Roots of Warehouse Mania

This week a special treat: guest blogger Mac McIntyre, editor of DeKalb County Online magazine. This is the first of two articles of his that will appear here. Mr. McIntyre represents the DeKalb County Building & Development Association and has followed local growth issues for years. During an e-mail discussion of the push to build warehouses on spec to market to prospective tenants, he had this to say about where we got the idea that we should pursue logistics:

Short history story: Shortly after the DCEDC (Roger Hopkin’s group) was formed the DeKalb County Board and NIU paid a national research firm, PHH Farnus, to do an assessment to determine what kind of industrial/commercial development was needed and could be supported in the county. In September of 1989 the results of that study was released to the public. It identified warehousing/logistics as the target industry for DeKalb County on the following basis: 1) DeKalb County has a low unemployment rate, historically, because such a high percentage of our residents are employed by the government. That puts the county at a disadvantage in attracting other types of industries who would need large numbers of employees. 2) Warehousing/logistics jobs generally pay better than food processing and retail jobs so the influx of logistics jobs would create opportunity for increased wages for some of our low-middle income residents without creating a strain on the workforce required by our existing employers. 3) Large warehouses cost a lot of money to build thereby creating a large property tax base to help the schools without creating a burden of too many additional students. And 4) logistics does not use a lot of water or sewer.

The county government, along with DeKalb and Sycamore, invested (courtesy of taxpayers) heavily into infrastructure (like Peace Road) and an attraction program designed to put DeKalb County at the head of the crowd of communities trying to lure logistics to their community. They also tried to recruit local investors into getting the private sector to buy into the program. They were told by PHH Farnus that they (public and private) were making a long term investment that would take 20 years to pay-off.

I’ll also note that the PHH Farnus study also said that DeKalb and Sycamore needed “new construction of single family and condominium homes in the $80,000-$120,000 range to keep our high school graduates in town and to facilitate the sale of greater numbers of existing housing units in the price range just below the cost of new housing.” At that time the DeKalb School District was facing declining enrollment and revenues and were mothballing and selling school buildings. The school district was on the verge of bankruptcy and the State of Illinois was ready to step in. (That’s how we ended up with the Jack Deere fiasco.)

Here we are 17 years later. It shouldn’t be a surprise that Roger Hopkins is a cheerleader for logistics. He knows that the taxpayers and local private investors who invested back then are now at the point in time where their investments are either profitable or for losses. That’s why he jumped on the I-39 Logistics Corridor organization, to protect the investment DeKalb County has made from the regional communities who are trying to capitalize on this county’s investment. I understand why he wants spec buildings because in these times of JIT (just in time) commercial construction schedules having immediate inventory is an advantage. However, a spec logistics building requires an investment of in the tens of millions of dollars and there are so many of them, especially east of here, that somebody is going to really get hurt.