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Chicago Railroad Economic Opportunity Plan Final Report

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CHICAGO RAILROAD ECONOMIC OPPORTUNITY PLAN FINAL REPORT CITY OF CHICAGO DEPARTMENT OF TRANSPORTATION Submitted by: IHS GLOBAL INSIGHT (USA) INC. Contact: Joseph Waldo Director – State and Local Sector Consulting Tel: 610-490-2636 Fax: 610-490-2770 E: [email protected] Chicago Railroad Economic Opportunity Plan TABLE OF CONTENTS Introduction and Executive Summary .............................................................................................1 Task 1. Analysis of Carload Rail-Based Industries and Their Long-Term Trends ......................10 Introduction............................................................................................................................... 10 Warehousing Activity ............................................................................................................... 11 Manufacturing Industry ............................................................................................................ 14 Conclusion ................................................................................................................................ 37 Task 2. Examine Chicago’s Industrial Corridors for Suitability of Rail-Served Industries .........41 Introduction............................................................................................................................... 41 CREATE Effects....................................................................................................................... 41 Overview of Industrial Areas.................................................................................................... 42 Industrial Areas......................................................................................................................... 44 Task 3. Define and Analyze Five Specific Locations Most Suitable for Rail-Based Industries ..86 Introduction............................................................................................................................... 86 Western/Ogden Industrial Corridor .......................................................................................... 89 Stevenson Industrial Corridor................................................................................................... 99 Stockyards Industrial Corridor................................................................................................ 110 Greater Southwest Industrial Corridor.................................................................................... 127 Calumet Industrial Corridor.................................................................................................... 140 Task 4. Determine Industry Needs, Potential Incentives, and Economic Efficiency of Incentives for Five Recommended Locations...............................................................................................153 Introduction............................................................................................................................. 153 Evaluation of Candidate Parcels ............................................................................................. 157 Summary................................................................................................................................. 182 Strategy Recommendations .........................................................................................................185 Appendices...................................................................................................................................203 Appendix I- Carload Rail Market Demand............................................................................. 203 Appendix II – County-Level Manufacturing Trends in the Chicago-Metro Region .............. 207 Appendix III – Source Consulted ........................................................................................... 211 IHS Global Insight (USA) Inc. i Chicago Railroad Economic Opportunity Plan Introduction and Executive Summary Since the 19th century, Chicago and its surrounding region have functioned as the primary hub of the North American freight rail network. The region is the only metropolitan area in North America served by every Class I1 railroad and one out of every four freight rail shipments originate, terminate, or pass through the area2. Chicago's unique legacy as a freight railroad hub has given it an extensive network of rail lines and terminals, and an unmatched volume and diversity of industrial property in the region that is accessible for carload rail service, i.e. service in which individual cars, or groups of cars, are moved to or from a shipper's location through the use of rail "sidings" or tracks that adjoin structures on a specific site. Carload service is different from intermodal rail traffic which utilizes both rail and truck modes of transport. While carload rail access was once common, it has now substantially diminished, if not disappeared entirely, in many North American cities. However, in Chicago, thanks to its historical development patterns, the city's extensive active rail network, and the region's geography, this type of rail access still exists at many industrial properties. This rail access offers the City of Chicago a unique opportunity for industrial development that is not available in competing urban areas. The goal of the Chicago Rail Economic Opportunities Plan (CREOP) was to assist the Chicago Department of Transportation (CDOT) and the Department of Community Development (DCD) in developing a set of strategies whereby the city can exploit its unique rail freight infrastructure. This Plan is increasingly urgent as property within many of the city's rail served industrial corridors are under growing pressure to be converted to non-rail uses such as residential or retail activity. Once properties in these corridors are transformed to other uses, the City loses its opportunity to leverage its unique rail asset and its corresponding economic development advantage. Taking advantage of the economic development opportunities for rail freight properties entailed a combination of skills: knowledge of rail operations, an understanding of freight logistics among various industries, expertise on industrial property development in Chicago and elsewhere, along with knowledge of local conditions. IHS Global Insight, together with Goodman Williams Associates, Economic Development Research Group, Cambridge Systematics, and Valerie Kretchmer undertook the study in a series of four major tasks: Task 1: Analysis of carload rail based industries and their long-term trends. This initial task provided the context within which a successful economic development strategy for attracting rail-oriented industry can be developed. Understanding what industries are best suited for rail-based development allowed the City to identify targets for which a compelling 1 A Class I railroad is defined by The Surface Transportation Board (STB) as having annual carrier operating revenues of $250 million or more. 2 Based on IHS Global Insight 2008 TRANSEACH data IHS Global Insight (USA) Inc. 1 Chicago Railroad Economic Opportunity Plan case can be made that Chicago‘s freight rail system is economically desirable for businesses to relocate to Chicago. Task 2: Examine Chicago's industrial corridors for suitability of rail-served industries. This second task focused on gaining a keen understanding of the economic activity, freight potential, and constraints along each the City's Industrial Corridors3. This information, together with Task 1 findings, provided the basis for assessing opportunities for business retention, expansion, and attraction related to rail facilities. Task 3: Define and analyze five specific locations most suitable for rail-based industries. Utilizing the findings from the previous tasks, this task was comprised of an assessment of features associated with properties within Chicago’s industrial corridors that offer rail-based development potential and identified a set of specific properties that were most suitable for one or more targeted industries. Following extensive interactions with the City, a set of five “representative” properties were selected for more detailed analysis in Task 4. In many respects, these selected properties characterized the broad range of potential rail-served properties that are available in Chicago. They ranged in size, presence of direct rail access, condition, geographic location, and existence of structures that may facilitate or impede future rail-served uses. Task 4: Determine industry needs, potential incentives, and economic efficiency of incentives for five recommended locations. Building on previous findings, strategies and a set of proposed actions for each of the recommended parcels were developed. While these findings were meant to address the specifics of most effectively realizing the potential for rail-related use at each of the five selected sites, they also offer more general insight into the challenges and potential solutions for developing some of the city’s industrial parcels with freight rail-oriented focus. Results from each of these four CREOP tasks are described below. While the objective of CREOP was limited to identifying five locations for rail-based economic development, it is hoped that the Plan's methodology be used as a model and extended to additional Industrial Corridors and other specific sites throughout the City of Chicago to encourage and leverage rail- based economic development. Task 1: Analysis of carload
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