Wall Street wisdom suggests that when you hear people publicly recommending a stock, it’s probably time to get out. By the time insider knowledge becomes public, its peak value has already passed.
In somewhat the same vein, it frequently happens that recommendations for future policy coming from sophisticated market analyses reflect trends that are already occurring.
Arthur Andersen last month came out with an analysis of the city of Chicago’s industrial development prospects. Overall, it’s a useful and generally encouraging document exploding the myth that industrial activity in Chicago is on an irreversible slide.
There is a decline in smokestack manufacturing, which has decreased to only 30 percent of occupied space, but the distribution and services sectors are growing.
In fact, the city appears to be holding its own in industrial space at about 145 million square feet–fully 20 percent of the region’s total, the report said.
That figure has remained steady since 1993, it says, adding that there are also possibilities for expansion of a million square feet a year in areas such as business services. An example is the $60 million bank operations facility near Roosevelt Road and Wells Street announced last week by First Chicago NBD Corp.
Demolitions of obsolete space will continue, but 150 to 200 new structures and expansions will be added “as Chicago’s industrial inventory continues to regenerate,” the study says.
But one of the study’s recommendations simply follows what’s already becoming reality. It says demand for industrial expansion and facility replacement on the congested North Side–where there is a lot of pressure to turn industrial space into housing– should be shifted to other areas, among them the Near South Side.
That shift, in fact, is already going on. One of the burgeoning new areas for industrial space is 35th Street west of Comiskey Park.
Colliers, Bennett and Kahnweiler, a real estate services firm specializing in industrial property, and Chicago’s Wooten Construction are redeveloping an old warehouse on 18 acres into a 350,000-square-foot distribution center for Pepsi-Cola General Bottlers, owned by Rolling Meadows’ Whitman Corp.
The $18 million project, which is raising the ceiling height from 14 feet to the 32 feet demanded in today’s warehouse technology, will allow Whitman to consolidate the Pepsi facilities in Chicago, preserving at least 350 jobs in the city.
David Kahnweiler, president of the Rosemont-based company bearing his name, said he originally planned the project as a spec space, but Pepsi snapped it up. The Near South Side is “getting there” as a hot market, he said.
Indeed, developer Tem Horwitz, who spotted early development opportunities on the North Side in the 1980s with retail and residential developments in fringe areas, is in the process of picking up several nearby properties including the old Spiegel Inc. warehouse, a 400,000-foot facility.
“As these (North Side) lofts were being converted for residential uses, it seemed to us a good idea to pick up some of the remaining old loft buildings, but in areas where you could really develop. Thirty-fifth Street is safe and clean and has expressway access,” he said.
Horwitz said he started out thinking of redeveloping the properties for light industrial use, but is now leaning toward warehousing and distribution, particularly in the medical supply area, and back-office space such as First Chicago will be building.
An example of the North Side to South Side industrial migration is the planned move by Stiffel Lamp Co. from North Kingsbury Street in River North to South Morgan Street in the Stock Yards Industrial Park.
After Stiffel sold its six-story building to Enterprise Development for conversion to 188 loft condo homes, the company and Enterprise President Ron Shipka worked with the city to find a new home for the plant and its 325 workers.
That’s a switch from the way it used to be. In the recent past, Shipka has found his North Side residential development plans stymied by the city’s policy of preserving industrial properties.
Another sign of the Near South Side’s vitality is the recent purchase by First Industrial Realty Trust, a Chicago-based real estate investment trust specializing in industrial space, of another plant on South Morgan Street, giving it a total of 500,000 square feet in the Stock Yards park.
Jon B. DeVries, a senior manager in Arthur Andersen’s real estate advisory services group who authored the industrial report for the city planning department, conceded that the move to Near South advised in his report was already going, on to some extent.
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“We’re saying do more of the same instead of fighting every particular battle on the North Side,” he said. “The land is there and so is the labor force–if coupled with some training.”
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