Chicago’s food and beverage industry is fueling jobs, real estate growth

A new report from JLL shows more people are trying to get in on the action. Joining us now is JLL senior managing editor, Andy Strand. Okay, Andy, what is the main headline from this food report? Great, well, thanks for having me on. I think that the main report or the main headline would be that, really, Chicago, from a corporate perspective, in addition to having obviously great food that we all enjoy, is really a major employer here and a major driver as well of both office and industrial real estate. And that's really just given the number of companies that are here in Chicago already today. Since you talked about that, I wanna jump to this. We hear a lot about office real estate struggles. How is the food and beverage sector holding up? I know you said they're consuming some of that office space, but are they holding up maybe well now compared to the COVID days? Sure, yeah, so we have actually seen growth within this industry, in the food and beverage industry in Chicago, in terms of from a, they've been actually leasing more office space over the last five years, about 6% more every year. As opposed to, obviously, we've seen some certain industries go the other way. So it has been a net positive overall. And a lot of that's due to the fact that these individuals need to be in the office from a research and development perspective, innovation being around the other employees. And so that's absolutely been a positive for the Chicago market. I think when people think of food, Andy, they think of like Portillo's or the pizza or something like that. But it's not just that, it's the manufacturing sector. And I was watching a historical documentary about that. And food used to be the candy capital of the country, because all of the railroads, it was centrally located. And so we were able to get the sugar that we needed to make all of the candy. And is that still the case where we are, because of our location in the country, one of the best food manufacturing areas? Absolutely, and I think you've hit on it. People don't really realize that because it's such a diverse set within the food and beverage industry, in terms of candy, to your point, Chicago is absolutely the kind of the candy capital of the world in terms of the sheer number of companies that are here. And you're exactly right, it's due to the fact of transportation proximity. We have obviously the best rail access, access to farmland. And then also just in terms of people who are here from a talent perspective, we have a great pull from a number of universities that people then come back to here. That then leads to an ecosystem where then you have these employees with a unique knowledge that I think you're seeing companies want to hire and retain long term. I want you to talk about this part of it because we do obviously see in the headline sometimes when businesses, companies decide to leave Chicago for different reasons. Is Chicago at risk of losing any of these companies to any other markets out there? It's a good question. I think there are several tenants. I think we counted about 700,000 square feet of these tenants that have leases expiring in the next five years. But I mean, there's always a risk when there's leases coming up. However, I think given the reasons that we've laid out in terms of why people are here, I think it would take a pretty big change in how people do business for that to actually happen. So I think there's always a risk. I don't foresee that as a large risk in a general sense. Andy, what should Chicagoans know about this industry in their own backyards? And we like to talk about the value to our viewers at home. What is gonna be the most valuable nugget from this report? Yeah, I think it comes back again to the diversity of what's here. You have headquarters that are based here. You have candy companies, like I said, that are based here. You have the distributors that are based here. So and then even ingredient makers that are based here. So I think when I think of what is the most unique thing about it, it's again comes down to the diversity of what is here. And the fact that they're here for a reason because the knowledge base that is here from the 100 year history of this unique industry that's been here. So I think that would be from my perspective, the main takeaway. I wanna ask you one quick question before we let you go. Is there like a certain part of town where most of these businesses thrive versus some others? Are they like in a general location or are they kind of all spread out? They're fairly spread out. We have definitely seen a few transactions from an office space perspective in Fulton Market more recently. So I think that you have seen a drive over there. But interestingly enough, they are fairly spread out. We have some in the West Loop. We actually have some in the East Loop as well, which is a little bit further from the train. So I think more recently, we have seen some of that investment go into the Fulton Market area. But in general, when you do look at where they're spread out, there's a pretty good mix in terms of where they're located. Andy Strand with JLL. Thank you, Andy. Thank you. Thank you very much.