charge and will be known as "Fonterra Port Chalmers".
The associated logistics operations was also sold to Fonterra.
Port Otago customer general manager Craig Usher described the signing as a "win-win for both parties".
"We have a long-term lease and commitment from our largest warehouse and container customer, and they have certainty that they’re able to continue to optimise their sites and any changes in their control."
It was a "key part" of securing Fonterra’s long-term supply chain and connection to Port Otago and Port Chalmers.
"It’s a good connection to the container business and provides underlying volume for a long period of time, allowing multiple parties to be able to plan and invest for the future."
The site would operate as a pack point for the dairy co-operative, and the 16 existing Port Otago workers would now be employed directly by Fonterra.
Mr Usher said the site had been used for packing Fonterra Edendale product for export from the get-go.
What had changed was that it was now a long-term lease and operational control had been handed over to Fonterra.
Leases of this length were not something you saw very often.
Contracts were often shorter — a design-build lease was usually not anything less than 10 to 12 years.
Fonterra had a long partnership with Port Otago, its first warehouse going up at Port Chalmers in 2001.
The signing of the lease strengthened that relationship beyond operational to "more strategic", Mr Usher said.
Port Otago chief executive Kevin Winders said the lease would allow Fonterra to run the site as another of its nationwide in-house distribution centres.
It would allow Port Otago to focus on its core business, while giving Fonterra control of the supply chain and warehousing operations "right to the wharf".
This allowed for increased opportunities to improve efficiencies and lower business costs, Mr Winders said.
In a statement, Fonterra global supply chain director Santiago Aon said the distribution centre played a pivotal part in the lower South Island supply-chain network.
The acquisition would not only benefit the co-operative, but customers and the community, too.
"This transition is part of our overall strategy to control operations at strategic sites," he said.
"Fonterra is committed to continue fostering collaboration with the existing teams at Port Otago and is working closely with on-site staff ensuring a smooth transition for all stakeholders."
