As billions of dollars make their way through Wisconsin for infrastructure improvements, the state’s logistics systems have made considerable strides to compete with other markets. However, metro Milwaukee’s proximity to Chicago, the dominant logistics hub in the Midwest, continues to stymie the area’s ability to land the total investment needed to maximize efficiency for the regional economy.
Wisconsin has received more than $4 billion in recent years from federal government spending bills like the American Rescue Plan Act and the Infrastructure Investment and Jobs Act to fund infrastructure projects across the state.
This year, the American Society of Civil Engineers gave Wisconsin’s overall infrastructure a grade of C+, up from its previous grade of C. While that may sound underwhelming, the grade puts Wisconsin two points above the national average of C- and above all of the other states in the nation, with only Utah and Georgia also at C+.
“The key is to remain vigilant,” said Bob Bryson, chair for the ASCE’s Roadway Council and previously the City of Milwaukee’s chief traffic engineer. “We got a shot in the arm to improve facilities and systems reaching the end of their life, but we have to keep them in good shape, maintain them.”
While the ASCE report card grade includes aspects of infrastructure that don’t contribute directly to transportation, transport-related areas in the state, like bridges and dams, received a C+ and railways received a B.
Southeastern Wisconsin industrial real estate brokers noted the region’s interstate system as the area that has seen significant improvement in recent years with several megaprojects beginning or wrapping up: I-41 has been redone in much of Milwaukee County, I-43 is currently under construction in Milwaukee and Ozaukee counties.
However, finding developable land along many of these corridors can be challenging due to the mature nature of many parts of Milwaukee, Waukesha and Ozaukee counties. The exception is the I-94 North-South corridor from the Illinois state line to Oak Creek, where there is still a considerable amount of undeveloped land and a $1.9 billion freeway expansion project was completed in 2020.
“Amazon located there and that’s a stamp of approval – Uline continuing to build in that area is also. They realize the logistical advantages,” said Jim Barry, president of Milwaukee commercial real estate firm The Barry Company, which has worked on I-94 deals, including Amazon.
Although one of the best-positioned parts of the state, industrial real estate vacancy rates in Racine and Kenosha counties are higher than in other counties in the region, which is in part a result of fewer logistics users moving up from Illinois than initially forecasted, brokers said.
“We still have this little problem called Lake Michigan and this little problem called Chicago,” said Jeff Hoffman, an industrial real estate broker and principal with Cushman & Wakefield | Boerke. “If you’re distributing on a national basis, the reality is locating southwest of O’Hare in the I-80, I-55 corridor is still just a strategically better location.”
The one exception to the region’s otherwise modern interstate system is the 3.5-mile I-94 East-West corridor in Milwaukee County that business leaders have been calling for the expansion of for several years.
“Once you complete that, I would suggest we’re going to be at the leading edge of modern infrastructure for our freeway systems,” Hoffman said. “That would put us in a good position for the next 50 years.”
The $1.74 billion project received federal approval earlier this year, but still faces a federal civil rights review and a civil rights lawsuit from opponents who say the expansion will adversely affect nearby residents, most of whom are Black and Hispanic.
“Wisconsin historically has been a manufacturing economy, so the ability to get things on the road quickly – trucks, oversized equipment, material – has been very important for distribution and logistics,” Hoffman said.
An area that some brokers see room for improvement in is the region’s rail network, especially in an era when some users are looking to cut their carbon emissions. In 2023, about 30% of freight by ton was handled by rail in Wisconsin, according to Bryson, making it a crucial part of the state’s logistics system.
However, from a commercial or industrial rail standpoint, Wisconsin does not have a very deep base of existing rail-served properties, according to Hoffman. Rail service might be nearby, but bringing the line directly to a site can be an expensive and long process.
“In the last two years, I’ve probably received more inquiries about the availability for rail service than I had received in my first 20 years in the business combined,” Hoffman said. “Everybody’s looking for more effective ways to transport. There’s also some carbon emitting and just the cost of transportation.”
Sandi Siegel, president of M.E. Dey & Co., a Milwaukee-based freight forwarder and customs broker, agrees that rail should be expanded in the region, but advocates specifically for a new intermodal facility, which is a facility able to move containers between different modes of transport, such as from a railcar to a truck. The southeast Wisconsin region has not had an intermodal facility since Canadian Pacific Railway closed its intermodal container service at Port Milwaukee in 2012, citing a lack of cargo volume.
As a result, 85% of the containers that M.E. Dey handles for shippers and importers in Wisconsin are moving in and out of Illinois, which is inefficient for Wisconsin companies.
“The rail and intermodal facilities in Illinois are horribly congested, and obviously the truck drivers are driving that much further to pick up on a container in Chicago, versus a local pickup,” Siegel said. “So, the trucking portion of the move is much more expensive, you have more restrictive weight limits because you’re crossing the state line. It goes on.”
“We have a huge void in intermodal,” said Siegel, who sits on the Wisconsin Department of Transportation’s Freight Advisory Board and is participating in two studies to examine how to bring intermodal back to the region. However, getting not only the political attention to bring such a project to fruition, but also the attention from importers and other logistics companies is challenging.
Industrial brokers and logistics experts agree that with the proper maintenance and key investments, southeast Wisconsin will remain an attractive place for business, but the region still sits in the shadow of Chicago logistically, which has its pros and cons.
“I’ve never really heard complaints from any of my clients or developers suggesting the infrastructure is inadequate here,” Hoffman said. “In fact, I’ve received several compliments from out-of-area developers that are looking in the market that what we’ve got here, especially from the state line up to Oak Creek, is as good as it gets.”
