Welcome to Episode 8 of Real Time, JLL Chicago’s industrial podcast. In this episode, our team hit the road for the topping off of Building Charlie, the latest spec project at RidgePort Logistics Center in Wilmington:
- Ridge Development Executive Vice President Aaron Martell tells us how the park came to be
- Elion Partners Managing Principal Shlomo Khoudari shares his vision of a mixed-use destination with amenities unrivaled at any business park
- JLL Managing Director Keith Stauber explains the stability of long-term park ownership
- BNSF Railway Regional Manager of Economic Development Eric Pitcher reminds us why rail is key for any logistics network
Fast facts on RidgePort Logistics Center:
- 2,200 acres capable of accommodating 22+ million square feet of industrial development
- Nearly 150,000 square feet of commercial development on its way
- Located at the intersection of I-55 and Lorenzo Road in Wilmington
- Rail-served on the BNSF transcontinental main line
- Proximity to the largest inland container port in North America
Hosted by: Industrial market research experts George Cutro and Chad Buch
Listen to this podcast with the player above or click here.
Post to LinkedIn | Podcast archives | Episode transcript
Clockwise, from top left: Building Charlie construction; Aaron Martell, George and Chad; more Building Charlie; our co-hosts; George and Eric Pitcher; and our co-hosts with Shlomo Khoudari and Keith Stauber.
George: Hey, Chad, you ready for our next podcast?
Chad: We’re 15 miles from Chicago, on I-55 on our way south to RidgePort Logistics Center.
George: The car is tanked up and I’m ready to go. You ready? Hop in!
Chad: Let’s hit it!
George: We are going to see the topping off of Building Charlie, which is being developed by Elion Partners and Ridge. Remember, this is another rendition of JLL Chicago Industrial – Real Time.
Aaron: Hi, this is Aaron Martell with Ridge Development Company. I oversee our Midwest operations for Ridge.
George: Let’s take you back to the beginning of time here. When was the thought to come out here and make a big land holding stake out in Wilmington, when your traditional developer today is looking for one-off sites and wants to build and get out quickly. You guys are doing the opposite of what the trend is today.
Aaron: We were working on a build-to-suit in Pennsylvania for Johnson & Johnson and our general contractor was in St. Louis. It was before my time, but the guys were driving down to St. Louis. They wanted to have access to rail, they wanted to be on I-55 and they started piecing this together in 2005. So it’s been a long time coming and we’ve had great success over the last three years. But prior to that it was eight, nine years working to get things put together, working to get annexed, working to get the TIF in place. It was a lot of effort that started in 2005.
Chad: So the TIF’s a pretty unique thing here. I think it really helps contribute to an overall lower gross occupancy cost. Can you explain to us a little bit more about what goes into that TIF and how some of those funds can be used for a user?
Aaron: The TIF is basically a reimbursement of taxes that we offer users across the park. It varies on a per square foot basis from deal to deal, but it’s made our park extremely competitive to beat from a pricing perspective. We’re able to hold the face rate up while offsetting the tax exposure for users and on an effective gross basis we’re really doing well against the competition.
George: Let’s go back to Building Charlie. When will you have this puppy built?
Aaron: We’ll say on the record mid-December, but hopefully it’s a little sooner than that, Mother Nature willing. It’ll be done before the end of the year.
Chad: How’s activity been? Have you seen any full-building users? Are you entertaining a 400,000-square-foot or 500,000-square-foot partial-building user?
Aaron: Activity has been strong. There are three to five users in the market that would take the full building. You play with what the market gives you. If someone came in and made a compelling case for a 400 or 500 and you were able to get a strong lease rate, then yes, you’d definitely look at that.
Chad: Pending the success of Building Charlie, there are more build-to-suit pads to come. Anything else moving forward on the build-to-suit front?
Aaron: There are always rumblings on the build-to-suit front. Nothing to report at this point, but for those that haven’t had a chance to get down to RidgePort, I would definitely take the drive down here. It’s a park like none other in Chicago. The boulevard, tree-lined streets, the amenities offered and you get to see 5.5 million square feet that’s been up in the last 30-36 months. It’s an exciting project, it’s nice to around it, I’m happy to be a part of it and thankful for JLL’s efforts in getting all this stuff leased up.
George: Next up we’re going to talk to Shlomo Khoudari, the man behind the curtain at Elion Partners, as well as our very own Keith Stauber, who is one of the brokers on the project.
George: First off, why did you guys pick RidgePort?
Shlomo: Basically as we all know, RidgePort is in a very strategic location. Nowadays it’s all about logistics and we inherited good bones. We’re right next to the highway and we have close proximity to the two intermodals. We have rail-served buildings and capabilities to rail-serve more, so we’re in a very unique situation. Lots of barriers to entry and love the market.
Chad: How’s activity been here over the last 12 months? I know we’ve seen not just one spec building but we’ve got our second one going up. We’ve got a large build-to-suit going on here. Do you expect activity to be pretty strong going forward over the next 12-18 months?
Shlomo: From the spec side, activity has been coming along nicely. Our intent is to always have one million square feet spec up. As you see, we’re right now finalizing our current spec. With the help of our friends and JLL, hopefully we will have it leased up sooner than later. So that market is moving. On the build-to-suit market, it’s also pretty active. We’re seeing big companies putting together new logistics strategies that involve super-regional warehouses, big warehouses, and we’re here to cater to them.
George: We’ve seen a lot of drivers in demand for big box, but one of them is the food industry. You’ve been very successful with capturing some food users in your market. You want to tell us a little bit about some of those guys?
Shlomo: One of the main industries that has been rethinking their supply chain has been the food industry. We’ve seen a lot of consolidation from smaller boxes into bigger boxes. Thanks to automation, nowadays you can have a 1.5-million-square-foot warehouse and be able to run it in an efficient way. So thanks to technology, these companies, specifically the food market companies, have been looking at these types of buildings.
Chad: Keith, I’ve got a question for you regarding some of the supply and competition here in the market. Just on the way down, we saw another million-square-foot spec building coming up. How do you guys position RidgePort against your competition? I know you have the developer-controlled TIF and you’ve got rail in the park, but what else is really helping us market the park and stand apart from some of the other spec buildings in the market?
Keith: I think what we’ve been able to do here at RidgePort is create an environment that’s very inviting for both employees as well as corporations themselves, as well as their customers. I think, as Shlomo said earlier today, it truly is a business park and mixed-use development. We have retail coming online, we’ve got our own life safety building for fire and police that will be in the park as well and we’ve also got, as a very unique fact, a full-service travel plaza that provides food, a quick-service restaurant as well as full maintenance and repair services to the truckers that will congregate at the park. We’ve got some unique attributes that help us stand apart from our competition.
George: Building Charlie, the spec building, is this a long-term hold for you guys? Or is this something you will fill, sell off and go on to your next project?
Shlomo: Not only Building Charlie, but everything that we’re going to be building here and have built are long-term holds. It’s warehoused on our evergreen funds, so our intent is to keep them for the long run.
Keith: I think that’s a really unique advantage. It really gives us an advantage for the corporations that know we, Elion Partners, Ridge, are going to be there in the long-term for them. We’re not going to just be in and out in the next 24 months. I know that’s been a distinguishing factor for us in winning some of the deals that we have. Those corporations like to hear that, that they’ve got a partner that’s going to be there for them, as Shlomo said, in the long-term.
George: You mentioned a couple amenities in the park. Are there any other types of amenities you’re going to add to the park going forward?
Shlomo: Right now we’re working on trying to put together one of the biggest truck stops in the world. We have the TA travel plaza, which we’re going to layer on. We have 450-stall parking, you can wash your truck, you can fix your truck, we have a minimart, we have restaurants. But soon to come we’re going to bring all sorts of other amenities, mostly for the trucking industry. Anything from chiropractors to barbershops to chapels to veterinarians and a whole array of tenants that are going to be servicing the logistics stakeholders, which are who we are aiming at.
George: Have you heard of anything like that anywhere else in the country? I haven’t.
Keith: I think it’s what makes RidgePort unique. We’re catering to the folks that are going to live and breathe here. We want to make a warm and inviting a location for them. With the long-predicted shortage in truck drivers, it’s extremely important to the occupants, the corporations of the park. What can they do, what can we do together to make sure the truckers know that they’re welcomed and desired here. That really help us solve a bigger issue.
Chad: That’s a good point. In some of these business parks, you have to drive fifteen minutes just to go run to a little store and grab a soda and a quick snack on your lunch break. So here you’ve got it right in the park, which is definitely a nice amenity for the labor force.
Chad: Hey everyone, this is Chad Buch. We came back from Wilmington, back from RidgePort, up to Chicago to catch up with Eric Pitcher, Regional Manager of Economic Development for BNSF railroad.
Chad: Eric, while this spec building is not a rail-served building, you’re serving two other customers in the park and have some big terminals just up the road in Elwood. We’d like to catch up with you and hear a little bit about the business and things going on in the market.
Eric: Sure, it’s a pleasure. Actually, Building Charlie does have the potential to be rail-served. There is a plan that was put in place with Elion Partners to allow the building to be rail-served depending on customer requirements. We worked with Elion during their planning process to make sure that the design of track to the facility could be accommodated within the footprint of the building and land.
George: So Elion then set the right-of-ways already to bring rail, because I believe you’re servicing the park from the west boundary of the park?
Eric: Yes, that is correct.
George: It was smart on their part to make this building as flexible as possible.
Eric: But you’re correct, the rail is not there today. But it can be there in the future if the customer requires it.
Chad: Sure, 20 years down the road that may be…
Eric: Hopefully not that long.
George: So that’s a main line that runs on the west boundary of the park. Are you servicing that from the intermodal yard in Elwood?
Eric: Probably the best way to take a look at it is that RidgePort itself can be served from a number of different locations. From a rail perspective, it’s adjacent to our Southern Transcon. That is our main line between Los Angeles and Chicago.
George: Is that a direct line?
Eric: That is a direct line. You have 60-70 trains a day going by that location. On the Chicago side, closer to Chicago, that line serves rail yards and intermodal facilities in Elwood (Logistics Park Chicago), in Joliet, Willow Springs, Hodgkins and the City of Chicago with the Corwith Yard.
George: Are those all intermodal yards?
Eric: Elwood, Willow Springs and Chicago Corwith are intermodal yards. Joliet and Hodgkins yards are what we call manifest yards. That’s where the more traditional boxcar and tank car would go. The others are intermodal yards where you’ll see the long trains that continue coming in and going out.
George: Is there a specific number of trains that link up per day in a car or is that just mandated by how much product you’re getting off the port and bringing east?
Eric: It depends on the type of train, but if you think of it this way, you could easily put 300 containers on a single train.
George: Traveling from L.A. to Chicago nonstop, how many days is that typically?
Eric: We have to stop every 11 hours to change crews. We have to stop every 1,500 miles for a maintenance check. Besides that it doesn’t stop.
Chad: It’s a 24/7 operation, right?
Eric: It is a 24/7 operation. We’re sort of like a pipeline with wheels. It just keeps on going.
George: I’m going to date myself here, but I miss the caboose on the old rail car, which has now been a non-factor for 30 years?
Eric: I think you see cabooses now in railroad museums.
George: Back to RidgePort, do you guys co-brand your marketing efforts to attract more people to the park because if it’s rail-served and you have the immediate access to provide them with service there. Do you guys go-brand and market that park to bring other customers there?
Eric: We do a couple of things. One is we have a co-location strategy, where we actively work with the Beneficial Cargo Owners that own the freight and the shipping lines that handle that freight to bring that freight to facilities near our intermodal facilities for obvious reasons. A second thing we do is we work with third-party logistics firms called transloaders that handle a variety of different kinds of freight, maybe in smaller quantities that don’t justify a customer building their own facility. Those third-party logistics firms that are considered premier transloaders, and there’s a high hurdle rate to get to that point, we actually publicize them on our website. There’s not exchange in ownership position between us and them, it’s simply a way that we encourage traffic to go to those companies. So that’s the extent that we’ve taken co-branding to this point. Something important to note is that we’re very agnostic when it comes to whichever developers are around our facilities. We want them all to be successful.
George: Makes total sense and it’s a win-win for everybody. Well Eric, we appreciate all your time today. Have a good night, guys!
Eric. Thank you.