AJR Filtration has operated a manufacturing facility in St. Charles, Illinois, since 2001. But as the company, a manufacturer of dust collection, liquid and custom filter bags and cartridges, continued to grow, it needed more space. The challenge? AJR wanted to expand, but it didn’t want to move too far away from its St. Charles home and risk losing the skilled workforce on which it had long relied.
That’s where the corporate services division of Transwestern came in. This division, which works with companies in transition, helped AJR determine both what it needed from a new building and where that building should be located.
This was especially important with AJR, which was expanding its product offerings to include the Pillow of Health, an adjustable, washable and hypoallergenic pillow.
The solution? Transwestern identified a number of sites in and near St. Charles. The best option, however, was twice the size AJR needed. Transwestern solved this dilemma by bringing in a master developer, Venture One, to purchase the entire property, then carve out a portion of it for AJR. The company signed on for a new build-to-suit building of 180,000 square feet to house its manufacturing operations. The best news? Because the building is located in the same community, AJR can continue to employ its 500 workers, employees who have been critical to the company’s success.
Michael Marconi, managing broker of Transwestern’s Rosemont, Illinois, office, said that officials with AJR are thrilled with the expansion and location.
“Their employees aren’t easily replaced,” Marconi said. “They are skilled laborers specializing in AJR’s product lines, and as a result, a valuable asset to the company. AJR was looking for a site where they could keep this existing employee base. If they couldn’t find that, they were prepared to move to another location, including out -of-state-options. Fortunately, our site selection people were able to work with Venture One and the city of St. Charles to identify this land site and work out a deal that was good for the city and our client.”
This is far from the only success story to come out of the corporate real estate departments of the commercial brokerages working the Chicago-area market.
These busy departments work with end users — including industrial users — to help them find the most appropriate sites when they are expanding. They also help their industrial users qualify for financial incentives offered by municipalities, incentives that can make a previously unattainable plot of land affordable.
The commercial pros working in corporate real estate divisions will also help companies analyze their workforces to make sure that they are not overpaying on labor, always a huge cost for industrial users. They’ll analyze their supply chains and logistics plans to make sure that these industrial users are manufacturing and shipping their products in the most cost-effective way possible.
In other words, corporate real estate services help industrial users operate more efficiently and spend less money while doing so.
A success story in St. Charles
That’s exactly what happened with AJR in St. Charles. Transwestern worked with AJR to find a site in which they wouldn’t have to go through the stress and costs associated with replacing a veteran pool of workers. Transwestern’s corporate real estate division analyzed possible locations that wouldn’t drive away existing workers. After that analysis, AJR had a list of possible locations that wouldn’t cost them their employees.
Transwestern also worked with AJR to secure financial incentives. These were key: AJR needed dollars, for instance, to build a new road leading to their build-to-suit facility, Marconi said.
“We were able to navigate AJR through the incentive process,” Marconi said. “They did qualify for a lucrative tax-based incentive. In reality, that incentive was like cash to them. It helped make this project a possibility for them.”
Transwestern didn’t have to worry as much about AJR’s access to major transportation routes. Neither trucking nor rail was a major driver for AJR, Marconi said.
“As a corporate real estate services provider, you not only have to look at where your clients’ products are going, but also where their employees are based,” Marconi said. “Due to the volume of shipments coming out of AJR’s facility, proximity to major highways was a consideration, but ultimately not the deciding factor. Instead, it was the proximity to skilled labor that kept the company in St. Charles.”
AJR’s new building is 180,000 square feet, but the facility allows for flexibility. The manufacturer can expand the site in the future if its business should continue to grow.
“Corporate services is really about looking at your client’s needs as a whole and understanding them,” Marconi said.
Industrial and real estate services
The number of industrial users employing the corporate services divisions of commercial real estate providers is continuing to grow, Marconi said.
For instance, many industrial users don’t want to arrange the snow plowing, lawn mowing or other maintenance-related services that pull them away from the day-to-day operations of their business. A corporate services provider that also has a property management division can handle those tasks instead.
Then there is the data work that corporate services divisions provide. For instance, a corporate services division can help industrial users find those sites in which they will be most likely to attract the skilled workers they need.
“Downtown CBD users know where to find the best office workers. They just head to Chicago if they are looking for Millennials,” Marconi said. “Manufacturing is different. Where do you go to get skilled labor? That’s a difficult component. Just consider all the people that Amazon is hiring. You need to go somewhere where you can find the workers. You need a company to provide the analytics showing you where the employees are. You need a company that can help you with the logistics and employees.”
When working with AJR, this meant that Transwestern didn’t just concentrate on finding the company a new, modern warehouse space. Transwestern also contacted colleges that offered strong sewing programs. In case AJR did decide to move to Kentucky, Transwestern searched the state for shuttered plants located near skilled laborers who were looking for work.
Not only that, Transwestern analyzed the possible workforces to determine which ones were most cost-effective.
“What if you have to pay $4 an hour more on average for your employees and you have 400 of them?” Marconi said. “Now the money you might have saved on transportation is all gone.”
Marconi said that industrial users have grown to appreciate the value of corporate services. He said, too, that more industrial users are willing to invest in these services because they so appreciate the value that they provide.
“More and more industrial users when they go into a market are looking at all of these factors,” Marconi said. “Factors like the scarcity of good employees is on the minds of industrial users today. They are all becoming nimbler when it comes to finding the right workforce.”