Construction began this summer for one of the largest industrial projects to break ground in the United States this year, with an expected delivery in July.
Earlier this year, the tire manufacturer, Michelin, entered a build-to-suit agreement to lease 1.7 million square feet of distribution space to be constructed in three buildings on 140 acres at the Ridgeport Logistics Center in Wilmington, Illinois, approximately 40 miles southwest of Chicago.
RidgePort, a rail-served intermodal park, is owned by an affiliate of Prudential Insurance Co. and is being developed by Ridge Development, the industrial arm of Transwestern Development Company.
JLL’s Keith Stauber, SIOR, Dominic Carboni, SIOR, Steve Ostrowski and Rich Tompson represented ownership in the lease transaction. Stephen P. Navarro and Trey Pennington from CBRE’s Greenville, South Carolina office, along with Traci Buckingham Payette from the Chicago CBRE office represented Michelin.
“I’m very excited to be a part of this, and Michelin is a fabulous client,” Payette said, SVP of CBRE’s industrial services brokerage. “They were wonderful to work with through the process, as was the developer Ridge Development.”
The first phase of the project consists of two 680,000-square-foot buildings and one 340,000-square-foot building. Michelin will use the new facilities to store and distribute its wide range of commercial, industrial, car, motorcycle and bicycle tires, which will bring hundreds of new jobs to the region.
The facilities will be owned by a joint venture between Ridge Development and a Heitman Financial advised state pension fund. JPMorgan Chase Bank N.A. is providing financing for the construction, which is being spearheaded by Ledcor Group as general contractor.
“Construction has been going very well,” said Keith Stauber, managing director in JLL’s Chicago office. “October especially was a little wetter than we all would have liked. But we’re all optimistic we will meet the time frames that are required.”
So how did the largest industrial project to break ground in 2014 come to be? Steve Ostrowski, associate in JLL’s industrial services, said lease negotiations took about 15 months.
“It was a year plus from the time we first engaged with them, to the time we completed the lease,” Ostrowski said. “This deal is validation for all of the hard work and the 10 years of Ridge’s commitment to the site, the 10 years of the BNSF’s commitment to the site and our engagement for the last four years to be able to bring this project to completion was very exciting.”
Prior to choosing RidgePort, Payette said that a trend CBRE is seeing with a lot of large corporations is that they are thinking about their distribution operation and how that should function going forward in the future—Michelin included.
“They are putting a lot of time and thought into that,” she said. “Michelin probably started thinking about this three to five years ago, as well as about how they were going to design a new state-of-the-art distribution facility.”
Payette noted that when it came time for Michelin to find a site, they went through an extensive process of evaluating, primarily in the I-80 corridor as there were quite a few land sites there.
“Through the process, the requirement was identifying a land site that was large enough to accommodate the type of environment that they were trying to build,” she said. “There are a limited number of sites than can accommodate that, and RidgePort is one of them. We did have some other sites in the mix, but at the end of the day, for a variety of reasons—size of the property and location—that’s why RidgePort was chosen.”
Stauber said they were a number of reasons that continued to make RidgePort attractive to Michelin, agreeing with Payette that the number one factor is the availability of RidgePort’s very large land site.
“Obviously at 1,500 acres, RidgePort is one of the largest industrial business parks in the Chicago metro area,” Stauber said. “So it’s able to uniquely provide opportunities for large buildings, or campuses if you will of buildings.” “The second reason is our ability to provide some economic incentives that we’re one of the few to offer,” he continued. “Specifically, RidgePort was created with a TIF, and the thing that makes it a unique TIF is that the development team—Ridge and owners—have the unilateral ability to allocate benfits from that TIF to prospective users as they see fit.”
“The TIF is controlled by the city,” said Ostrowski. “So the city, or the local municipality will allocate those funds, whereas Keith stated the uniqueness here is this s a developer controlled TIF, and it’s pretty rare.”
“Lastly, being literally right on an interchange at Lorenzo Road, obviously provides corporate users who occupy our park immediate accessibility to the interstate systems,” added Stauber.
RidgePort is strategically located three miles south of the Interstate 55 Arsenal Road exit that leads to the BNSF Logistics Park-Chicago in Elwood and Union Pacific-Joliet Intermodal Terminal in Joliet. RidgePort is also flanked by more than two miles of BNSF mainline frontage to the west and Interstate 55 to the east. The park would serve as the western terminus of the proposed Illiana Expressway, a toll road that would connect I-55 and I-65 in northern Illinois and Indiana.
“We’re very excited about the activity and the momentum we continue to build at RidgePort,” Stauber said. “We’re very optimistic about the success here in the near future, as well as longer term. We’re very appreciative of the support of our good client Ridge, and Prudential, and also BNSF. We’d also like to acknowledge the CB Richard Ellis team that represented Michelin.”
“Obviously the teams worked extremely hard together to get a transaction done,” said Stauber. “I know everybody is very excited about the conclusion of it, and we’re anxiously waiting building completion summer 2015.”