Despite hurdles, South Chicago drawing industrial interest
10 years ago, industrial development in the submarket of South Chicago was an afterthought. With global supply chains and logistics experts re-thinking risk and migrating to nearshoring, the South side is now an affordable, viable option for industrial growth.
Chris Gary, Executive Vice President – Industrial Services at NAI Hiffman, has seen a shift in recent years, thanks to a few key factors.
Cost of Land
- While land on the North side of Chicago has grown increasingly more expensive, pushing industrial manufacturers farther away from the city, land on the South side has remained affordable. Because of the cost of land, inventory in South Chicago is much greater than the Northern counterpart. According to data from CoStar, there is nearly double the amount of 100,000+ SF industrial buildings in South Chicago (401 buildings) compared to North Chicago (235 buildings). The low cost of land is also one of the main advantages that Chicago has in comparison to other large US cities like New York, Seattle, San Francisco and Los Angeles.
- In 2023, Chicago was ranked as the #1 metro in the country for corporate relocation and site selection. This isn’t a new honor for the region. In fact, it’s the 10th consecutive year that Chicago has earned the top spot. If you have a moment, read that last sentence again. 10 consecutive years as THE #1 destination in the entire United States. Although this stat is more about the office world, the industrial sector is lifted due the advantages of industrial manufacturing being located near a large population base. With more corporate headquarters calling on Chicago, a large labor pool comes with them.
- Even though cost of land is more affordable in smaller Midwest markets like Indianapolis, Milwaukee and Cincinnati, the counter move that Chicago has in its back pocket is the continuous labor supply. Recent college graduates from Northwestern University, the University of Iowa, Purdue University, Indiana University and the University of Illinois at Urbana-Champaign account for a large portion of new Chicago residents every year. Of those schools, at least 10% of their alumni base calls Chicago home, resulting in a refresh of the labor market every single year.
- $3,000,000,000,000 (Trillion with a ‘T’). That’s the value of goods that travel through the Chicago region each year, making Chicago the busiest rail hub in the country. Six of the seven major Class I North American railroads converge in Chicago. On the roads, the metro Chicago region is home to 10 interstate highways with trucks accounting for approximately one in seven vehicles on those routes.
Because of these factors, South Chicago’s role in the industrial sector could increase, aligning with the post-pandemic trend of re-shoring and near-shoring to shorten supply chains.
For more information on the South Chicago market, reach out to Chris Gary – Executive Vice President, Industrial Services.
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 an award winning company headquartered in suburban Chicago, with more than 250 employees strategically located throughout North America.
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.