Contributed By John Coleman, Executive Vice President of Transwestern
The Kennedy Expressway between the Edens and downtown was recently named the most congested roadway in the country.
Traffic agita in Chicago is as inherent to our culture as Italian beef or disappointing quarterbacks, so this news comes as no surprise to anyone who lives and works in the area. But thanks to evolving real estate, transportation, and purchasing trends, we may enjoy an easier time on the roads as the nation’s expressway system shifts from serving the commuter to serving the economy.
Interestingly, the things we think should add to traffic actually have the opposite effect. Uber, for example, plunked thousands of cars on the road, but statistics show that its drivers often carry multiple riders per trip who might have otherwise driven separately.
And with the recent rollout of UberPool in cities like Chicago, the company is promoting carpooling as a way for riders to save money while simultaneously reducing the number of cars on the roads. While not entirely measurable, there is a strong belief that ride- sharing services may eventually convince city dwellers to forgo their vehicles altogether, further reducing congestion.
Likewise, the rapid growth of e-commerce – U.S. online retail sales are projected to reach $334 billion in 2015, according to Forrester Research Inc. – should eventually have a positive effect on traffic. Washington D.C.-based Brookings Institute has published numerous reports speculating that online shopping and last-mile delivery should reduce the number driving trips.
For example, if 10 people travel to an electronics store to buy a television or some other device, they generate 20 separate road trips – one there, and one back. But, if the same 10 people order online and have the product delivered, the number of trips is reduced because of the efficiency of the new transportation model. E-commerce needs to grow more for this outcome to fully manifest, but signs point in this direction.
Generation X and millennials are also expected to drive down road congestion because of their lifestyle choices. First, there is noticeable migration of professional workers moving back to dense urban areas like downtown Chicago.
As evidence of this trend, developers completed a record 3,100 apartments in downtown Chicago in 2015, with another 8,000 in the pipeline over the next two years, including smaller studio and one-bedroom units geared toward young professionals who want to live and work in the city center. They use public transportation, ride sharing, bike sharing and their own two feet to get around, not their personal vehicles.
Similarly, many baby boomers are selling their single-family homes in the suburbs and moving downtown in search of a more walkable lifestyle. This urbanization is producing other positive economic outcomes as well, like more restaurants and city groceries. Yet because these sites require regular deliveries, which add truck trips, the net impact of urbanization on congestion remains to be seen.
This downtown migration is happening in the suburbs, too – albeit on a different scale. Over the past 10 years, we’ve seen a rise in the high-density “suburban downtown” model. Communities like Arlington Heights, Elmhurst, Naperville and Palatine have invested in new mini-urban centers where dwellers walk to services rather than drive. Since they’re primarily centered along commuter rail lines, they also offer access to employers in the city.
In some cases, the jobs go where the workers are, which is why manufacturing site selection today is more about labor statistics and network optimization than available real estate. Manufacturers either build or make due in order to attract quality workers. The desire to tap into the younger workforce in downtown Chicago is also why suburban companies like Kraft Heinz, Motorola Solutions and Gogo have relocated to the central business district.
Because homeownership is less of a priority today than it has been in the past, many millennials are renting apartments near work – whether it be in the city or the suburbs – rather than opting for entry-level housing in exurban areas with longer commutes and limited access to public transportation. This takes vehicles off the road entirely or reduces the distance traveled, both of which help ease congestion.
The broader shift in how goods are transported and delivered is already affecting the real estate sector. Companies are decentralizing their distribution model to get products closer to the consumer for faster and cheaper delivery. FedEx, for example, is constructing a new micro-terminal near Midway Airport so it can bring in large, package-filled semis and send those packages back out in box trucks for last-mile delivery.
The focus is on speed and efficiency, which may be why FedEx chose a location off I-55 and not the Kennedy, where congestion is more problematic. Elsewhere in Chicago, suppliers are gobbling up every warehouse or converted property they can find along the Ogden Avenue corridor and Near North and West sides, giving them direct access to the Loop without relying on the expressway.
Although the congestion situation in Chicago will likely get a bit worse before it gets better, experts are optimistic that it will eventually ease as we settle into a new consumer shopping and logistics model. But they also warn that if we want our new TV delivered tomorrow, we’ve got to stay off the road so the trucks can get through.
John Coleman is Executive Vice President of Transwestern and the Chicago Industrial Lead based in the Rosemont, IL office.
© 2016 Real Estate Communications Group. Duplication or reproduction of this article not permitted without authorization from the Real Estate Publishing Group. For information on reprint or electronic pdf of this article contact Mark Menzies at 312-644-4610 or firstname.lastname@example.org