Industrial users turning more often to corporate real estate services

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by Dan Rafter

AJR Filtration has operated a manufacturing facility in St. Charles, Illinois, since 2001. But as the company, a manufacturer of custom filters used in medical equipment and liquid processing, continued to grow, it needed more space. The challenge? AJR wanted to expand, but it didn’t want to move far enough away from its St. Charles home to lose access to the skilled workforce on which it had long relied.

That’s where the corporate services division of Transwestern came in. This division, which works with companies planning expansions or moves, helped AJR determine what it needed from both a new building and a new location.

This was especially important with AJR, which was expanding its product offerings to include the Pillow of Health, a new hypoallergenic pillow.

The solution? Transwestern worked with AJR to find a new land site right in St. Charles. AJR signed on for a new build-to-suit building of 180,000 square feet to house its manufacturing operations. The best news? Because the building is located in the same community, AJR can continue to employ its 250 workers, employees who have been critical to the company’s success.

Michael Marconi, managing broker of Transwestern’s Rosemont, Illinois, office, said that officials with AJR are thrilled with the expansion and its location.

“Their employees aren’t typical,” Marconi said. “They sew. You can’t find that talent everywhere these days. AJR was looking for a site where they could keep their current employee base. If they couldn’t find that, they were prepared to move to Kentucky. Fortunately, our site selection people were able to work with the city of St. Charles to find this land and work out a deal that was good for the city and our client.”

This is far from the only success story to come out of the corporate real estate departments of the commercial brokerages working the Chicago-area market.

These busy departments work with end users — including industrial users — to help them find the most appropriate sites when they are expanding. They also help their industrial users qualify for financial incentives offered by municipalities, incentives that can make a previously unattainable plot of land affordable.

The commercial pros working in corporate real estate divisions will also help companies analyze their workforces to make sure that they are not overpaying on labor, always a huge cost for industrial users. They’ll analyze their supply chains and logistics plans to make sure that these industrial users are manufacturing and shipping their products in the most cost-effective way possible.

In other words, corporate real estate services help industrial users operate more efficiently and spend less money while doing so.

A success story in St. Charles

That’s exactly what happened with AJR in St. Charles. Transwestern worked with AJR to find a site in which they wouldn’t have to go through the stress and costs associated with replacing a veteran pool of workers. Transwestern’s corporate real estate division analyzed possible locations that wouldn’t drive away existing workers. After that analysis, AJR had a list of possible locations that wouldn’t cost them their employees.

Transwestern also worked to land AJR financial incentives. These were key: AJR needed dollars, for instance, to build a new road leading to their build-to-suit facility, Marconi said.

“We were able to navigate AJR through the incentive process,” Marconi said. “They did qualify for a lucrative tax-based incentive. In reality, that incentive was like cash to them. It helped make this site a possibility for them.”

Transwestern didn’t have to worry as much about AJR’s access to major transportation routes. Neither trucking nor rail was a major driver for AJR, Marconi said. The facility needed to service one client located north of St. Charles. That meant that major highways and rail lines weren’t a necessity.

“As a corporate real estate provider, you have to take a close look at where your clients’ products are going,” Marconi said. “They service one client in Cary, Illinois. There is not much industrial land between St. Charles and Cary. They could have moved to Elgin, but then they would have lost their employees who live in North Aurora. This location in St. Charles worked for AJR and its employees. Those are some of the things you look at on the behalf of your clients when you are working in corporate real estate services.”

AJR’s new building is 180,000 square feet, but the facility allows for flexibility. The manufacturer can expand the site in the future if its business should continue to grow.

“Corporate services is really about looking at your client’s needs as a whole and understanding them,” Marconi said.

Industrial and corporate services

The number of industrial users employing the corporate services divisions of commercial real estate firms is continuing to grow, Marconi said.

For instance, many industrial users don’t want to arrange the snow plowing or lawn mowing services for their facilities. A corporate services division can handle that task.

Then there is the data work that corporate services divisions provide. For instance, a corporate services division can help industrial users find those sites in which they will be most likely to attract the skilled workers they need.

“Officer users know where to find the best workers. They just head to Chicago to get the Millennials,” Marconi said. “Manufacturing is different. Where do you go to to get skilled labor? That’s a difficult component. Just consider all the people that Amazon is hiring. You need to go somewhere were you can find the workers. You need a company to provide the analytics showing you were the employees are. You need a company that can help you with the logistics and employees.”

When working with AJR, this meant that Transwestern didn’t just concentrate on finding the company a new, modern warehouse space. Transwestern also contacted colleges that offered strong sewing programs. In case AJR did decide to move to Kentucky, Transwestern searched the state for shuttered plants located near strong seamstresses who were looking for work.

Not only that, Transwestern analyzed the possible workforces to determine which ones were most cost-effective.

“What if you have to pay $4 an hour more on average for your employees and you have 400 of them?” Marconi said. “Now the money you might have saved on transportation is all gone.”

Marconi said that industrial users have grown to appreciate the value of corporate services. He said, too, that more industrial users are willing to invest in these services because they so appreciate the value that they provide.

“More and more industrial users when they go into a market are looking at all of these factors,” Marconi said. “Factors like the scarcity of good employees is on the minds of industrial users today. They are all becoming nimbler when it comes to finding the right workforce.”

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This entry was posted in Chicago Commercial Real Estate, Illinois, Illinois real estate, industrial real estate and tagged , , , , , , . Bookmark the permalink.

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