Jobs and Entrepreneurial Opportunities for Building Material Reuse Warehouses Are Highlighted by Delta Institute Study for Cook County

Laura Oakleaf

Cook County is a leader in building material reuse. Its landmark Demolition Debris Diversion Ordinance mandated recycling and reuse of demolition debris to reduce landfilled material, promote safety and environmental quality and build the nascent building material reuse economy. Cook County asked the Delta Institute to do a market analysis of opportunities to further these goals.

Cook County has grown a building material reuse economy that employs both skilled and unskilled workers, and transforms building materials that might otherwise be landfilled into economic assets. This economy has been catalyzed by the creation of the reuse warehouses that act as a conduit for the supply of reused building materials to enter the marketplace and stoke the demand for those products through marketing, classes, and strategic partnerships that supply craftsmen.  Examples include the ReBuilding Exchange in Chicago, the Evanston ReBuilding Warehouse, the ReUse Depot in Mawood and Habitat for Humanity ReStores in Chicago Heights and Chicago. Building materials sold by existing reused building material warehouses increased tenfold between 2009 and 2014.

Delta found that communities want to attract building material reuse warehouses because of their positive impact, and because they support deconstruction jobs. Deconstruction is the systematic dismantling of a building that allows for salvage of valuable materials. Not only does deconstruction provide more jobs in the structure removal, it also supports transportation, warehousing, reuse and production jobs.

Privately-funded demolition is rebounding and growing most heavily in the northern suburbs and a large concentration of public demolition activity is planned for the south and southwest suburbs. This increase is due to changes in the market, and to the U.S. Department of Justice and Bank of America settlement which created the Hardest Hit funds for communities disproportionately impacted by the foreclosure crises.

Delta’s supply and demand analyses identified where new reuse warehouses could be located based upon the availability of adequate supply within ten miles and demand within seven miles, which is the distance contractors and the public seem willing to travel. Mapping the existing reuse warehouses reveal large gaps throughout Cook County – particularly in the south suburbs (including neighborhoods in southern Chicago) and the northwest suburbs.

The supply and demand scores awarded to each community, when overlaid with the goal of even access throughout the County, point to optimal locations for facilities in suburban Cook County. According to Delta, these include the Midlothian-Oak Forest area in the south suburbs and Arlington Heights-Palatine area in the northwest suburbs. In addition, the Glenview-Northbrook area has very high supply and demand scores. These communities alone comprised 17 percent of all demolitions in Cook County over the period from 2012 - 2014.

New reuse warehouses in these areas would help build both local supply and demand for reused building materials. Delta found that the best start-up facility size for a reuse warehouse is 20,000 to 25,000 square ft. to allow for adequate display of lumber and provide room for growth. Facilities of this size could generate sufficient revenue in the $600,000 to $650,000/year range when mature to support the staffing required to operate without relying significantly on volunteer labor or on-going operating grants.

Delta notes that business planning funds are needed prior to opening a warehouse, and grant or equity capital of about $450,000 is needed to sustain the business through the first two to three years, while the business grows to capacity. Loans of about $120,000 are needed to purchase the equipment and make the building improvements necessary to start each warehouse. A new reuse warehouse may be able to break even in the third year and make a profit in its fourth year and beyond.

The existing reuse warehouses are all connected to non-profit organizations. Tax deductible charitable donations of used building materials are an important element of their business model that is not available to for-profit entrepreneurs. More sources of start-up capital and operating funds will be available through grants and low interest loans for a not-for-profit.

The Delta study points out opportunities to grow the building material reuse industry. This report was funded by a Cook County Energy Efficiency and Conservation Block Grant through the Cook County Department of Environmental Control, in collaboration with U.S. Department of Energy.