Peterson-Pulaski Industrial Corridor: To be or not to be? - Metropolitan Planning Council

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Peterson-Pulaski Industrial Corridor: To be or not to be?

Campaign for Sensible Growth-ULI Chicago Technical Assistance Panel examines remaking of Chicago industrial corridor to face the future.

Is manufacturing dead on the north side of the city of Chicago ?

Not so, said a panel of industrial experts, but don’t expect traditional smokestacks with hundreds of jobs to return any time soon. The experts were part of a Technical Assistance Panel convened to examine the Peterson-Pulaski Industrial Corridor on the city’s northwest side. Technical Assistance Panels, co-sponsored by the Urban Land Institute (ULI) Chicago and the Campaign for Sensible Growth, assemble a group of experts in the fields of real estate, finance, law over a two-day period to help a community address a difficult development challenge and make recommendations for moving forward. Concerns over the health of the Peterson-Pulaski Industrial Corridor led Ald. Margaret Laurino (39th Ward), the City of Chicago’s Department of Planning and Development and the Peterson-Pulaski Industrial Council to request a Technical Assistance Panel for the area.

The Corridor is a collection of 22 small to mid-size industrial buildings that employs approximately 1,900 people today, but hosted more than double that number as little as five years ago. Jobs that have been lost in the corridor in recent years have generally not been replaced. Some companies have left the corridor entirely or have been replaced with much smaller operations of 50 to 100 employees, compared with the 800 employees of previous years. The perception of the corridor’s existing buildings is that their size, layout and parking are not suited to the modern industrial user. The buildings are generally 1950s era, one-story buildings with low ceilings, which are sometimes not suitable for modern manufacturing.

The corridor is also surrounded by healthy residential neighborhoods to the north and west and North Park Village, an expansive open space and senior housing development, to the east. Given the desirability of the area, Alderman Laurino receives frequent rezoning requests from developers who are interested in converting the industrial buildings to residential or retail projects in the corridor.

On August 2, 2005, the panel convened to begin its analysis. Ald. Laurino, city officials and members of the Peterson-Pulaski Industrial Council presented data about the corridor and explained the corridor’s challenges in depth, and, with a concern for keeping jobs in the area, asked them to address several key questions:

  • What is the state of the industrial market and what is the corridor’s main competition?
  • What environment are modern industrial owners and tenants looking for in an industrial corridor?
  • What financial tools and incentives can the City provide to attract and retain industrial users?
  • What infrastructure improvements should be made in the corridor?
  • How can nearby amenities benefit the corridor?

Panelists began their assignment with a tour of the Corridor that included a plant tour of Cozzini, a current owner and tenant that manufacturers cutting and processing equipment for the meat industry. Panelists gathered more information about the state of the corridor by interviewing tenants, owners, service providers and neighborhood residents to get a broad overview of how the corridor functions today as well as how it is perceived in the marketplace. After examining data, information gathered from interviews and bringing their considerable expertise to bear, the panelists presented their findings at a public meeting on the afternoon of August 3rd .

The State of the Market in the Corridor

Contrary to concerns of the community and the perception that the corridor was no longer viable, the panelists reported that the Peterson-Pulaski Industrial Corridor is well positioned to remain a successful industrial corridor. The corridor is strategically located near excellent transportation resources, with access to the nearby Edens and Kennedy expressways and public transit resources to provide transportation for the corridor’s workforce. Interviews that the panelists conducted with employers in the corridor confirmed that employers also have access to a full range of quality employees including executives, management and skilled labor. The quality of the surrounding neighborhoods also contributes to the strength of the corridor.

From the panelists’ perspectives, the corridor represents a functional, in-city product with a vacancy rate of only five percent, which is low relative to other industrial corridors in the city. Panelists acknowledged, however, that other industrial areas both in the city and in nearby suburbs like Skokie, Niles, Lincolnwood and Morton Grove, serve as competition to the Peterson-Pulaski. Suburban markets have the added advantage of lower taxes relative to the city of Chicago . The corridor’s strengths in transportation, access to a skilled workforce, proximity to a variety of housing resources for employees and the ability to bid on city contracts offered enough incentives for most businesses to stay in Chicago.

Turning Potential Challenges to Opportunities

Panelists did identify some challenges. They noted that many employers have a preconceived notion of building their operations from scratch in a suburban business park situation and may view an in-city product with older buildings as less desirable. The lack of available land in the corridor for development also hinders its growth. The land costs in the city and corridor make it economically infeasible for a manufacturer to tear down the existing buildings in the corridor and do new construction.

Despite these issues, the panelists advised the city and the Peterson-Pulaski Industrial Council to use the assets at hand and turn challenges into opportunities. The corridor should remain flexible to new and potentially different users. The face of manufacturing is changing all over the world, they reported. Panelist, Rob Hoffman of World Business Chicago, noted that even China lost 1.6 million manufacturing jobs in recent years. The Ford Supplier Park on the city’s south side uses robots to do the work that numerous skilled laborers used to do. Panelists noted that it is unlikely that the Peterson-Pulaski corridor will see the heavy manufacturers of the past return. Rather, the corridor will continue to attract smaller users, companies looking for 25,000 to 50,000 square feet of space. While Chicago is concerned about keeping jobs in the corridor, the panelists noted that 90 percent of the city’s manufacturers employ less than 100 people today.

Given those factors, the corridor should look to fill vacancies with light manufacturers, distribution companies, and service companies like plumbing, electrical, cable and express shipping. The panel suggested that industrial owners and users are seeking flexibility, a ready supply of space, loading and docking capabilities on larger sites, space to accommodate manufacturing, distribution and office uses, and insulation from surrounding residential areas. Prospective tenants for the corridor might include commercial printers, light assembly companies, corrugated box manufacturers, packaging and overnight shippers or consolidators.

Recommended Changes to the Corridor

Panelists also made recommendations on how the corridor should change. They noted the difference between the southern portion of the corridor, south of Peterson Avenue and the northern portion, north of Peterson. The southern portion is doing very well from an industrial perspective, they noted, and recommended retaining manufacturing zoning for the area, though felt that a Planned Manufacturing District designation was not needed to protect industrial uses.

The northern portion of the corridor was quite different, with antiquated uses, several existing non-industrial uses and residential uses surrounding the area. As such, the panelists suggested allowing the northern portion to become a mix of uses including a neighborhood retail development with two to three stories of residential above the stores. The investment in a retail/residential mix would not only increase the amenities for the corridor and surrounding neighborhoods, but would also keep sales taxes in the city and add increment to the area’s Tax Increment Financing (TIF) district, monies that could then be reinvested in the corridor.

Tools for Maintaining and Improving the Corridor

Panelists noted that there were several steps the corridor and the city could take to solidify and improve its position. Efforts in the near future should focus on retaining the businesses that exist today. In doing so, the corridor needs to improve its marketing efforts to showcase the tools that can help existing companies succeed such as workforce training options.

Tax Increment Financing and Cook County’s Class 6b designation are the primary financial tools that the corridor can employ to improve conditions in the corridor and retain existing businesses. In fact, panelists recommended that the City permit the 6b designation for speculative buildings to attract investment and jobs. Most companies cannot afford to wait the two years for city approval to build new facilities. The corridor should look to improve its curb appeal with landscaping, signage so that potential companies see that the corridor will fit their image. Panelists also recommended using industrial revenue bonds and enterprise zone tax credits, which allow a sales tax exemption for building materials, equipment and manufacturing. Panelists also suggested that Chicago needs to streamline bureaucracy as suburban municipalities can turn building permits around much faster for companies than the City currently can. The corridor should also use TIF funds to fund marketing and outreach efforts and provide on-going support services to businesses.

Lastly, panelists recommended addressing the most frequent complaint they heard from current users in the corridor during the interview process — lack of high speed Internet access. Panelists noted that high speed access is a must have for today’s business climate and is nearly universally available in other areas of the North side and in the suburbs. Panelists recommended encouraging existing telecom and utility providers to upgrade their infrastructure and issue a Request for Proposal (RFP) to bring in competition by a third party provider. Panelists concluded by advising that the city, the alderman and the Peterson Pulaski Industrial Council nurture the corridor and improve on its strengths.

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