A Nevada warehouse developer is reportedly negotiating a contract to buy Allstate Corporation’s suburban Chicago’s headquarters.
Dermody Properties is expected to pay more than $200 million for the office complex, which sits on a 186-acre lot totalling 1.9 million square feet at 2775 Sanders Road in Northbrook, Crain’s reported.
The logistics real estate firm’s potential purchase of the Allstate property shows the pandemic’s impact on commercial real estate: office space is downsizing while warehouses are in high demand.
Allstate announced last month it will sell the property, as many of its employees are choosing to work from home. About 95 percent of its employees working in the Northbrook campus have reportedly been working remotely since the onset of the pandemic. The company had said it plans to keep a “significant presence” in the Chicago area” but did not disclose further details of another suburban office in the city.
Chicago’s already strong industrial real estate market has become even more robust after the pandemic. Vacancy rates came in at a record-low of 4.4 percent in the third quarter this year, according to JLL. About 27.8 million square feet of industrial space are in the pipeline, doubling the 13.2 million square feet of new warehouses that sprouted this year.
Dermody’s redevelopment of Allstate’s corporate campus into industrial space will likely be reviewed by Glenview and Northbrook officials, Crain’s reported. Residents in other parts of Chicago have opposed developers’ plans to build warehouses nearby as it would bring an onslaught of trucks that create pollution and traffic congestion.
The firm also plans to build three distribution buildings totalling 825,000 square feet at 3600 and 3700 West Lake Avenue in Glenview, 15 miles northwest of the Chicago Loop.
[Crain’s] – Connie Kim