No Condos for this Industrial Corridor in Chicago – Next City

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No Condos for this Industrial Corridor in Chicago

(Photo by Oscar Perry Abello)

Hannah Jones was helping the City of Chicago navigate a crossroads between two futures. Would the city continue its legacy of offering hope and blue-collar jobs for millions of people, drawing them northward during the Great Migration or from around the world? Or would it take a step toward a different future of condos and tech industry jobs only for the advance-degreed, offering less in terms of legendary blues musicians but much, much more in property taxes.

It was not the first time the city had to navigate these crossroads in the Kinzie Industrial Corridor, the industrial neighborhood where Jones works as director of economic development at the Industrial Council of Nearwest Chicago (ICNC), a nonprofit organization founded in 1967 to address the deteriorating conditions in this area, a narrow strip of land located just west of downtown Chicago. ICNC served as a key liaison between city planners and businesses in the neighborhood as the city was considering changing the zoning and other land use regulations in key industrial areas like this one around Chicago.

For Jones, that meant, over the course of 2018, regularly accompanying consultants hired by the city’s Department of Planning and Development on walking tours through the corridor and in interviews with business operating in the neighborhood.

“I joked that I acted as a translator for the city and the businesses and vice versa,” Jones says.

With Jones’ help, the city’s planning consultants ultimately interviewed 15 companies with 1o or more years operating in the Kinzie Industrial Corridor, as well as 11 newer companies, ranging in size from one to 340 employees. Half employed more than 25 people; three employed over a hundred. Most, 69 percent, owned the buildings where they operated; 31 percent leased. ICNC itself owns four buildings with 416,000 square feet, leasing out to more than 100 manufacturing companies who are part of its Make City Incubator.

In August of this year, the Chicago City Council approved an ordinance to tweak some of the zoning around the Kinzie Industrial Corridor, the fourth largest industrial corridor in the city. The product of two years of work including the discussions Jones helped facilitate, the ordinance lays out what kind of non-industrial uses can continue to be sited in the area, but mostly preserves the industrial zoning — a win for advocates who see manufacturing as a pathway to the middle class for millions of people.

“I think it turned out way better than we thought it was going to turn out, going back to when this all really started in 2017,” Jones says. “It’ll still allow for changes to happen in the corridor, but it just won’t allow it to happen in a way that would allow all the manufacturers to be eliminated. Development will happen on the manufacturers’ terms as opposed to the developers’ terms.”

Chicago’s industrial corridors date to 1865, when the city opened what is now the Stockyards Industrial Corridor, covering 475 acres at that time on the South Side of Chicago. Today Chicago has 26 officially designated industrial corridors, ranging in size from 70 to 3,500 acres. The Kinzie Industrial Corridor currently covers 854 acres.

The industrial corridor designations helped facilitate the growth of manufacturing in Chicago, but there was never any guarantee those jobs would stay — especially in a globalizing economy. In 1960, manufacturing employed 57.8 of working Hispanic or Latino 20 to 24 year olds, 35 percent of non-Hispanic white 20 to 24 year olds and 29.6 percent of non-Hispanic blacks 20 to 24 year olds, according to a report from the University of Illinois at Chicago. By 2015, those numbers had dropped to just 10.2 percent of working 20 to 24 year old Hispanic or Latinos in manufacturing, and just 2.9 percent of both black and white 20 to 24 year olds. Chicago’s large manufacturing sector was hit harder by the decline in manufacturing than the U.S. as a whole.

With manufacturing firms and jobs leaving Chicago, the condos started coming for Chicago’s industrial areas in the late 1980s. In response, the city created its first three Planned Manufacturing Districts (PMDs). In these areas, alderman voluntarily gave up their power to “spot zone” — converting properties zoned for manufacturing to zoning for commercial or residential. In many cities, including Chicago, local council members have long maintained local fiefdoms over land use decisions — and that can lead to segregation, or it can lead to corruption as developers seek ways to gain favor with elected officials. Most of the Kinzie Industrial Corridor was overlaid with a PMD in 1998.

Since then, manufacturing in Chicago has made a booming comeback. But the markets for housing and commercial space in Chicago have strengthened at the same time, particularly in or around downtown. In 2016, Chicago’s Department of Planning and Development launched the Industrial Corridor Modernization Initiative, beginning with industrial corridors close to downtown. The first corridor analysis conducted led to the city eliminating or reducing the boundaries of the three original PMDs in the North Branch Industrial Corridor, along with other tweaks to the zoning. Those changes cleared the way for what is now the massive $6 billion Lincoln Yards project — now the center of a lawsuit claiming that the $1.3 billion in tax-increment financing subsidies it received is a violation of state law.

In spring 2018, the city launched three more examinations for the second round of the Industrial Corridor Modernization Initiative, including the Kinzie Industrial Corridor. There wasn’t widespread panic that the Kinzie PMD would similarly vanish, according to Jones of ICNC, but there was a moment to reckon with the thought of losing the Kinzie corridor’s protection as an industrial area.

The city had previously repealed a small section of the PMD at the eastern-most end of the Kinzie PMD as part of the earlier Fulton Market Innovation District Plan, which opened up zoning in that part of the neighborhood for more office, retail and restaurants serving alcohol. That plan centered on Google’s Midwest headquarters, which arrived in 2014 in the West Loop neighborhood, just to the east of the Kinzie corridor.

According to Deputy Commissioner Peter Strazzabosco of the Chicago Department of Planning and Development, shrinking the Kinzie PMD further was never on the table.

But others had been predicting a result along those lines. In one commercial real estate firm’s long-term outlook, “eventually, this [Kinzie corridor] PMD will be vacated as well.” Another commercial real estate broker told Crain’s Chicago Business, “we’ll see a lot of money flowing that way … It’s a better price point, and it’s [developers] looking at the long haul to go retail or residential.”

“You can’t read anything in the business press about the Kinzie corridor over the past several years without a developer or a property owner saying something like, ‘you know, people are investing in the corridor with the long term in mind,’” says Steve DeBretto, executive director of ICNC. “It’s basically code for saying, when all these factories go away, we’re going to make a lot more money. That sort of speculation was encouraged.”

But not by 27th Ward Alderman Walter Burnett, who represents the area in city council. He’s spoken against lifting the PMD’s restrictions on development, saying at one October 2018 event, “I know developers want to make a lot of money…I also know residents who own property in the area want to see their property values go up so they can make a lot of money, too. I’d like to help people do that, but not at the expense of everybody else. There has to be a balance.”

(Burnett was on family vacation and not available when reached for comment on this story.)

The Chicago Planning Commission approved the Kinzie Industrial Corridor Framework Plan in May 2019. The city presented its final ordinance to implement the plan’s zoning changes for the Kinzie Industrial Corridor on August 13, 2019. The changes do allow for new and larger office, retail and restaurant development at the eastern end of the PMD — closest to downtown and the Fulton Market area. Some of the additional changes place new limits on some uses that have been encroaching on the rest of the Kinzie Industrial Corridor to the west, such as event venues, medical centers, and sports and recreational uses like CrossFit gyms. Existing businesses of these kinds will be grandfathered in.

Most importantly, the changes do not repeal any part of the remaining Kinzie PMD, preserving it as primarily industrial space for the foreseeable future.

“This public recommitment by the city to the PMD is gonna restore some certainty to the market and it’s gonna allow people to make decisions based on business fundamentals rather than on real estate speculation,” DeBretto says.

It’s good news to Kinzie’s industrial businesses and tenants, which include food wholesalers, breweries, coffee roasters, caterers and other businesses that rely heavily on being able to bring in large truck shipments at any and all hours.

“I have trucks in and out all the time,” says Kate Jakubas, who six years ago founded Meliora Cleaning Products, which makes people- and planet-friendly cleaning products out of a 6,000 square foot space in ICNC’s Make City Incubator. “So I need to be somewhere where it’s accepted, where everybody knows that’s the deal.”

For Heidi Coudal, who founded her catering company Big Delicious Planet in 1994, there has never been anywhere else in the city where she’s imagined her business. She values the proximity to downtown, where many of her clients hold their events. It’s not far from her home in Lincoln Park. Many of her 30 or so full-time employees bike to work, she says. Coudal loves her building (“There are a lot of windows in our kitchen, which is unusual for a commercial kitchen,” she says) and believes enough in the neighborhood as it is, in 2017 she bought the building she had been renting for seven years.

If she can get the financing, Coudal says she has room to expand in her building, which also has an energy-efficient geothermal HVAC system. There’s also room at the front of the building for Big Delicious Planet to operate a cafe, The Canteen, which Coudal says is full of workers from the neighborhood every morning and afternoon.

Coudal even bought three lots next door to her building and converted them into an urban farm that supplies thousands of pounds of vegetables for her business every year.

“It’s a short growing season where we are in the Midwest,” Coudal says. “But we might go for weeks without having to buy tomatoes and cucumbers and certain herbs.”

Chicago City Council is scheduled to vote on the final zoning changes in September.

This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter. The Bottom Line is made possible with support from Citi Community Development.

Oscar is Next City's senior economics correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha, and Fast Company.

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Tags: chicagozoningmanufacturing