Is Chicago America’s New Construction Hub?
Commercial construction takes a big hit during economic recessions when businesses and governments scale back expansion projects and take a conservative approach to protecting and consolidating their assets. Today though, for the first time since the recession of 2008, the construction business is booming again in the Windy City. Between the new McDonald’s corporate headquarters, being constructed on the former site of Oprah Winfrey’s Harpo Studios, the planned 98-story Vista Tower, Northwestern University’s new 1.2 million-square-foot biomedical research building and nearly 40 other projects currently in progress, Chicago has more cranes in the sky in 2016 than every other American city, save New York.
In this article, we’ll look at why it is that companies like McDonald’s, Conagra Foods and Kraft Heinz are so excited to be moving to Chicago, and what other factors are helping the construction business make a comeback
Benefitting from Lower Costs
One of the principle reasons that companies are choosing Chicago is the comparative affordability of the city compared to other urban centers. Businesses looking at office spaces around the country should be alarmed at the $75 per square foot market rates in San Francisco and Manhattan. Put that number beside a comparatively paltry $40 per square foot – the price you’d pay for a great office space in a popular area of Chicago – and it’s no wonder that big companies are opting to take advantage of the huge savings available.
Chicago is also a more popular destination for attracting talent than other similarly sized cities, thanks to its Midwestern housing prices. Young professionals looking for a start in the big city can expect to pay around $1450 (starting price) for a new apartment, compared with well over $3000 in one of America’s more expensive urban centers. Companies looking to recruit better executive and management talent will see the lower cost of living as an attractive prospect for their future employees.
Transit Access & an International Hub
With construction firms increasingly operating on a global scale, the importance of proximity to transportation options has never been greater. Chicago’s position in the middle of America makes it an ideal gateway to the rest of the world for companies looking to expand and do business abroad.
Chicago’s O’Hare International Airport gives executives a convenient way to travel overseas, and Chicago will be expanding its rail transit connectivity with a $2.3 billion Red Line rail system, having received a Federal Transit Administration (FTA) grant for $1 billion to put towards the project. Between its easily accessible air and rail transit options, Chicago is an ideal hub for construction firms that are planning to operate globally in 2017.
Investment Returns to Pre-2008 Levels
On December 22nd, 2016, the Chicago Tribune published an article on big-ticket construction in Chicago. The article offers a comprehensive mapping of construction sites in the windy city that carry a crane operation license, and the accompanying chart shows just how heavily high-rise construction was affected by the 2008 economic crisis. In 2006 and 2007, there were 36 and 39 (respectively) construction sites in the city that were operating cranes and Chicago was a hotbed for massive construction projects. By 2009, the number of licensed crane sites was down to just 12 and it was clear that developers had scrapped or abandoned their plans to build.
Today, with Chicago looking like an attractive destination for corporations all over America, the construction business is back in full boom and there are 43 sites with cranes in the sky. A glance through the list of ongoing projects reveals no clear trends among projects – office spaces, mixed-use buildings, 98-story towers with skywalks bridging them to their neighbors, and residential spaces with apartments and condominiums are all in the future for Chicago.
Like most businesses, construction firms thrive where businesses and the economy are thriving. Chicago is providing the ideal circumstances right now – reasonable costs of living, easy access to national and global travel and the availability of great talent is bringing businesses to Chicago and putting more and more cranes in the sky. Chicago looks to be the focal point of growth in America’s construction industry for the next five to ten years.