Glenwood eyes large warehouse project

Added space off Illinois 394 fueled by e-commerce growth

To satisfy the growing demand for e-commerce needs of retailers and shippers, Glenwood is moving forward plans for 500,000 square feet of warehouse space.

Chicago-based M1 Properties proposed the project on 38 acres on the west side of Illinois 394 and south of Glenwood-Dyer Road, according to the village.

The $54 million project, with construction scheduled to start next summer, will be the single-largest commercial development in the 150-year history of the village, according to Glenwood officials.

Glenwood Park 394 would have 141 loading docks and adjacent parking for trucks and other vehicles, according to plans.

A redevelopment agreement with M1 and an affiliated company, Glenwood Commerce, calls for the project to be completed by the end of 2024.

The agreement, approved recently by the Village Board, calls for a tax increment financing district, something village administrator Brian Mitchell said is the next step in the process.

When a TIF district is created, the equalized assessed valuation of property inside it is established as a base, although the term “frozen” is also used.

The property taxes paid on that base amount continue to flow to other taxing bodies, such as school districts, but they don’t realize any incremental increase in taxes until the TIF has expired, according to the Illinois Tax Increment Association.

Along with the municipality the TIF district is located in, other taxing bodies have to agree to establishing it.

A TIF district’s life span is typically 23 years, although TIF’s can be ended sooner than that and the duration of a TIF can also be lengthened another 13 years under certain conditions.

While the TIF is in place, incremental increases in property tax revenue due to new construction or redevelopment are sequestered in a separate fund that can be used to reimburse a developer for certain eligible expenses such as land acquisition and for constructing public improvements such as utilities.

The Village Board has also asked the Cook County Board to approve a tax reclassification for the property, another requirement of the redevelopment agreement.

The short-term property tax

reduction would not take effect until the project is complete. While industrial property is taxed at a rate of 25% of market value, the reclassification would reduce it to 10%, the same level as assessments for homes.

The 10% rate lasts for 10 years, with the property assessed at 15% of value in the 11th year, 20% in the 12th year and 25% after that.

Over the years, many of the regional warehouse projects have been concentrated in lower tax sites in Will County. That has been changing, although Cook County municipalities have had to induce that development to overcome their property tax disadvantage.

Large projects underway or planned in south and southwest suburbs, including Country Club Hills, Oak Forest and Tinley Park, are tied to demand for warehouse distribution space driven by e-commerce growth.

Glenwood officials say the demand for such space is incredibly strong throughout the south suburbs.

“There simply isn’t enough available space to satisfy demand and there is no sign of it slowing,” according to the village.

Real estate services company CBRE estimates that for each $1 billion in additional e-commerce sales, another 1.25 million square feet of distribution space is needed to meet supply chain requirements.

According to Cushman & Wakefield, through the first half of this year, industrial leasing in the Chicago area jumped nearly 14% compared with the first half of 2020, with more than 26 million square feet gobbled up, the largest absorption on record.

The COVID-19 pandemic has driven part of the demand, but manufacturers, retailers and distributors don’t see the trend abating.

Glenwood officials said that while Amazon has developed large fulfillment centers in the south suburbs devoted to getting goods it handles to customers, other shippers want distribution sites closer to customers to shorten delivery times, particularly in heavily populated metropolitan areas.

The Glenwood building would be a speculative property, with no firm tenants lined up. But, apart from Amazon, there are more companies that lease readily available space from already constructed facilities, according to the village.