For years, Kenosha County has been a hot spot for distributors and manufacturers finding available land to move in and escape from Illinois taxes while still being close to the nation’s largest logistics hub: Chicago.
Lately, however, another darling has emerged for industrial real estate developers and their would-be tenants: the Janesville-Beloit corridor along I-39/90 in Rock County.
That’s especially true for developers who are now forced to push for 300,000- to 500,000-square-feet buildings to make their projects feasible.
To Adam Matson, an industrial real estate broker and director in Newmark’s Milwaukee office, Beloit-Janesville could very well be the state’s next industrial hot spot.
“We call it ‘Little Kenosha,’” Matson said. “It’s sliding under the radar for some, but it is going to hop up really quick. Just in the last three years there has been two million square feet of industrial moves in that area. (There’s been activity there for a while), but it’s only been in the last two or three years that national, institutional investors have started to show interest. Now, (Milwaukee-based) Zilber Ltd. has holdings in Janesville, STAG Industrial has holdings in Janesville and (Milwaukee-based) Phoenix Investors is doing a speculative project in Beloit of 500,000 square feet.”
Part of the draw, says Matson, is not only the corridor’s access to I-39/90, but also the connections that freeway system provides. Trucks can reach metro Chicago via I-90, but the system also provides easier access to Iowa, the Dakotas, the Twin Cities and Denver.
The Janesville-Beloit corridor’s move from a tertiary to a primary market has also lowered cap rates, making it more attractive to investors looking for less risk, he said.
The large population of blue-collar workers near the state line has also made the corridor a place where companies want to locate.
“Ever since the Janesville (General Motors) plant closed (in 2008), that labor pool has been crossing into Illinois to work, or they have been commuting to Madison. That is a labor pool that is skilled and ready to work,” Matson said.
Jeff Hoffman, an industrial real estate broker and principal at Cushman & Wakefield | Boerke, agrees. But he’s also seen continued interest just up the road in Madison, where the supply of tech workers is the strongest.
“Madison going down to Beloit is most certainly a corridor to watch,” Hoffman said.
As for the Madison interest, Hoffman said his firm is very close to closing a “substantial deal” with a company that is currently located in the southwestern corner of the state.
“They are going to be locating in Middleton, and they are coming for the engineering talent coming out of UW-Madison,” he said.
Near north, near south
But with the Kenosha and I-39/90 corridors increasingly designed for bigger users, companies –especially those that don’t need massive amounts of space – are looking just north and south of Milwaukee as the price of development elsewhere has become increasingly expensive.
As far as the hottest industrial corridor to the north of Milwaukee, Hoffman and veteran broker Jim Barry say the Germantown-Richfield corridor at Holy Hill Road and I-41, which includes the nearly complete Germantown Gateway Corporate Park, is the one to watch.
“Just in the last three years, 11 buildings and over 2.5 million square feet of space delivered, and there is more coming,” Hoffman said. “It is a wide range of users, from manufacturers to service space, to distributors. It is a known quantity at this point.”
There’s also the proximity to workers on the northwest of Milwaukee and even the Fox Valley.
“A lot of people didn’t really expect it, but we are hearing about employers being about to recruit from that area,” Hoffman said.
As Germantown continues to grow its business parks, Barry said Richfield, just across I-41, is itself poised to grow.
He and Hoffman are also watching Racine County, especially those areas along the interstate that, up until now, really haven’t been as popular as those closer to Chicago in Kenosha County.
“There is going to be more going on at the interchanges, where there has been nothing up until this point,” Barry said.