In many ways, the I-39 Corridor’s success over the last year has been a reflection of a broader recovery in the U.S. manufacturing sector, says Eric Voyles, executive director of the Rockford-based I-39 Logistics Corridor Association and vice president of national business development for the Rockford Area Economic Development Council.
During 2013, the I-39 Logistics Corridor booked 5.9 million square feet of commercial space, representing a total capital investment value of $290 million, according to research compiled by the I-39 Logistics Corridor Association. Last year, the corridor closed 56 transactions averaging 105,000 square feet per deal, including 15 deals well in excess of 100,000 square feet.
“I think that we’re kind of a poster child for what’s happening in the U.S. industrial real estate market as we’re coming out of this recession,” Voyles said. “There is a return to manufacturing. Chicago is not dead when it comes to manufacturing. There still is a huge manufacturing base in Chicago.”
Of the I-39 Corridor’s 56 transactions in 2013, the manufacturing sector accounted for 49 percent or 2.9 million square feet, while the manufacturing-related logistics, transportation, warehouse and distribution sector accounted for 21 percent or 1.2 million square feet, according to the association.
“You’ve got a large number of companies that are continuing to grow and expand. As a matter of fact, 54 percent of the projects that were announced last year were expansions in our market,” Voyles said. “Our companies are choosing to continue to grow here, but we’re also attracting some new companies, which helps us diversify our marketplace.”
Examples of the I-39 Corridor’s recent success are plentiful.
In Rochelle, Ill., Coated Sand Solutions (CSS), a division of Frederick, Md.-based U.S. Silica Holdings Inc., acquired 35 acres at 1951 Stewart Road and built a new state-of-the-art sustainable 280,000-square-foot eight-story sand-processing plant, which opened in 2013.
According to CSS, Rochelle is the ideal location for shipping resin-coated sand because it is dual served by the mainlines of both the Union Pacific Railroad and the BNSF Railway.
“Coated Sand Solutions chose the I-39 Corridor because of the ability to integrate both the interstate system and the rail system,” Voyles said. “The I-39 Corridor is one of the few places in the entire Chicago market where you have an uncongested road system that connects with an uncongested rail system. We interconnect with so many of the class one rail lines, that you have tremendous options for the movement of goods, and many of these companies are choosing this market because of that ability to interconnect with multiple modes of transportation.”
Mark Goode, founding principal of Venture One Real Estate, said the I-39 Corridor’s transportation system attracts many companies to the area.
“From I-39, you can go south and hit I-74 and go east all the way to Columbus pretty easily and avoid the congestion in Chicago,” he said. “You can go to I-55 and cut southwest to St. Louis. If you go north, you can easily hit Milwaukee on I-43 and then go up to Minneapolis.”
In addition, CSS has hired all of its workforce for its plant within a 30-mile radius of Rochelle.
“If you’re a Midwest distributor or you distribute to the middle part of the country, (the I-39 Corridor) has very good access,” Goode said. “It has good labor and it has communities that are pro-development.”
Also in Rochelle, Salt Lake City-based Central Refrigerated Service Inc. acquired an existing 50,000-square-foot building on 13 acres at 1080 S. 7th St. and retrofitted it as a $1.5 million maintenance and dispatch terminal. As one of the largest temperature-controlled truckload carriers in the U.S., Central services the 25 million square feet of temperature-controlled warehouse space in Rochelle, primarily in the food-products sector. Since the new facility opened in the spring of 2013, the company has hired approximately 120 employees and plans to hire 200 more in coming months, according to the I-39 Logistics Corridor Association.
“The region out here has been very aggressive in making sure that we’re aligning our educational resources so that we have the ability to continue to supply skilled labor for these types of jobs,” Voyles said. “We’re not just pirating from the existing companies out here. We have the training institutions pumping out new sources of skilled labor.”
Another example of the region’s recent success includes Peru, Ill.-based Unytite Inc., a unit of Kobe, Japan-based Unytite Corporation, which acquired 25 acres in LaSalle for a new 120,000-square-foot manufacturing and office facility. The facility is located just south of I-80, west of the Flying J Travel Plaza on East 351 Road. A manufacturer of nuts and bolts for the construction and heavy-equipment industries, Unytite plans to begin construction this spring.
“These are bread-and-butter central and northern Illinois type projects that our workforce is extremely well skilled to handle,” Voyles said.
On the other side of the border, in Janesville, Wis., United Alloy Inc. (USI) has expanded its facility four times since 1999. In the most recent expansion, USI added another 112,500 square feet, bringing its total footprint to 200,000 square feet. The company is an integrated engineering and manufacturer of diesel tanks, generator frames, heavy-metal fabrications and weldments for the power-generation markets in North America.
“These are not small projects that are occurring out here. That’s what’s kind of exciting,” Voyles said.
Also, in Beloit, Wis., Universal Acoustic & Emission Technologies signed a long-term 106,000-square-foot lease at the Ironworks Campus with an additional 67,000 square feet for future expansion.
“We are completely renovating Ironworks into a state-of-the-art manufacturing facility that will meet Universal’s needs today with ample room to expand in the future,” said Mark Membrino, vice president of Hendricks Commercial Properties, owner/manager of the campus.
“These two projects are great examples of the manufacturing sector’s resurgence. The fact that they are expanding locally means that Rock County at the northern end of the I-39 Logistics Corridor has available and suitable land for expansion, a low cost of doing business, a skilled workforce and the supply chain manufacturers need to thrive and grow,” added James Otterstein, Rock County economic development manager.
Goode added that companies benefit from the region’s pro-development communities as well as its land availability.
“There are good incentives from the local communities for industrial companies that want to locate in that corridor,” he said. “They’re very supportive of development and there is land availability, which is important because it is getting more and more difficult to find larger sites closer in to Chicago.”
Voyles said many of the properties in the I-39 Corridor are development- or shovel-ready, adding that the communities along the corridor understand business.
“You can actually have a development plan reviewed and approved in less than 30 days so that you can begin construction in a very reasonable timeframe,” he said. “In some cases, communities will assign inspectors to a project. Part of their daily routine is stopping by to check on the process to make sure that anything that needs to be reviewed and approved is getting done. It’s that proactive approach that the communities have out here along I-39 that’s making it easier for projects to occur.”
