With recent deals in Melrose Park, Bolingbrook and Skokie, the e-commerce colossus is rapidly encircling the city with a network of warehouses as it pushes to speed up delivery times of everything from televisions to toilet paper.
Showing that it hasn’t sated its voracious appetite for Chicago-area real estate, Amazon has cut two deals for new warehouses in Downers Grove and Palatine.
The e-commerce colossus is rapidly encircling the city with a network of distribution centers as it pushes to speed up delivery times of everything from televisions to toilet paper. In the past six months, the Seattle-based company has confirmed plans for warehouses in Skokie, Melrose Park and Channahon, acquired a huge parcel in Bolingbrook and explored a deal in Pullman on Chicago’s South Side.
Next up: Downers Grove, where Amazon has signed leases for two new industrial buildings totaling 504,000 square feet right where Interstates 355 and 88 connect, according to real estate information provider CoStar Group. In Palatine, the company has agreed to take over a proposed 162,000-square-foot warehouse on Hicks Road near Northwest Highway, according to a report from brokerage Colliers International.
Real estate has become an increasingly important part of Amazon’s business the past few years as the company has promised its customers shorter delivery times. Last year, Amazon committed to a one-day turnaround goal on online orders from its Prime customers.
While the company used to be able to get by with big warehouses in places like Kenosha, Wis., to meet its delivery goals now it needs more distribution centers closer to its customers in Chicago and its suburbs. Since 2013, Amazon has cut deals for more than 10 million square feet of warehouse space in the Chicago market, according to CoStar, making it one of the biggest industrial tenants here.
The company is also the ninth-biggest employer in the Chicago area, with 14,610 full-time workers here at the end of 2019, up 4.2 percent from a year earlier, according to the Crain’s List of Chicago’s Largest Employers. Amazon, which also owns Whole Foods Market, is the largest local employer outside government, health care or higher education.
Amazon’s growth has attracted the attention of labor activists who say its warehouse workers endure low pay and poor working conditions. The company’s critics include Bolingbrook Mayor Roger Claar, who opposes its plan for a big warehouse in the suburb that would employ as many as 1,500 people. One reason: The jobs would pay about $15 per hour, not enough, according to Claar.
It’s unclear how many people will work at the Downers Grove and Palatine properties. Amazon representatives did not respond to a request for comment.
Amazon has signed leases for two buildings—one comprising 291,000 square feet and the other 213,000 square feet—in Bridge Point Downers Grove, a new industrial park on the west side of I-355 where it meets with I-80, according to CoStar. A spokesman for the project’s developer, Chicago-based Bridge Development Partners, declined to comment.
In Palatine, Amazon has a deal for a warehouse planned at 315 S. Hicks Road, the former site of an H.B. Fuller factory, being built by Conor Commercial Real Estate, a unit of Rosemont-based McShane.
At a Palatine Village Council meeting earlier this month, Conor Executive Vice President Brian Quigley declined to identify the business that would occupy the building but previously said “one big e-commerce company” expressed interest in it, according to a recent story in the Daily Herald. The warehouse, which is expected to be completed in September, would be used to load vans with packages for delivery to nearby areas, the newspaper reported. Conor representatives did not respond to a request for comment.
Amazon currently occupies nearly two dozen local properties ranging from a 1.4 million-square-foot fulfillment center in Monee to a 41,000-square-foot distribution center in Morton Grove. The company is gobbling up industrial space all over the country as well: Green Street Advisors, a Newport Beach, Calif.-based consulting firm, estimates that Amazon will account for 15 percent of U.S. industrial leasing activity this year.
The growth of e-commerce has fueled an industrial real estate boom both nationwide and locally, as logistics and e-commerce companies expand and traditional retailers like Target retool their supply chains. The Chicago-area industrial rate was 6.25 percent at the end of 2019, down from 6.4 percent at the end of 2018, according to Colliers.
Joe Heffernan ©2020/All rights reserved. A Member Of KW Commercial Keller Williams Chicago-O'hare, Senior Broker