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March 2024

Four Reasons Illinois Industrial is Primed for Growth

How do companies manage risk to maximize efficiency in the next five years? That is the large-scale question that looms in the minds of business executives and companies operating in the often unpredictable, volatile world of global supply chains and logistics.

Because of the ever-changing factors that impact industrial real estate, the calculus that determines the best location has evolved over time. According to NAI Hiffman Executive Vice President Adam Roth, one market stands out as most advantageous when considering several pivotal factors for the future of industrial manufacturing and distribution. Here are the reasons Illinois ranks among the best-positioned industrial real estate markets in the country:

1) Water

The city of Chicago is located on the shores of Lake Michigan, the 3rd largest lake in the country. Lake Michigan, combined with the other Great Lakes (Superior, Huron, Erie, Ontario) make up 95% of the freshwater in the United States and 21% for the Globe. This makes the area surrounding the Great Lakes incredibly valuable for industrial real estate because 49% of fresh water usage in the United States is used in cooling systems for industrial manufacturing.

2) Electricity

Reliable, affordable power will be an extraordinarily important factor for companies in the coming years. Illinois is the only state in the Midwest that exports power, with Pennsylvania being the next-closest state that is a net exporter of power. Indiana and Ohio both import power, making Illinois the most logical option for direct access to the electric grid.

3) Climate

$1 Billion natural disasters have risen from an average of 6.7 events per year in the 2000s to around 20 events per year in the 2020s. The coasts of the United States are more susceptible to natural disasters than Illinois, and wildfire risk in Illinois is low in comparison to other parts of the country, especially the Western United States. Although weather events are often unpredictable, historical data proves that there are ways to mitigate risk through location evaluations. Additionally, insurance companies are increasingly reluctant to insure properties in high-risk areas, or charge higher and higher rates to do so. Areas such as the upper Midwest are projected to remain at a relatively lower risk for extreme weather events, making them attractive as long-term strategic locations.

4) Geopolitical and Trade Route Issues

Current issues in the Suez Canal and Panama Canal benefit the Illinois industrial infrastructure. Supply chain traffic from the Suez Canal and Panama Canal filter to the East Coast of the United States, but because of current events affecting each major canal, some cargo in that trade route is being directed to the US ports on the West Coast. Freight utilizing the West Coast has a bigger impact on the Chicago market, as approximately one-third of the US population lives in the western states. Therefore, much of the product arriving on the West Coast travels across the country to Chicago for additional distribution. Conversely, freight from the East Coast is in large part delivered to the eastern two-thirds of the population before arriving in Chicago.

For more information on industrial real estate and supply chain, contact:

Adam Roth
Executive Vice President – Industrial Services
630-691-0607
aroth@hiffman.com


About Hiffman National: 

Hiffman National is one of the US’s largest independent commercial real estate property management and advisory firms, providing institutional and private clients exceptional customized solutions for property management, facility management, advisory services, accounting, lease administration, lender services, project management, marketing, and research. The firm’s comprehensive property management platform and attentive approach to service contribute to successful life-long relationships and client satisfaction. As a nationally bestowed Top Workplace, and recognized CRE award winner, Hiffman National is headquartered in suburban Chicago, with more than 250 employees nationally and an additional six hub locations and 25 satellite offices across North America.

About NAI Hiffman:  

NAI Hiffman is one of the largest independent commercial real estate services firms in the US, with a primary focus on metropolitan Chicago, and part of the NAI Global network. We provide institutional and private leasing, property management, tenant representation, capital markets, project services, research, and marketing services for owners and occupiers of commercial real estate. To meet our clients’ growing needs outside of our exclusive NAI Hiffman territory, we launched Hiffman National, our dedicated property solutions division, which provides property management, project services, and property accounting services across the country. NAI Hiffman | Hiffman National is and award winning company headquartered in suburban Chicago, with more than 250 employees strategically located throughout North America.

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