As downtown Chicago’s office market continues to struggle a full year since the start of the COVID-19 pandemic, the commercial market in the western suburbs keeps pushing forward full steam ahead. And not only is competition stiff among developers, contractors and brokers to land the next deal, individual municipalities and counties within the Chicagoland metro are competing against one another for investment.
Business is booming across the I-88 corridor and many of the cities with a presence along the route are getting in on the action. Which industries are making waves across the corridor? What are regional stakeholders doing to lure new investment to the western suburbs? And what are some of these suburbs already doing well and how can they stay ahead?
“From an industrial, distribution and warehousing perspective, in my opinion, it’s an absolute growth market for DuPage County and that corridor,” says Greg Bedalov, president and CEO of Choose DuPage Economic Development Alliance. “Industrial vacancy rates are hovering around 5% and normally, you don’t typically think of the I-88 corridor as a true industrial corridor.”
However, the ecommerce boom and its halo effect on suppliers and other related businesses has helped change the image of the I-88 corridor from one known more for suburban offices and corporate campuses to a diversified and thriving industrial region.
But it’s not just transportation, distribution and logistics moving in and leasing up space throughout the western suburbs. According to Bryan Gay of Invest Aurora, other industries such as manufacturing, food processing, data centers and even film production are also helping change the image of the corridor.
“We’ve had about two million square feet of industrial warehousing space that has been added to our marketplace over the last few years and a lot of that has been filling up in the last six to nine months,” Gay says of Aurora’s booming commercial segment. “We’re actively working on six to seven projects right now on attraction projects and the site selection process.”
Glanbia Nutrition, Sonova, FlexXray, and CyrusOne are just a few of the names Gay mentions who have either moved to or expanded their presence in Aurora in the last couple of years.
Gay adds that Aurora has witnessed a combination of reshoring of manufacturing and a healthy amount of foreign investment in the corridor, further indicating interest and demand for industrial space in the region.
But what is it about the I-88 corridor that’s attractive to these businesses? And if logistics companies are looking to build out last-mile fulfillment, isn’t the western suburbs still a long ways off from Chicago?
After Chicago, the western suburbs are home to the next three largest cities in the state: Aurora, Joliet, and Naperville. With this kind of population density clustered around I-88, there’s enough demand for last-mile distribution to these cities.
And it’s the people — particularly, the college-educated demographic and skilled laborers — who live in these communities that continues to attract investment, Bedalov says. The western suburbs and its talent pool are an important draw not only to businesses looking to move to the area, but it’s a key asset in keeping the Chicago metro as a whole, competitive against other national and international markets.
But another crucial component to DuPage’s success, and the continued growth along the I-88 corridor, is the tax advantages the region offers compared to Chicago.
“We’re competing with national and international locations; we’re competing with Chicago and Texas, we’re competing with Florida and California,” Bedalov says. “So what we try to impress upon the leadership across DuPage County from an economic development perspective is that right now if you compare DuPage to Cook, we have a distinct tax advantage over Cook County: our taxes are cheaper.”
Bedalov credits the stability — and predictability — of DuPage County’s tax structure as one of the region’s greatest assets in competing with Chicago.
And then there’s the infrastructure in the western suburbs. Like other areas of the Chicagoland metro region, the I-88 corridor is well connected to the region’s central business district and the numerous other industrial corridors that surround Chicago.
“From an economic developer’s perspective, it’s really more of a system, it’s not just a corridor,” Bedalov says of the interstate system that connects I-88 to I-355, I-290, I-294 and so forth. “So when we talk about I-88, I can’t talk about it without talking about the Western Access project and the improvements being made to the roads going in and out of O’Hare.”
Beyond traditional infrastructure, one thing that Aurora is doing differently is connecting its downtown business district to fiber. The city is in control of this major investment effort, laying down miles of fiber in hopes that it helps Aurora stand out in I-88’s crowded pack.
“In terms of our growth of with manufacturing, transportation and logistics, we’re seeing now more than ever that these big box warehouses being dependent on broadband and fibre optics,” Gay says of the city’s municipally-owned, 100-mile fiber optic network. “Access to fiber would have been considered a non-traditional utility 20 years ago, but it’s become a driving force for us now in addition to available workforce, water, electricity, and so forth.”
It would almost seem like the economic development professionals in the western suburbs have it easy — but does the region really sell itself? It’s not so simple, Bedalov concedes.
While DuPage County and many of the western suburbs offer lower taxes and cheaper land prices than Chicago proper, the I-88 corridor has continued to expand even further west towards neighboring DeKalb County, where there’s more available space and even cheaper land.
“If there’s a challenge DuPage county is facing right now, it’s that the county is mature and largely built out from an economic development perspective, the land prices are getting somewhat expensive relative to Kane, McHenry or DeKalb counties,” Bedalov says.
But there’s also maybe something of a public image issue that the western suburbs and I-88 corridor is contending with, Bedalov adds. For the region to remain viable and competitive, it needs to attract a younger workforce and families to invest in the area.
“We have to do more in the I-88 corridor and western suburbs to promote from a sales and marketing standpoint that DuPage County is no longer your father’s Oldsmobile,” Bedalov suggests. “We have an active nightlife, we have great arts and culture, and we need to do everything we can do to promote that so that we can start to embark on that emerging tech market.”
And the region’s science and technology credentials cannot be ignored. As the home to Fermilab and Argonne National Laboratory, the western suburbs has played an important role in the Chicago metro area’s reputation in cutting edge science and research. Bedalov even nods to Lucent’s move to the corridor in the ‘90s, which helped kick off a wave of subsequent development and relocation.
But, as Bedalov acknowledges, this all started 40 years ago. The corridor has matured and evolved throughout this time, and will continue to grow and change in the near future as more data centers and ecommerce distribution hubs move in.
However, a common thread that links the I-88 corridor’s past, present and future is that of manufacturing. But that well-worn image that many of the area’s edge cities have are changing as manufacturing changes. In addition to metal fabrication, you’ll see food processing and big data.
Or as Bryan Gay puts it, “Aurora is a community that was built on manufacturing, so it’s really in our DNA.”
This article also appears in the March 2021 issue of Chicago Industrial Properties.