The state of Illinois is an interesting place in my opinion. You have this whole state that is completely different from its major city. In my quick assessment, I would say that a good 60% of the state is rural. Maybe the number is a little high but it can demonstrate the extreme differences between the state itself and its biggest city. Industrial real estate is huge in the city of Chicago. If you can secure land and build on it, then lease that building to a company, you’re probably set financially forever. However, it does benefit an industrial real estate company to branch out into neighboring states to find other ways to lease out their buildings without breaking the bank.
It has been known for some time on social media and in the mainstream media that the state of Illinois is having financial issues. However, when you look at the industrial market in Chicago, renting commercial space is as high as it has been in ten years. Specifically, in the last 2 years, Chicago has shown that even with the financial issues the state is having, its buildings are being rented or leased. While Chicago has been on the upswing, its same industrial real estate people are looking towards not only Northwest Indiana, but also Southern Wisconsin for build buildings. Most of the work being done in these neighboring states has to do with manufacturing. Manufacturing buildings don’t need to be top notch buildings because of the nature of the work. However, that does not mean that there aren’t any chances of building growth in these states. A company in Indianapolis has built a building that already has tenants signed on to long term leases. In Indiana specifically, it makes sense to build, because the property taxes are going to be lower for a developer, therefore making the rental space more affordable for the company leasing the building. This could also stimulate the economy as a new business moves into the area and creates new jobs for the community.
As industrial real estate developers move from Chicago to Northwest Indiana and Southeastern Wisconsin, they should see a better or similar scope of benefits from those economies. However, it is crucial to understand that the state of Illinois, Chicago specifically holds the key in that success. Without Illinois, the neighboring states would end up folding. The state of Illinois must stay afloat in order for industrial real estate developers to continue building not only in Chicago and its suburbs, but also in Indian and Wisconsin.
Maybe the state of Illinois will come back from its current financial situation, and maybe it will hang by a thread for years to come. However, if the continued financial downturn continues, industrial real estate players will have to invest in new areas, creating a mass exodus from the state, leaving Illinois as cripples as ever. Not only would Illinois fall, but Chicago would start to go as people leave the city. It is clear that Illinois has to stay above water so the neighboring states can see real estate growth.