Chicago O'Hare International Airport (ORD) continues to progress toward its goal of becoming the North American leader in global air cargo with the recent opening of a $35 million landside warehouse and more airside development in the works.
ORD joined forces with Aeroterm, a private real estate developer that specializes in airport industrial projects, to add the new 491,000-square-foot freight facility to its landscape. When it opened in January with cargo heavyweight DHL Global Forwarding as its tenant, airport officials considered the event an important step toward making Chicago a leader in global trade.
"O'Hare is one of Chicago's key economic engines," says Michael Boland, acting commissioner of the Chicago Department of Aviation. "With DHL's investment, we are ensuring that O'Hare International Airport will continue to be a powerful economic engine and one of the world's leading transportation hubs."
DHL Global signed a 10-year lease with Aeroterm, which, in turn, has a 40-year lease with the city. Both have options to extend.
Project: Landside Cargo Warehouse
Location: O'Hare Int'l Airport (Chicago)
Cost: $35 million
Leasee: DHL Global Forwarding
Warehouse Size: 440,000 sq. ft.
Office Space: 51,000 sq. ft.
Handling Capacity: 20 million kg of freight/month (by end of year)
Special Features: 2 temperature-controlled chambers, totaling 10,000 sq. ft.
General Contractor: FCL Builders
Construction: Nov. 2013 - late 2014
Future Capacity: When Aeroterm completes a $200 million/850,000 sq. ft. airside project now under construction, airport will have 4 million sq. ft. of cargo facilities
When Aeroterm completes a separate 850,000-square-foot airside project currently under construction, ORD will have an impressive 4 million square feet for moving cargo - more than any other passenger airport on the continent.
Construction of the new facility began in November 2013 and was completed at the end of last year. With 440,000 square feet of warehouse space and 51,000 square feet of office space, the new facility is DHL Global's largest air export gateway.
Specifically, it is the company's largest freestanding building in the world and its largest U.S. building of any type. The new structure was designed to accommodate 500+ employees and replaces a facility DHL previously occupied in nearby Franklin Park, IL.
Chris Remund, chief executive officer for DHL Global Forwarding, U.S., explains that ORD's strategic location for air cargo shipped to/from Europe and Asia, and within North America, was a key factor in its selection for the new facility. "Given the airport's ability to process approximately 1.5 million tons of imports and exports, it was the perfect location to expand our operations," he explains.
Remund also highlights the importance of ORD's Modernization Program, which he says is reducing delays, increasing capacity and meeting increased demand for companies doing business with the airport. "We wanted to continue partnering with an airport that is investing and taking concrete steps to meet its future growth - something we are always looking to do as a company," he comments.
Per DHL's specifications, Aeroterm outfitted the facility with 59 docks, four drive-in doors and 142 trailer storage spaces. It is a TSA-certified cargo screening facility and is Customs-Trade Partnership Against Terrorism (C-TPAT) validated. While the bulk of the building is warehouse space, it also includes a three-story office component.
Remund notes that two elements make the facility especially appealing to DHL customers: Its Foreign Trade Zone status reduces the amount they must pay in Customs duties, taxes and tariffs; and carriers can receive cargo for direct loading into containers, because it's a Bonded Container Freight Station.
"This facility represents a milestone in our journey of becoming both the global market leader in the logistics and transportation industry, and our customers' first choice," he says. "It allows us to better serve our customers by giving us the ability to process substantially more cargo. The warehouse is expected to handle about 20 million kilograms of freight per month by the second half of 2015."
Two temperature-controlled chambers, totaling nearly 10,000 square feet, allow the warehouse to accommodate sensitive pharmaceutical, biotech and medical products and/or devices. One chamber is designed to maintain a temperature between 35° and 46° F and the other between 59° and 76° F. The warehouse also includes a temperature-controlled dock for processing.
Like all other infrastructure projects at ORD, the new DHL facility was designed and built according to the Chicago Department of Aviation's Sustainable Airport Manual, which requires specific green building practices. As such, the new warehouse includes electric freight-handling equipment, and the overall project is slated for Leadership in Energy and Environmental Design certification by the U.S. Green Building Council.
"We took careful measure of using recycled materials, natural lighting and energy-efficient equipment," details Erin Gruver, Aeroterm's executive vice president of acquisitions and development. The project also included participation by minority- and women-owned companies and disadvantaged business entities, he adds.
Except for severe winter weather suspending construction for a few months, Gruver describes the construction process as seamless. He attributes much of the productive momentum to Aeroterm's good relationships with DHL and the city. "The airport is very prepared and works hard to ensure that we understand every aspect of the site and project," he explains. "They helped us plan for - not react to - potential unknowns related to the site; and that allowed us to continue and maintain the schedule."
Gruver also credits the city's practice of being actively involved in projects that affect ORD: "The mayor (Rahm Emanuel) was a big proponent of this project, and with his help and the Chicago Department of Aviation, we were able to get this done quickly. That was very important to us."
Bigger Project Underway
With construction of the new DHL warehouse ending in late 2014, work continues on an even larger airside development project, also by Aeroterm. Crews began the 850,000-square-foot Northeast Cargo Center in November 2014; and airport officials expect them to finish the first two phases of the $200 million project next spring (2016). The third and final phase is projected to be complete in late 2017.
When combined with Aeroterm's other holdings at the airport, the Northeast Cargo Center and recently completed DHL warehouse bring the company's investment at ORD to nearly $400 million. "We like O'Hare because it is a major U.S. gateway, a primary portal for international freight and trade," Gruver comments. "Chicago is a very strong market for us, which we have invested in significantly and we plan to continue to invest in the coming years."
Three ground handlers - Alliance Ground International, Total Airport Services and Swissport - have already committed to lease space in the facility, Gruver reports.
Once complete, the 65-acre cargo complex will be able to simultaneously accommodate up to 15 of the newest generation Boeing 747-800 freighters, notes Boland. "The center is expected to generate $600 million for the airport over the life of the lease, and will create thousands of new jobs during construction and after it opens," he adds.
Ongoing development of its cargo infrastructure also keeps ORD aligned with city hall. Mayor Emanuel, who was reelected in April, cites the transportation, distribution and logistics industry as a critical part of his plan for economic growth. He further estimates that those sectors will bring more than 110,000 jobs to the area during the next decade alone. Boosting the city's competitiveness in the field is essential, he stresses.
"This new DHL Global Forwarding building is a testament to Chicago's burgeoning growth and can offer local businesses of all sizes a gateway to trade expansion within the U.S. and abroad," Emanuel explains. "The city of Chicago is proud to partner with businesses like DHL that want to invest in our community by adding jobs, promoting commerce and further positioning the city as a leading cargo hub."