Northwest Business Magazine

A 2020 Economic Forecast: Plenty of Optimism with a Touch of Uncertainty

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A year filled with economic successes has local leaders feeling optimistic about the months to come. Get a taste of what’s happening in our region and what challenges could lie ahead.

Expansion among existing businesses is driving construction in many of Elgin’s 23 business parks, including one along Randall Road and Interstate 90, where electronics display specialist Newhaven Display just opened a new facility this year.

Forget for a minute everything you think you know about what’s happening in the economy lately. Here in the northwest suburbs of Chicago, every corner of the region is enjoying the effects of economic expansion.


In some places, key indicators are setting new records. In other places, a stable pattern of steady growth has been the hallmark for the past several years. Everywhere, there are signs of growing pains, but there’s also plenty of optimism.


For all the good news happening locally, we haven’t been immune from national trends. Uncertainty in Washington is trickling down, and there’s an election year coming. Major moves in Springfield are adding additional questions, and the rise of online shopping is forcing brick-and-mortar retailers to adapt creatively.


To get a true sense of what’s happening around our region – and what you should plan for in the coming months – we met up with experts from four corners of northwest suburban Chicago to gauge what lies ahead in 2020.

Breaking Records in Elgin

It’s been a memorable few years in Elgin, where numerous metrics are hitting historical milestones.


The unemployment rate was down to 3.7 percent several months this year, its lowest point since 2006 according to the federal Bureau of Labor Statistics. Retail vacancies, including in the downtown area, are at historic lows, while net absorption of industrial space in 2018 was about 1.7 million square feet, says Tony Lucenko, director of Elgin Development Group, the city’s economic development representative.


“We’ve never had that much net absorption of industrial space since records started being kept 30 years ago,” he adds. “We are seeing between 1.7 to 2.2 million square feet of both speculative and non-speculative industrial construction because of last year’s net absorption, demand, developer confidence in Elgin, continued growth and simply because there isn’t enough space left.”


To some extent, Elgin’s growth has come from the arrival of new firms, among them retail giant Amazon, which is building a new facility along the Interstate 90 corridor.


But the greater growth has been among existing firms in Elgin’s 23 industrial parks. Firms like Hydrox, a specialist in the health care industry, and Newhaven Display, a specialist in electronic displays, are expanding their local footprints.


“A number of local businesses are growing, and they are investing in their current facilities or seeking additional space,” says Carol Gieske, president and CEO of the Elgin Area Chamber. “As part of our effort to retain existing businesses and help them expand, Tony is working with our businesses to stay in the community and find them space that’s appropriate.”


On the retail side, available space is equally tight, with about 5 million square feet of existing retail space and a vacancy rate of less than 4%. The local market has been attractive to both traditional brick-and-mortar stores as well as online retailers looking to establish a physical presence.


“It’s been very difficult to find space for new retailers,” says Lucenko. “So, we continue to do what we can to open up more space, because we’re running out of land in our nine existing retail corridors.”


The story is the same in Elgin’s downtown area, where recent projects like the redevelopment of Elgin Tower and the introduction of new retailers and restaurants are helping to relieve vacancy rates. Lucenko estimates there’s less than 4% of available space among the downtown area’s nearly 127,000 retail square feet.


Even with all of the good news in Elgin, Gieske and Lucenko say they’re seeing mixed signals about the near future.


Rising tariffs are impacting some local manufacturers, says Gieske, and are in some cases halting expansion plans. Low unemployment rates are making it harder to locate quality talent, which limits expansion plans. At the same time, data from the Federal Reserve and purchasing managers’ indexes seem to indicate a general economic softening, adds Lucenko. Uncertainty in federal government also creates room for a possible flattening of the economy.


“Depending on who you talk to among our manufacturers, some will tell you things are currently down a bit, while others will tell you they’re still in a boom,” says Lucenko. “It’s difficult to give a broad-brush stroke on how local businesses are doing because we have such a diversity of businesses.”


There’s also concern about recent legislation coming out of Springfield, namely the legalization of recreational marijuana and the enactment of a minimum wage hike.


To help business owners prepare, the Chamber has been hosting conversations with Chamber members, lawyers, policymakers and other business owners who’ve shared their research and perspectives.


Next year’s Census raises many questions for local municipalities and service agencies, especially given Elgin’s nearly 45% Hispanic population. A lower population count – and Illinois in general is expected to decrease in population – could bring in fewer dollars for grants and other forms of state and federal aid.


Regardless of what’s to come, the Elgin Area Chamber of Commerce and Elgin Development Group continue to make themselves a support for all local businesses, with resources available in person and online.


Free programs like the Elgin Area Small Business Academy are aimed at helping local entrepreneurs and small businesses to advance their goals, and Chamber-related networking events are geared toward improved connections and collaboration.


“Economic development certainly is a priority in this community, and we work together, partnering and collaborating with many organizations, especially with the professional staff at the City of Elgin, to provide businesses an array of assistance and programming,” says Gieske.

Downtown Geneva remains a busy shopping district, fueled by a rich array of small businesses. There’s a growing interest in boosting the amount of residential opportunities in the neighborhood.

Staying the Course in Geneva

Conditions continue looking favorable in Geneva, where vacant spaces tend to be gobbled up quickly in this increasingly landlocked community.


Several downtown storefronts, left vacant last year when their owners retired, have since been filled and appear to be thriving. Summer festivals drew in record numbers to the downtown area and its many locally owned retailers.


“The Third Street retail space fills quickly, so we are happy to have some new faces on our retail blocks,” says Paula Schmidt, director of the Geneva Chamber of Commerce.


Out west on Randall Road, several new arrivals are popping up in large commercial shopping areas. Tenants like Ashley Furniture, Burlington Coat Factory and Fresh Thyme Farmers Market are bringing infill developments, while smaller projects, like an Oberweis ice cream store, are filling in empty parking lots along the corridor.


“Geneva has an excellent location and offers the best of everything,” says Cathleen Tymoszenko, economic development director for the City of Geneva. “It has Metra service, a historical shopping and dining district, national tenants, excellent schools and the Fox River. There are a lot of positive amenities for residents and visitors.”


Expanding the city’s retail strengths remains a key focus for the Geneva Chamber, especially as e-commerce giants like Amazon continue to grow. While the Chamber’s summer festivals do their part to attract new shoppers, the organization is also helping its members to be more intentional and strategic in providing a memorable shopping experience.


“You need to have that good combination of touch-and-feel in the brick-and-mortar stores, in addition to an online purchasing option,” says Schmidt. “Our service industries are happy to work with us on social media campaigns. Our membership director, Robyn Chione, has created some great learning events for our retailers and service members.”


Discussion continues around new ways to boost the presence of residential developments downtown, which could further add to the strength of its retail corridor. Early concepts for the redevelopment of the former Mill Race Inn, located at the river and Illinois Route 38, call for a mixed-use development with 116 apartments, eight townhomes and about 2,000 square feet for ground-floor commercial space.


Meanwhile, the city’s quieter southeast corner is heating up, as plans take shape for a new industrial park off Route 38, near Kautz Road. The 200-acre development would extend Kautz Road to Fabyan Parkway, says Tymoszenko.


Plans for the long-awaited third rail, to be located near the Metra platform downtown, look to be imminent, with an expectation of construction starting this summer, says Tymoszenko. There’s also talk of reconstructing and resurfacing State Street through downtown, across the river toward Kirk Street, but the Illinois Department of Transportation has yet to solidify a schedule.


“It is an extremely positive program designed to alleviate traffic congestion issues in the area east of the Fox River and continue the city’s downtown streetscape program,” says Tymoszenko. “That will help to create a better aesthetic, better pedestrian movement and better vehicular movement.”


The Chamber and its members are watching closely, as the project is expected to last for about two years. Schmidt expects it’ll impact foot traffic and will require some clever marketing to keep shoppers coming.


“The City of Geneva is here to assist businesses any way we can. We are glad to work on a case-by-case basis to help business with expansion plans or to overcome challenges they may encounter,” says Tymoszenko. “We are committed to working with our businesses to help them move toward future success.”


Schmidt believes her members are “optimistic but hesitant” about the year to come, encouraged by the year’s successes but watchful for a turn in the tide. Despite some members’ uncertainty, she remains optimistic and eager to adapt with changing conditions.


“We need to keep steady and help our businesses to not be afraid of the future,” she says. “We need to embrace what we have and flaunt it during times of uncertainty. We’ll still be here before and after the elections.”

The new Moretti’s restaurant in downtown Barrington is adding a new dimension to the area’s busy dining scene. It’s been a big hit among families and visitors, and it enjoys wide visibility from the Metra station.

Busy in Greater Barrington

The Barrington Area Chamber of Commerce covers 11 communities around Barrington, and in all corners there have been positive happenings, says Chamber President Suzanne Corr.


At the heart of the region, downtown Barrington continues growing on the success of the new shopping center at Hough and Main streets. New restaurants like Big Iron Horse and the revamped Remember Charlotte’s pizza have found a welcoming audience among longtime favorites like McGonigal’s and Neoteca.


“We have a very active nightlife here in the downtown area,” says Corr. “People want more reasons to do things down the street, and in their own communities. The long-awaited Moretti’s Barrington opened this summer, and that has already been a huge destination for families.”


More than entertainment, Barrington’s smaller retailers are capitalizing on their competitive edge over e-commerce and big-box retailers: improved customer experiences. Firms that offer personalized service and tailored recommendations can gain an upper hand, says Corr. Such strategies increase loyalty and play upon our tactile senses.


“I read one statistic that said something like 27 percent of people abandon a shopping experience online because that product can’t be shipped right away,” she says. “So, what does that tell you? Instant gratification is so important to today’s consumers. Where can you get instant gratification? Walking into a store.”


The Chamber does its part to encourage small business with events such as its biannual Wine Walks, which encourage shoppers to stroll downtown while enjoying wine samples. Shopping centers in South Barrington, Deer Park and Long Grove host similar community gatherings. They help expose shoppers to new businesses, says Corr, but they also bring businesses together for a common goal.


Collaboration is something she’s especially noticed downtown, as the area becomes a hot spot for wedding-related services. This February, local venues like Barrington’s White House and vendors like Barrington Flower Shop are teaming up to host a wedding tour.


“I think collaboration and partnerships are big trends in businesses,” she says. “Work together, reach out to other businesses whose catalog of products and services are a nice augmentation of what you do, and maybe do events together, or find a way to help one another.”


Barrington is bracing for future challenges, largely related to a $73.5 million plan to relieve train congestion with an underpass at Northwest Highway, in the far northeast of downtown. With construction expected to begin in 2022, the underpass will help to relieve traffic concerns in the long term, says Corr, but getting there will create some headaches.


Meanwhile, empty office space also remains a challenge, as vacancies remain high across the village.


Hiring quality talent brings its own challenges as employers struggle to fill low-wage jobs, especially in the dining sector.


“Those are traditionally minimum wage-level jobs, so I think employers are realizing that you have to become a good place to work, because that at least helps attract staff to you,” she says. “You have to treat employees well. You have to create a good staff culture, because that will be a plus when you’re competing with others.”


The Barrington area doesn’t have as many manufacturers as some corners of our region, but Corr has heard them vocalize similar concerns about finding high-quality, skilled employees – a national trend that schools like Harper College are targeting.


Looking ahead to the coming year, Corr sees many good signs, but she also sees plenty of “noise” to cause distractions.


“I think there is a lot of positivity in the business community, and I would say it’s tempered with a little bit of caution,” she says. “We are coming into an election year. We all know what’s going on nationally and politically can affect business, and people’s spending habits, so I think there’s a lot of optimism.”


Corr advises sticking to the basics in the months ahead. Filter out the noise and focus on the positives.


“Put your focus on what you can control and what you can have the most impact and involvement in,” she says. “You really have to look at what you can do to help continue your own success. How can you team up with community groups? How can you collaborate with other businesses to do something that benefits all of us?”

Workers complete the exterior of a new senior housing complex in eastern Crystal Lake. Housing has been growing briskly in the city this year.

Filling Up in Crystal Lake

National retailers continue to spring up along Northwest Highway, spurred on by a combination of available space and big wins from recent years.


“When Mariano’s opened, that got the ball rolling, and ever since then we’ve kept that going forward,” says Heather Maieritsch, economic development manager for the City of Crystal Lake. “It’s created and generated a lot of buzz.”


Over the past year, Crystal Lake has welcomed numerous retailers, including Steinhafel’s, a Wisconsin-based furniture store that filled more than 100,000 square feet in a former Kmart – a space much bigger than most retailers want to fill these days, says Maieritsch. A little farther east, Binny’s Beverage Depot is set to open in a space vacated this summer by Barnes & Noble, while a McAllister’s Deli and Freddie’s Frozen Custard are slated to open next door. Down by Illinois Route 31, an Edge Fitness and a Fairfield Inn & Suites are scheduled to open in the spring.


“Retailers that may have dismissed the Crystal Lake market now are re-evaluating us and taking a closer look with all of the activity we’ve had,” says Maieritsch.


Even with the growing interest in Crystal Lake, it’s the mid-size spaces – typically those around the 40,000-50,000-square-foot range – that remain hard to fill.


“We still have the former H.H. Gregg, the former T.J. Maxx and the former Joseph’s space, and we’ve been working hard trying to find the right tenant mix,” says Maieritsch.


Retail successes are also being fueled by an expansion in local homebuilding. On the far east side of town, off Illinois Route 31 north of Illinois Route 176, the Woodlore Estates subdivision is taking shape. It’s expected to add several hundred single-family, senior and town homes.


A new senior living community is rising near Exchange Drive and Congress Parkway. It’s expected to be finished in the spring. Elsewhere in town, a former office building is being converted into private residences.


Expect to see additional movement as developers redesign the largely vacant Crystal Court shopping center outside Three Oaks Recreation Area. Developers have been planning a mixed-use community with housing and retail.


“It’s something that’s been on our radar and we’ve been talking about for a long time,” says Maieritsch. “There were a variety of property owners within that shopping center, and so one individual has been working to acquire all of them and is now nearing completion of that phase of the project.”


At the same time, Maieritsch is also celebrating recent investments at Camfil, a Swedish-based manufacturer of air filtration solutions. The company recently doubled its footprint in Crystal Lake.


“Years ago they were at the point where they were considering shutting down the facility,” says Maieritsch. “They had a plant manager come in and, over the course of a couple of years completely turned it around. Now the Crystal Lake facility is their highlight facility.”


Locally owned businesses continue to thrive, especially in the downtown district, which has enjoyed a near-zero vacancy rate for several years. Groups like Downtown Crystal Lake continue investing in events that draw more foot traffic to the area.


“They’ve really worked on strengthening the farmers market they do in the summer, to help that become a draw that gets people into the downtown and keeps them here,” says Maieritsch. “They’ve been very successful this past year, with improvements they’ve made to the market.”


The Crystal Lake Chamber of Commerce, McHenry County’s largest Chamber, is also doing its part to inform local business leaders and build relationships. By hosting programming with legislators and community experts, it works to keep local businesses aware of local, state and federal issues that can impact them in McHenry County.


There’s little doubt in Maieritsch’s mind that things are looking good for the year ahead. She doesn’t see evidence of a slowdown, though she does see the market shifting in subtle ways. Diners, for example, are spending more time at fast-casual restaurants than slower sit-down establishments.


“I foresee a good, strong year ahead,” she says. “When you’re talking to people, they plan almost two years out. We’ve had a lot of good conversations with individuals, so we know we have a lot of construction coming in 2020, and that’s a positive thing to see. And that will bring a lot of new business and traffic.”

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