- Aug 18, 2017
As part of its efforts to address the changing needs of different business sectors, Northbrook’s Economic Development Committee (EDC) recently discussed the local industrial market and its challenges, looking at trends including employment, vacancies and possible incentives to help market vacant properties.
The panel reviewed the six largest vacant properties – three located in Sky Harbor and three on south Shermer Road:
- Maurice Sporting Goods, 1825 Shermer Rd., 105,500 sf
- Stats, 2775-2783 Shermer Rd., 87,937 sf
- Petra Presbyterian Church, 3005 MacArthur Blvd., 53,126 sf
- Old World Industries, 4065 Commercial Ave., 46,077 sf
- Maurice Sporting Goods, 1919 Stanley St., 33,911 sf
- Clesen Wholesale, 2945 Shermer Rd., 32,168 sf
Considering larger vacancies, Village President Frum commented that the Village worked hard to retain many of the businesses, but some, including Stats, indicated that they are relocating to attract a larger, skilled workforce, and many young professionals do not want to live in Northbrook.
While Northbrook enjoys a relatively low 3.1% unemployment rate, below Cook County and the Chicago Metro area, job growth is not occurring in the industrial market, according to data shared with the group. Additionally, 30% of Northbrook’s job force lives and works in the Village “which reflects an entrepreneurial environment,” pointed out Development & Planning Services Director Tom Poupard. “Many jobs include repair, or taking care of what’s already been built, and not traditional assembly line work.” Other data reveals zero construction starts in the industrial market in the past 12 months.
In addition, Northbrook’s vacancy rates are low, but rents have stayed flat, generally the same in 2017 as in 2016. EDC Chair Jim Kahan highlighted the opinions of local real estate experts that there is also little economic incentive for owners to invest in industrial space, as the demand for higher cost space is not there. Kahan pointed out the importance of a strong industrial tax base to keep the residential tax rate low – the higher the Industrial Equalized Assessed Value (EAV) the less pressure on residential property taxes. President Frum agreed, noting that the tax burden was once evenly split between business and residents, but that it is now 60% residential vs. 40% commercial, due to growth in residential assessed valuation that has not been experienced in the industrial market.
Chairman Kahan agreed, adding that the key is to ensure that new investment results in an increase in the Equalized Assessed Valuation (EAV), pointing out that the residential market has held its value over time and in fact, appreciated. As a result, teardowns and new investment results in a higher residential EAV. However, without similar activity in the industrial space, the industrial EAV has remained flat. It’s important, he noted, to achieve new investment in order to increase the EAV. He gave as an example the recent Wiss Janney expansion, where a tax break was given on the additional space to the building on the property.
Poupard pointed out that the obstacles are generally not regulation, but dealing with an aging industrial park with older buildings that often can’t meet modern requirements. Transportation needs have changed with larger trucks that are taller and don’t fit in existing loading bays, and warehouse areas needing higher ceilings for modern storage techniques. Many businesses are now heavily investing in automation, which impacts the industrial market.
Village Manager Rich Nahrstadt commented that many businesses want an immediate answer on how fast they can get a 6b tax break. The Village could potentially pre-qualify some properties for the 6b to make the process move more quickly. Kahan noted that the Village could also look into other types of incentives.
The discussion will continue at the October EDC meeting, with additional input from area real estate experts. For more information visit www.northbrook.il.us.