Could 2 Amazon facilities revitalize the south suburbs?

Commercial real estate developer Keith Lord thinks Chicago’s south suburbs, which have seen an exodus of jobs, manufacturing and retail stores in recent decades, are on the verge of a turnaround.

Lord’s own company is getting ready to break ground on the next phase of Market Square Crossing, a mixed-use development taking shape on the former Lincoln Mall site in Matteson.

A lot of factors are at play in bringing towns in the south suburbs back, Lord said, but one stands out: the 2021 opening by Amazon of a pair of mammoth distribution facilities in Matteson and nearby Markham, by far the largest in the Chicago region.

“It put Matteson on the map,” he said. “The number one thing it did was validate the area for other companies, and the second thing it did was bring in jobs and income.”

The Matteson facility alone employs about 3,700 people, said Lamonte Heyward, until recently the plant’s general manager, and plans to recruit several hundred more by the holidays.

“We plan to take this to just under 4,000 people,” he said.

Although the internet giant recently closed several smaller facilities around the metro area, it just opened a new distribution building in Chicago’s Humboldt Park neighborhood. And the Matteson and Markham buildings, along with other huge facilities in University Park and Monee, are the heart of its regional operations, shipping products throughout the Midwest.

“It was a significant investment in Chicago’s Southland area,” Heyward said.

Controversies still dog Amazon. Local labor board officials filed a complaint against the company in May, alleging it broke the law by discouraging union organizing efforts at four suburban facilities, including one in Joliet and in Monee. Amazon denied the allegation. An administrative law judge will hold a hearing on the matter in December.

Some, including Ruvayn Gray, complain about the quality of Amazon jobs. Gray, a 39-year-old Richton Park resident who worked at an Amazon site in Joliet, said he found it a dead-end job.

And the incentives and tax breaks communities often offer to woo Amazon are the subject of debate. Matteson, Markham and University Park reportedly offered a combined $512 million in benefits to Amazon and its property developers.

But local economic development experts say Amazon’s massive presence is already helping improve the fortunes of the south suburbs, which extend about 18 miles south of Chicago between I-57 on the west and Indiana on the east. Although reversing the region’s decadeslong economic decline will take years, a marquee corporate name such as Amazon cements the south suburbs’ reputation as a modern logistics hub, and could attract new manufacturing. The e-commerce giant is also having an impact on area wages.

“I would say Amazon pushed up wages everywhere,” said Reggie Greenwood, executive director of the Supply Chain Innovation Center at Governors State University in University Park. “We have a great labor pool in the Southland, and companies have to compete with one another, and right now that means competing with what Amazon does.”

Amazon increased the base pay at its plants in the region to $19.50 an hour starting in October, Heyward said, $6.50 more than the state minimum wage and up from $18 on opening day two years ago.

“We want to attract and retain the best talent,” he said.

Industrial developers began targeting the south suburbs several years ago, taking advantage of their proximity to the nexus of I-57 and I-80 and planting modern distribution facilities of more than one million square feet, each of which can handle hundreds of delivery trucks per day.

But it’s the Markham and Matteson facilities that stand out. At 3.9 million square feet, they are more than 100 feet tall, have five floors, and dwarf all other distribution buildings in Chicagoland. And unlike most Amazon warehouses, each relies heavily on robots to trundle packages around, speeding up the flow while saving workers a lot of time and effort.

“There’s nothing else like it in the area,” said Craig Hurvitz, director of national industrial research for Colliers. “It’s been forever since we’ve seen this kind of industrial development in the south suburbs, mostly you see a lot of older properties from the ’70s, ’60s and even the ’50s eras.”

The present logistics boom may not last, he added. Developers don’t find it easy building new behemoths in the south suburbs. It’s a patchwork of municipalities, residential subdivisions, old factories and warehouses, all crisscrossed by major highways and roads.

“It’s not like you’re buying and developing farmland,” Hurvitz said. “You need to be creative and put together a number of different parcels, but with the large labor pool and transportation it’s a great location, ideal really, if you can find pieces of developable land.”

Greenwood said he’s not sure there’s a direct tie between Amazon’s arrival and other economic investments, as many projects kicked off around the same time. But he said Amazon is a globally recognized brand and brought long-deserved attention.

“This shows the Southland has credibility, and we have a real sense of vindication,” he said. “The Southland is still, let’s say economically challenged, but people are just seeing massive investment out here.”

Other developers completed projects after Amazon’s move to Markham and Matteson, including CRG, which last year finished a one million square foot distribution facility at the intersection of I-57 and I-80 in Country Club Hills. The site is now leased to Solo Cup Corp.

“Amazon coming into these two municipalities definitely created a buzz in the development world,” said CRG Senior Vice President Susan Bergdoll.

She also said it’s likely other businesses that service massive distribution centers, such as packaging and trucking firms, will eventually flock to the area.

“There are suppliers and vendors that like to be close to them,” she said. “We’ve seen it in other locations.”

The south suburban economy started taking major hits in the 1970s. Manufacturers sought cheap labor overseas, shrinking and even shutting down U.S. operations. White flight ensued, family incomes shrank, and many towns hiked property taxes to finance government services. Large factories such as Riverdale’s Cleveland-Cliffs steel plant still dot the landscape, but typically employ far fewer workers than in the region’s heyday.

Conditions deteriorated further in some industries after the Great Recession, according to a 2017 report from the South Suburban Economic Growth Initiative, a group of local businesses and organizations. Between 2004 and 2014, the number of jobs in chemicals and related materials manufacturing fell 15% to 6,219, although transportation, distribution and logistics jobs increased 8% to about 20,000.

Overall things are looking up, Greenwood said. Manufacturers are now bringing jobs back to the U.S. for its skilled labor and lower transportation costs, and that’s benefiting the south suburbs. Local manufacturers such as Bimba Manufacturing Co. in University Park and LB Steel in Harvey are investing in new equipment. Best of all, in September, Gov. J.B. Pritzker announced that Chinese manufacturer Gotion, assisted by more than $500 million in state incentives, would establish a $2 billion electric vehicle battery plant in Manteno, about 18 miles southeast of Matteson.

Once Gotion joins Amazon, it strengthens the case for the south suburbs’ long sought-after goal: building Chicagoland’s third major airport, Greenwood said. Advocates have scaled back their original grand vision from an international passenger airport in Peotone to an air cargo hub, and the Illinois legislature passed a bill in May requiring state planners to solicit proposals from developers.

“The opportunity is certainly there, much more than it was two or three years ago,” Greenwood said.

Lord said the pace of development is also picking up in Matteson, a village of about 20,000. The Great Recession hit hard, and Matteson saw its once vibrant retail sector gutted, losing a Target, a Sam’s Club, and a Toys R Us, along with Lincoln Mall and, in 2013, its only full-service grocery store. But a Pete’s Fresh Market grocery opened in 2021, and a Sam’s Fulfillment Center also recently opened, along with a large-scale cannabis farm. Market Square Crossing will fill the former Lincoln Mall site on Lincoln Highway with indoor and outdoor golf, pickleball, basketball and volleyball, along with a new hotel and up to 600 residential units.

“The location is outstanding,” Lord said. “We just needed to get rid of the dying mall.”

Matteson is a mostly middle-class community with a high rate of homeownership, so Amazon isn’t the only factor in its revival, but it helped.

Lord praised Village President Sheila Chalmers-Currin for putting together the tax breaks and incentives packages for Amazon, along with bringing in other businesses.

“It increased the amount of disposable income and that’s great for retail,” Lord said. “They’ve added so many jobs and people down there, and all of it has had a tremendous impact.”

Showering subsidies on companies always draws criticism. That’s especially true when incentives are awarded to e-commerce firms, which compete directly with brick-and-mortar retailers.

“These warehouses employ a lot of people, but economists would argue they’re not creating net new jobs in the economy,” said Greg LeRoy, executive director of Washington, D.C.-based nonprofit Good Jobs First. “You’d think there was a recession going on and no one was shopping anymore, but it’s just e-commerce forcing stores to close.”

It’s also a bad idea for neighboring municipalities to one-up each other by offering more incentives to attract Amazon, he added, since it just sets up a race to the bottom.

Greenwood said south suburban mayors recognize the danger of trying to outbid one another. In 2019 they helped form the Southland Development Authority, a nonprofit that coordinates business expansion and new infrastructure. But tax incentives are essential, otherwise companies like Amazon could choose other locations, including in nearby Will County, where tax rates are lower.

“We have to have tax rates comparable to other places,” he said.

And it’s unavoidable that communities hard hit by job loss, such as Matteson, Markham and University Park, would offer more generous incentive packages than higher-income areas, said Bo Kemp, CEO of Southland Development Authority.

“I’m not aware of any community that solved that riddle,” he said.

Kemp sees attracting Amazon as just one step in reviving the south suburbs. The development authority envisions diversifying the economy by starting a hub where the hundreds of local metals, machinery and equipment firms can collaborate and share resources. It also wants to establish a food-processing center with warehousing and cold storage.

“There is not enough cold storage (space), not just in the Southland, but in Chicagoland,” he said. “These are the sorts of industries we want to attract alongside Amazon.”

Gray, who earned $18 an hour picking packages at Amazon, agrees that the region needs more than massive distribution centers.

“Amazon is always hiring,” he said. “But they don’t pay well at all, and I sometimes would walk a mile to pick one package. There were no robots at that Amazon that I was aware of. And if there was a minute of your time not accounted for, even if it was for a 10-minute bathroom break, they would write you up for that.”

Amazon offered training so workers could move up to higher-skilled jobs, added Gray, but it wasn’t useful for non-Amazon jobs, so over the summer he completed an electromechanical technician program run by OAI Chicago Southland, a workforce training agency in Park Forest funded by the state and county, as well as foundations and businesses.

OAI Senior Director Sandra Dafiaghor said many local manufacturing firms, have aging workforces, and need a stronger pipeline of trained young people.

“They tell us they need people, they come to all of our hiring events,” she said. “But they’re not looking for entry-level folks.”

Gray landed a job with Ability Engineering. The South Holland-based firm makes high-tech components for companies such as Boeing and SpaceX, pays $20 an hour, and provides training that will eventually boost Gray to $40 per hour, he said.

“I understand Amazon is helping the cities they’re in,” he said. “But I had to leave there to better myself.”

brogal@chicagotribune.com