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I-39 LEADS THE WAY IN INDUSTRIAL DEVELOPMENT
Industrial developments reap the benefits of a central
location in the I-39 Logistics Corridor.
Misty Reagin
The Interstate 39 Logistics Corridor, which spans 14 counties
in two states, is rapidly becoming a hot spot for industrial
development. The corridor stretches 165 miles from Janesville,
Wisconsin, in the north to Bloomington-Normal, Illinois, in
the south and 65 miles from Sterling, Illinois, in the west
to Sycamore, Illinois, in the east. In addition to the six
interstates that intersect I-39 within the corridor, the transportation
infrastructure includes seven airports, six major rail lines
and barge ports along the Illinois River, says Roger Hopkins,
executive director of the DeKalb, Illinois-based I-39 Logistics
Corridor Association (LCA).
To help spread the word about the benefits associated with
locating in the area, the I-39 LCA — made up of about
51 members representing a variety of groups (from economic
developers to real estate developers, contractors, utility
companies and railroads) — recently held the I-39 Expo
at the Rosewood Restaurant in Rosemont, Illinois. Nearly 350
people were in attendance, and Heartland Real Estate Business
was there to learn more about this flourishing industrial
area.
During a panel presentation, Doug Scott, the mayor of Rockford,
Illinois, spoke about the cohesive public involvement within
the corridor. Cities and counties, which are typically in
competition to keep businesses in their respective areas,
are now making information available to other regions in the
corridor as a result of the LCA, Scott says. “It is far
different than it was several years ago because we are working
together to provide opportunities in this area.”
David Graf, dean of the college of business at Northern Illinois
University, called the corridor a “roadmap for higher
education.” He pointed to the many universities, private
colleges, community colleges and technical schools within
the corridor that offer a prime workforce for the companies
that locate there. Top recruitment resources include the University
of Wisconsin, Northern Illinois University and Illinois State
University.
Other members of the panel were Ronald Hounsell, vice president
of Long Grove, Illinois-based Tom Zosel Associates; Neil Palmer,
president of Elm Grove, Wisconsin-based Neil Palmer &
Associates; and Mike Slavish, director of real estate for
Beloit, Wisconsin-based Hendricks Development Group. Mark
Goode, principal with Riverwoods, Illinois-based Venture One
Real Estate LLC, moderated the panel discussion.
Hopkins, who also serves as executive director of the DeKalb
County Economic Development Corporation, and Goode created
the I-39 LCA in August 2000 to gather financial resources
to market the corridor. Previously, Hopkins was involved with
the Northern Illinois Automotive Corridor, which was solely
made up of economic developers. “We never collaborated
with developers, contractors or transportation companies,”
Hopkins says. As a result, the group was not making much of
an impact.
By creating the I-39 LCA from many different kinds of companies,
the group can now gather financing to produce marketing materials,
purchase advertising and organize trade shows, such as the
I-39 Expo. The financing comes from membership dues (to be
a member, a company must sign a formal partnership agreement
to pledge membership for a 3-year period at $500 per year),
and from special projects. For example, the I-39 LCA sold
exhibit booth sponsorships for the Expo.
According to Hopkins, Rockford, Illinois, is probably the
member with the largest budget. Rather than just marketing
on its own, however, the city is looking for cooperative marketing
efforts. “Bob Levin, who is executive director of the
Rockford Area Council of 100, talks about [the association]
as being a ‘coopetition,’ or a mixture of cooperation
and competition,” Hopkins says. “We have had success
because we recognized several years ago that the United Parcel
Service (UPS) Air Hub facility in Rockford, Illinois, was
a major marketing opportunity for us.”
That facility opened in the late 1990s. More recently, the
Union Pacific Global III Intermodal Facility opened in August
in the heart of the I-39 Logistics Corridor in Rochelle, Illinois.
The intermodal facility is designated primarily for international
traffic, especially for goods coming from the Asian Pacific
Rim being shipped via container and then distributed throughout
the Midwest. “Chicago is the third largest container
shipping market in the world — behind Hong Kong and Singapore,”
Hopkins explains. “A lot of the container loading places
in Chicago were built in the 1950s and 1960s on much smaller
parcels of land.” Now, many of those facilities are being
used to maximum capacity.
Probably most important to logistics or manufacturing and
distribution companies is that by locating in the I-39 Logistics
Corridor and using these types of facilities, they can avoid
all of the traffic associated with Chicago’s main thoroughfares.
“You can reach about three-quarters of the Midwestern
destinations — within about 400 or 500 miles — in
about 1 day’s drive without going through the congested
Chicago traffic,” Hopkins adds.
The best part about the corridor, according to Goode, is that
each area in the corridor will attract companies based on
their site selection requirements. For example, he says that
Rochelle has phenomenal benefits in terms of dual rail availability
and a low-cost municipal electric utility. DeKalb offers a
unique community perspective (the mayor has publicly stated
that he would like to see industrial growth expand by 50 percent
in the next 3 to 5 years).
The I-39 LCA has set some mighty goals to attract businesses
to the area. Most importantly, it wants businesses to consider
the corridor in 80 percent to 90 percent of all projects.
So far, a dozen or so projects are currently underway in the
10,000-square-mile I-39 Logistics Corridor.
MLG Development
Milwaukee-based MLG Development, a full-service real estate
firm, is currently developing a 700-acre project in Beloit
on the northern end of the I-39 Logistics Corridor. The Gateway
Business Park consists of 250 acres of single-family and multifamily
homes and a 450-acre business park. The company is developing
the project in a joint venture with the city of Beloit, and
it represents a major economic development initiative for
the city.
The city is even providing an approximately $20 million infrastructure
package through a tax increment financing (TIF) district and
through state and federal grants. The package includes infrastructure
such as a water tower, a sewer system and road extensions,
including two direct connections from The Gateway Business
Park to Interstate 90.
“We certainly see the advantages of being on this north/south
corridor from a manufacturing and logistics standpoint,”
says Andrew Bruce, executive vice president of MLG Development.
“We have lower utility costs than are typical in Wisconsin,
and payroll tax and labor costs tend to be lower as well.”
Since MLG Development is primarily a land developer, the company’s
primary motivation is to have land absorption and buildings
developed on the land. It plans to market the site to other
developers, which will, in turn, develop industrial facilities
for their clients. Bruce expects that there will be a mix
of build-to-suit and speculative developments on the parcels,
which range from 5 acres to 100 acres.
Venture One Real Estate
Venture One Real Estate, St. Louis-based Clayco and DeKalb,
Illinois-based DeKalb Associates have formed a joint venture
to develop Park 88, a 425-acre industrial park in DeKalb that
is currently one of the largest in the corridor. The site,
which is located east of I-39 and north of Interstate 88,
features lot sizes ranging from 5 acres to 50 acres. According
to Goode, the projected target building size ranges from about
300,000 square feet to 1 million square feet.
Currently, the developer is constructing roads within the
park, and has recently leased a 161,542-square-foot speculative
facility at Park 88 to Del Monte. “We are not building
speculative space; we are really looking at the park on a
build-to-suit basis,” Goode says. “Most people we
have talked to want specific buildings with certain bay sizes,
certain ceiling heights, and a certain number of doors spaced
a certain distance apart. We also have a Union Pacific (UP)
rail line in our park.” Goode adds that they can deliver
a build-to-suit in 9 to 12 months.
The approximately $200 million park offers build-to-suits
for purchase and for lease, and the entire project is scheduled
for completion within 5 to 7 years. When completed, Park 88
will have about 15 build-to-suit facilities.
According to Goode, large users wanting to be in the Chicago
area are currently trying to decide whether to locate in the
I-39 Logistics Corridor or in the Interstate 55/Interstate
80 corridor. “The more aware people become of the I-39
corridor during the next few years, the more I think the decision
will be made that it is a better location.”
CenterPoint Properties Trust
Oak Brook, Illinois-based CenterPoint Properties Trust is
developing CenterPoint Business Center, a 362-acre business
park in Rochelle, Illinois, west of I-39. Union Pacific is
CenterPoint’s marketing partner in the project, and the
two companies are primarily targeting companies that use intermodal
forms of transportation for build-to-suit developments. Typical
buildings will average 100,000 square feet to 1 million square
feet with 30-foot clear heights. The site provides the capability
to build up to 5 million square feet of space.
The companies are currently working through utility and infrastructure
planning and, according to James Ford, vice president of land
and rail development for CenterPoint Properties Trust, the
company anticipates spending about $75 million as a possible
overall investment. “A major key to our decision [to
develop the industrial park at this site] was the opening
of the UP Global III Intermodal facility, and the highway
and rail infrastructure,” Ford says.
DP Partners
Also in Rochelle, Reno, Nevada-based DP Partners, a national
industrial development company, is developing LogistiCenter
at Rochelle — a 300-acre industrial park that represents
the company’s first foray into the Chicagoland market.
DP Partners has partnered with the California State Teacher’s
Retirement System to develop the park, and Chicago-based Lee
& Associates is the listing and marketing partner in the
project.
LogistiCenter at Rochelle is located at the southwest quadrant
of I-88 and I-39, and about 2.5 miles east of the UP Global
III Intermodal Facility. According to Dennis Shaw, regional
development manager for DP Partners, the company expects to
build out about 5 million square feet of space within the
park. “It will mainly be a mix of warehouse/distribution/manufacturing
facilities,” he says.
The site plan is flexible to accommodate buildings as large
as 2 million square feet. However, DP Partners has laid out
a conceptual plan for buildings between 300,000 square feet
and 750,000 square feet. The park has access to the city of
Rochelle’s dual rail, which connects to the main lines
of the Union Pacific and Burlington Northern railroads.
According to Shaw, the dual rail service is important to rail
users because they can get a competitive price by negotiating
with both Union Pacific and Burlington Northern. “Sometimes,
the rail contracts are more costly than the real estate, and
if you are doing 4,000 or 5,000 cars per year, it can add
up to be significant cost savings.”
This advantage is one reason DP Partners chose this site for
the project. “DP Partners looks for property that is
reasonably priced with good highway access, infrastructure
and layout,” says Jeff Janda, principal with Lee &
Associates. “The intermodal access is also very important,
and these factors have driven the project.”
DP Partners recently got approval from the city to annex the
industrial park into Rochelle, and the company just announced
its first speculative building — a 570,000-square-foot
facility that is scheduled for delivery during the second
quarter of 2004. “We are marketing the overall park for
build-to-suit opportunities, but our commitment to this project
and to the city of Rochelle is to start the speculative building,”
Shaw says. “If we have success with leasing, we will
further consider building other speculative space throughout
the park.”
Janda anticipates that LogistiCenter at Rochelle will attract
three types of users. Logistics companies will be attracted
to the site because of its access to I-88 and I-39. Rail users
that have product delivered directly to the building via boxcar
and rail users that have the product broken down and delivered
via tractor-trailer also will be attracted to the site.
The Alter Group
By deciding to develop the Interstate Transportation Center
in the I-39 Logistics Corridor, Skokie, Ilinois-based The
Alter Group has moved back to its roots. Although the company
has been in Chicago for more than 50 years, it has focused
its attention on expanding nationally for the past 10 years.
“To come back to Chicago and say ‘let’s really
get into the big box arena,’ is something that we just
recently decided to do,” Gallagher says. The company
is also aggressively looking to build speculative product
in the inner-ring suburbs of Chicago.
The 200-acre park is located in the northwest quadrant of
the I-88 and I-39 intersection off of Route 38 and north of
the UP Global III Intermodal Facility. In addition, the company
has another 87 acres at the intersection of I-88 and Route
251 that may become part of the project at a later date, according
to Pat Gallagher, senior vice president of national development
for The Alter Group.
As part of a joint ownership structure, The Alter Group has
partnered with Milwaukee-based Black Earth, a land investment
company. “They bought this land on speculation,”
Gallagher explains. “We have come in to bring national
development expertise to the table.”
The companies are currently going through the entitlement
process and getting the infrastructure components installed,
including the sewer and water systems. “Our goal right
now is to get the project ready so that we can quickly address
any build-to-suit needs and then be able to deliver in a very
short period of time,” Gallagher says.
So far, The Alter Group has talked to several prospective
companies looking for build-to-suit facilities. According
to Gallagher, these companies want similar floor area ratios
and ceiling heights, numerous truck doors and trailer parking.
“All of these things were incorporated in the basic design
of the park, but we are tweaking them based on build-to-suit
needs,” he says.
Most facilities in the Interstate Transportation Center will
be 300,000 square feet or larger. The Alter Group plans to
target companies transporting goods from the Pacific Rim,
food product companies and logistics companies. The company
chose to develop the industrial park in the I-39 Logistics
Corridor because of the distribution options available through
the UP Global III Intermodal Facility; the ease of distribution
along the north/south corridor of I-39 as well as the east/west
interstates including I-88, I-80 and I-39; and the opening
of the UPS Air Hub facility in Rockford.
Janko Realty & Development
As part of his recipe for success, Mark Janko, president of
Peru, Illinois-based Janko Realty & Development, has decided
to build a 400-acre industrial park in Oglesby, Illinois,
on land that has been in the Janko family for about 20 years.
The Starved Rock Industrial Park is located in the southern
portion of the I-39 Logistics Corridor in the southwest quadrant
of the I-39 and I-80 intersection.
According to Janko, he decided to build an industrial park
on the land because of the available infrastructure. “The
Illinois River is close to the park, and the barge traffic
is a good, cheap mode of transportation,” Janko says.
“We are also only 35 miles away from the intermodal facility
in Rochelle.” Besides the area being perfectly suited
for an industrial park, Janko says that he also wants to bring
jobs to the area.
So far, Janko Realty & Development has completed an 8,000-square-foot,
a 62,000-square-foot and a 300,000-square-foot building in
the park. Janko hopes that several new distribution centers
that have recently located near The Starved Rock Industrial
Park — including Wal-Mart, which has started a distribution
center in a 1.2 million-square-foot facility in Spring Valley
— will help bring attention to the park.
“Our land is reasonable, part of our park is in a TIF
and our labor market is eager to start working there,”
Janko says. “So, we have a lot of good ingredients, but
we do need some growth.”
By locating in the I-39 Logistics Corridor, companies will
be able to transport goods via the interstate system to Milwaukee
and Minneapolis in the north; to Bloomington-Normal, Indianapolis,
St. Louis, and Kansas City in the south; to Detroit and Cleveland
in the east; and to Des Moines and Omaha in the west. While
these projects are certainly a good start to getting the I-39
Logistics Corridor on the map, the LCA wants the area to be
on every developer’s, contractor’s, broker’s
and economic developer’s list of viable places to locate
an industrial facility. With the LCA’s high degree of
collaboration among these different professions, and with
its regional approach, the association should not have any
trouble getting the I-39 Logistics Corridor on top of everyone’s
mind.
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