Investments in St. Louis Metro East approach $9.5 billion
After shattering records in 2006-2007, the development pipeline for Southwestern Illinois continued to swell over the past year, reaching a new high of more than $9.4 billion. The 2007-2008 Market Review and Investment Update – released this month by the Leadership Council Southwestern Illinois – shows the total value of projects announced, under construction or completed during the reporting period ending September 30, 2008 up more than half a billion dollars over the prior year.
“In the midst of all the pessimistic news about the slow down in the economy, we’re pleased to report that developments were still moving full steam ahead in Southwestern Illinois during the past year,” notes Suzanne Butler, president of the Leadership Council, the member-based, economic development corporation that compiles the economic data for Madison and St. Clair counties. “The continuing investments across so many sectors of our economy reaffirm Southwestern Illinois’ position as a prime Midwestern development location.”
Among the highlights from this year’s report:
$2.5 billion in projects were already under construction as of the end of September 2008, and $6.1 billion in additional announced projects included the multi-billion dollar investment at ConocoPhillips, which moved forward this fall.
As billions of dollars in projects move through the pipeline, the region should be poised for several years of intense construction activity. While this represents tremendous opportunities, the Leadership Council notes the level of activity will come with some challenges, including a sizeable increase in the demand for qualified laborers and greater stress on the region’s infrastructure systems and public services. Continuing to move projects through the pipeline also will be dependent upon solid support from and cooperation with local, national and international funding sources.
At $6.46 billion, industrial investments represented the largest chunk of the development pipeline. While mega projects such as those underway or planned by ConocoPhillips, U.S. Steel and Martin Aviation Group account for much of this, also noteworthy is half a billion dollars being invested in alternative energy projects, and
$95 million flowing into warehousing facilities. The continued investments in both of these areas can be directly linked to the Metro East’s superior intermodal infrastructure that has firmly positioned the area as a key Midwestern distribution hub.
Commercial investments topped $1.3 billion for the second year in a row, with 87 different projects contributing to the total. Approximately $164 million of the total represents projects already completed, while two thirds of the total consists of projects under construction. Although the pipeline includes over a quarter billion dollars in projects announced, that number is down $60 million from the year prior, an indication that the commercial sector may be slowing a little as our nation’s economy continues to struggle. Collinsville and O’ Fallon remain the two cities with the largest number of projects, 13 and 15 respectively, while the top five projects in terms of investment size can be found in Dupo, Collinsville, Belleville (2) and Shiloh.
Totaling $331.3 million, institutional investments posted a 63 percent increase over the prior year, the largest percentage increase among all the sectors. This sector includes hospitals, medical centers, non-profits and senior housing facilities. Over $200 million in healthcare projects alone drove the impressive increases in the institutional sector, which has seen three years of back-to-back growth.
Office investments totaled $217.7 million, climbing almost 23 percent over the prior year’s record total and representing the third consecutive year of investment growth. The year-over-year increases in office developments are seen by the Leadership Council as an important signal that the Metro East economy is continuing to evolve as the region receives more consideration as a location for back-office and regional headquarters operations. Almost $62 million in new office projects were delivered during the 12-month reporting period, a 33 percent increase in projects completed compared to the prior year. Collinsville serves as home to one-fourth of all the new office projects moving through the pipeline.
Topping out at $439 million, total investments in the educational sector remained steady over the past year. While the overall investment numbers remain strong in the educational arena, the total value of announced projects decreased by 33 percent compared to the prior period. $262 million of the projects on this year’s list are K-12 facilities, while $177 million represents investments in higher education projects. The three largest projects under construction, totaling $93 million, are K-12 projects.
Public investments (excluding transportation) soared to $648.7 million, up 56 percent from last year. This 56 percent gain was on the heels of a 45.5 percent increase the year prior, with projects again ranging from basic infrastructure improvements to recreational amenities to public safety projects. Projects at Scott Air Force
Base accounted for $180 million, or more than one-quarter of the total. With over $600 million of the public projects under construction or yet to break ground, investments in this sector should continue to positively impact the local economy for years to come.
Though not counted in the project investment totals, well over a billion dollars of public sector transportation projects recently completed, announced or under construction will provide a solid foundation for continued growth throughout Southwestern Illinois.
Among the most significant transportation projects to get underway in the past year is the New Mississippi River Bridge. Also noteworthy are the recently announced plans for a $30 million harbor port facility at Tri-City Regional Port District and several million dollars of additional investments in rail improvements within the port area to better serve existing and future tenants.
While the numbers paint a very positive picture for the region, Butler states that sustaining the high level of economic activity will require that new challenges brought on by this growth and the current financial and economic conditions of the country continue to be addressed. “The Leadership Council remains confident that individuals from business, industry, government, education and labor will collaboratively address those challenges in a way that moves our region forward,” she notes.
The Metro East’s ability to respond to challenges to future growth was very much evident this past year in the tremendous progress made regarding the region’s flood protection systems. “Within a year of learning that FEMA considered the Metro East Levee systems deficient, a robust reconstruction plan is in the works and supported by a dedicated funding source,” notes Patrick McKeehan, executive director of the Leadership Council. “This will help to ensure that the work is completed in a timely manner so our levees continue to protect lives and property and enable developers to continue investing with confidence in our region.”
The Leadership Council Southwestern Illinois is a member-based, economic development corporation representing Madison and St. Clair counties. The Council works to attract/retain jobs and stimulate capital investment through its coalition of leaders in business, industry, labor, education and government.
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