Amazon Project Credits
Owner/Developer: KTR Capital Partners
Architect: Ford & Associates Architects
Engineer: Pinnacle Engineering Group
General contractor: Clayco
Chief legal counsel: Barack Ferrazzano Kirschbaum & Nagelberg LLP
Project cost: $155 million
Real Estate Awards: Best Deal of the Year/Regional Development Award
Niagara Bottling’s $56 million Pleasant Prairie development has the same back story as many in Kenosha County: The company searched for sites in northern Illinois, but ended up choosing Wisconsin.
Kenosha County’s development boom over the past two years represents a series of wins over its neighbor to the south. National distributors such as Niagara Bottling and Amazon.com selected the county after scouting for sites in the Chicago region. Locally, growing northern Illinois manufacturers such as L&M Corrugated Container Corp. opted to hop the border for their expansions.
Wisconsin is becoming a master at marketing against Illinois. It captured the respect of businesspeople in the neighboring state who are developing and marketing land in Kenosha County.
The wins over Illinois aren’t just good for bragging rights. Massive projects by national companies put Kenosha County on the map for site selectors. The developments represent immediate construction jobs, and the promise that manufacturers that invest here will lay down roots and grow, creating more permanent jobs in future years.
Much of the credit goes to Todd Battle, president of the Kenosha Area Business Alliance, said Whit Heitman, executive director of Cushman & Wakefield in Rosemont, Ill.
“Todd Battle is just a huge help on bringing companies into Wisconsin,” Heitman said. “Every time we have a company that may come in from Illinois and they seem serious about it, we give Todd a call.”
Battle summed up the situation in very simple terms.
“You get the benefit of a greater Chicago metro area at the cost of a southeast Wisconsin suburban community,” he said. “I don’t think it is that complicated. Kenosha is a pretty well-managed area. It’s in a good part of the state of Wisconsin. It’s in a good region.”
The alliance’s wins in 2013 will generate $375 million in capital investment, 2,600 jobs and 2.9 million square feet of building space developed or filled. The biggest win, at $300 million and 1,600 jobs, is the Amazon.com distribution center under construction in Kenosha.
KTR Capital Partners, a national real estate company, is developing Amazon.com’s Kenosha project. Jeffrey Zygler, KTR vice president of development, declined to discuss the Amazon development, but said investors and developers such as KTR plant a seal of approval when they build in a community.
“It sends a message that if it’s good enough for them, it’s good enough for everybody else,” Zygler said. “In Wisconsin, in the local and state level, the collaboration between the different bureaucracies, as well as the can-do attitude that is pro-business, is much appreciated.”
Collaboration is carefully orchestrated between KABA, Milwaukee 7 and the Wisconsin Economic Development Corp. For example, the groups sent 1,000 letters over the past year to northern Illinois companies encouraging them to jump the border. That campaign generated the lead with Kenall Manufacturing, which is developing a $30 million plant in Kenosha.
The three organizations visited Kenall executives together for a meeting to entice the company to Wisconsin, said Patrick Drinan, regional account manager of economic and community development for WEDC.
“They appreciate that we’re working as a team rather than three separate entities coming in and pitching their own little stories,” he said.
The marketing pitch includes the promise that manufacturers will save money. Milwaukee 7 hires a public accounting firm to run reports comparing the state tax levels for companies in Illinois versus Wisconsin, said Jim Paetsch, vice president of the economic development consortium. Taxes in southeastern Wisconsin sometimes can be half of what a company would pay in Illinois, he said.
“That is the game-changer in the pitch we can make to a company,” he said.
Kenosha County has reaped the benefits of that disparity because it is situated on the Interstate 94 corridor and on the Illinois border. Paetsch said he gets two or three calls a month from Illinois companies looking to move to the Wisconsin side of the border.
“When we started Milwaukee 7 nine years ago, I don’t think we ever got calls from Illinois companies,” he said. “I have three Illinois companies that are interested in finding manufacturing locations along the Illinois-Wisconsin border. They are sold on the value proposition.”
Success has created a new challenge for the county. It is almost out of available industrial buildings and is running low on large sites that are pre-approved for construction.
That situation is causing out-of-state developers to move into the county. Heitman, of Cushman & Wakefield, is working on a business park site with Bridge Development Partners LLC, Chicago, near the Amazon.com project. Illinois-based Venture One Real Estate is working on a 250-acre business park on the border in Pleasant Prairie.
California-based Majestic Realty Co. has a site ready for construction in Pleasant Prairie. It is lining up approvals for a 309-acre business park in Somers, said Majestic development partner Taylor Talt.
“Wisconsin has done probably the best job of any state that surrounds the Chicago industrial market with its vicinity to create a package that is very enticing,” Talt said.
Most developers see blurred state line
Mike Prost, senior vice president of Lee & Associates of Illinois LLC, is among the many Illinois brokers putting together deals in Kenosha County. Prost talked about the increased interest in Kenosha-area property:
From the perspective of Chicago real estate companies, is Kenosha County part of the northern Illinois market? Is the state border invisible in the eyes of the business community?
“In the eyes of both the brokerage and business community there really is no distinction between Lake and Kenosha County. The state line is just that — a line on a map. We repeatedly see clients who search both markets looking for the best opportunity.”
What economic advantages and/or disadvantages does Kenosha County’s industrial market have compared with Lake County?
“The perception south of the border is that Wisconsin is more pro-business. I believe this stems from many factors, including the proactive economic development efforts of KABA and Milwaukee 7, the historical and continuing relocation of Illinois companies to LakeView Corporate Park and Business Park of Kenosha, and an overall ‘Wisconsin has its financial house in order’ through the efforts of Gov. Scott Walker and his administration. It also seems that Wisconsin gets more and better PR for their development deals. There is also more land zoned for industrial with sewer and water service and strategically located in the I-94 corridor available in Kenosha County.”
Kenosha County is coming off a very active year for industrial development. How do you think 2014 and 2015 will compare?
“On the heels of the recent high-profile developments like Amazon, Ta Chen and Niagara Bottling, there is piqued interest in Wisconsin both from companies and developers. The county’s very low industrial vacancy has led to industrial developers putting an additional almost 1,000 acres into play for future speculative and build-to-suit opportunities.”