When you think of I-80, it’s the industrial sector that usually stands out, given its reputation as one of the region’s most robust and resilient submarkets. But its prosperity also sets in motion a chain reaction of prosperity for various other businesses, including the multifamily and retail sectors.
Firstly, the recent influx of industrial development has significantly impacted the supply and demand dynamics of multifamily housing in the region, particularly along I-80. Colliers Executive Vice President Tyler Hague explained that the growth has been driven by major infrastructure developments and the arrival of industry giants like Amazon, which has caused substantial rent growth, often exceeding that of Downtown Chicago.
“The apartment business, like a lot of other sectors, is slow moving from the development side,” Hague said. “There’s been major announcements for the corridor, but the multifamily sector has struggled to keep up with the demand due to red tape and cost constraints, resulting in rent increases ranging from five to twelve percent in that submarket.”
Labor migration driven by industrial development also plays a pivotal role in shaping the housing landscape. Accessibility is key. The I-80 Corridor is easily accessible to various parts of Chicagoland, making it an attractive location for both employers and employees. And of course, investors are naturally drawn to regions where employment is abundant and growing, as they seek to align their investments with the availability of job opportunities.
Yet the rapid growth in employment has raised concerns about the pricing and affordability of multifamily housing. The predominance of older vintage properties and limited new developments have made housing more expensive, and because of this, Hague said many employees choose to live in Indiana—whether it be Highland, Schererville, Griffith—and commute to jobs along I-80, benefitting from lower taxes and housing costs while earning an Illinois wage.
The influence of industrial growth extends beyond housing, though—it spills into all other services and amenities. Retail businesses, in particular, are experiencing increased demand, thanks to the growing workforce in the region.
“It’s likely a big boom for the retail sector, especially fast food and restaurants,” Hague said.
The daytime population boost drives foot traffic to retail establishments, restaurants, and other local businesses.
The correlation between job growth and multifamily property development is evident, as well. Industrial expansion results in jobs, triggering the demand for housing near the workplace.
While the synergy between the two sectors has numerous advantages, it also presents challenges related to zoning, land use, and infrastructure development. Municipalities may face resistance from residents who oppose dense housing developments, but the economic benefits that multifamily properties and industrial facilities bring to an area are often underestimated.
“If you consider an industrial property that was once farmland and has now generated an additional one hundred and fifty job opportunities,” Hague pointed out, “that equates to one hundred and fifty more individuals contributing to local commerce by shopping, dining out, and frequenting retail establishments. The same principle applies to multifamily housing. The residents themselves become catalysts for the growth of the surrounding microeconomy. Contrary to popular misconceptions, apartment buildings are not just about transient housing; they primarily serve people seeking proximity to their workplace.”
All of this raises the question: What would happen if the industrial sector were to face a substantial downturn? The repercussions on multifamily development within the region would be far-reaching. Since developers prefer to invest in areas poised for growth, a stagnant or declining industrial sector would likely discourage new multifamily projects. However, Hague pointed out that the resilience of the apartment business shines through even in such circumstances. He noted: “There’s still a housing shortage in the region, which makes it a pretty stable place to invest.”
And so, the symbiotic relationship between industrial and multifamily development along I-80, and the rest of Chicagoland, for that matter, is a testament to the interconnectedness of various real estate sectors. As industrial growth continues to fuel job opportunities, multifamily housing adapts to meet the demands of a burgeoning workforce, a dynamic interplay not only transforming the housing landscape, but creating opportunities for retail and service businesses, as well.
