Portions of the I-39 Corridor in North Central Illinois may technically be considered part of the Greater Chicago Metropolitan Area, but proponents of the burgeoning economic area tout its distance from the mega Midwestern city as one of its strongest selling points.
In 2002 Mark Goode, principal of Venture One Real Estate, began purchasing land in the DeKalb area. The idea was to find land suitable for distribution
firms that allowed them to bypass the heavy congestion in the Chicago area and have easy access to “free highways” throughout the Midwest. I-39, roughly 80 miles west of Chicago, was the key to achieving this goal.
“I-39 runs all the way from Madison (Wis.) to Bloomington (Ill.) and it intersects with all major East-West expressways in the Midwest,” says Goode. “It allows you to bypass the congestion in Chicago completely.”
While the benefits may have been clear to Goode, convincing potential tenants, and, more importantly, Chicago-area brokers, took some time.
“When we got involved in 2002, not a lot of brokers knew about the corridor,” he says.
To help solve this problem, Goode spearheaded the initiative to establish the I-39 Logistics Corridor Association, a group of municipalities and commercial real estate firms that now consists of 50 members. The group pooled together to fund logistic and economic studies regarding the corridor. The association helped legitimize the area as a business destination for major distribution operations. As the real estate market went through a boom in the past decade, major deals began to take place.
“Prior to the recession we had over 7 million square feet of space brought to the corridor,” says Janice McFadden, executive director of the I-39 Logistics Corridor Association.
McFadden says that activity in the corridor slowed down considerably during the recession, not only because economic activity was hurting, but also because projects in the corridor are generally completed on a built-to-suit basis. There is not much second-generation or speculative space available for lease.
“Firms that move here have to want new construction,” says McFadden. “But if you need to serve Wisconsin, Minnesota, and Missouri, our corridor is very enticing.”
Venture One’s Park 88, a 450-acre industrial park outside of Dekalb, has been very successful in luring big firms for ground-up construction. Retailer Target Corp. developed a 1-million-square-foot facility and Minneapolis-based 3M has a 401,000-square-foot facility as well. Of the original 450 acres, 285 remain available.
The biggest news to come out of the corridor in 2010 was 3M’s development of its second facility at Park 88. The firm broke ground in August, with Clayco acting as the general contractor, on a 650,000-square-foot distribution center. The firm will have the option to expand the property to 1-milion-square-feet if needed. The corporate conglomerate, which specializes in medical products, electrical products, and laminates, among others, also has 500,000-square-foot facility in a nearby location in DeKalb.
Another large deal to emerge in the corridor recently is the 250,000-square-foot built-to-suit facility for the Japanese company Nippon Shayro. The firm will break ground this summer in Rochelle, Ill. Nippon Sharyo is a major supplier of commuter rail cars and will serve clients like Metra and the City of Chicago from this new assembly facility, says McFadden.
While the market may not be labeled as robust, it has improved in recent months, making Venture One’s Goode optimistic for the next 12 months.
“It’s been slow for the last couple of years, but now it is rather active,” says Goode. “We need the larger companies to build new facilities and expand. I think they have to if they want to be competitive. 3M is evidence that firms are willing to expand.”
As the market improves Goode likes his position. Land is available along some portions of the I-80 corridor in the Chicago metropolitan area, but sites for new industrial product have become scarce otherwise, and, not to mention costly when compared to land prices along the I-39 corridor.
“There are very few land sites available for industrial development east of the Fox River,” says Goode. “It is hard to find a 50-acre land site. If you can’t build east of Fox River, where can you build? Firms need infrastructure and a large four-way intersection. The I-39 corridor is the next logical step.”