A Chicago suburb granted a tax break to TA Realty, the Boston company that bought a former Walgreens research facility in May, with plans in place to turn it into a $40 million industrial facility.
TA Realty paid $21 million to acquire the 284,000-square-foot office campus at 4000 Commercial Avenue in Northbrook from Walgreens Boots Alliance. An agreement between Northbrook and California’s Panattoni Development dated May 24 shows that village officials authorized Class 6b classification for the property, a step that cuts the property tax assessment for certain qualifying industrial buildings.
The agreement stipulates that Panattoni, which entered the Chicago market in 2000 and has a 544 million-square-foot development profile that spans North America and Europe, plans to invest at least $40 million to complete the project. Neither TA Realty nor Panattoni responded to requests from The Real Deal to confirm that they’re developing the property in tandem.
The plans come as office vacancies in suburban Chicago climb to a record 27.1 percent, according to JLL. Brokers have embraced a shift from outdated offices that aren’t in prime locations, which is driving up the rate, to industrial uses. The Chicago area’s industrial market has had few vacancies and developers have only recently matched demand.
The Northbrook tax incentive is intended to encourage industrial development and is offered for new industrial facilities, rehabilitation of existing industrial structures and reuse of abandoned buildings for industrial use, according to the Cook County assessor’s website.
Panattoni intends to demolish the office building and construct a 447,583-square-foot industrial building, according to the public records. It will be customized for an eventual tenant once it’s been leased.
According to the document, the property has been vacant and unused for more than two years except for about 30,000 square feet used by Walgreens. Deerfield-based Walgreens plans to add 14,240 square feet to its main campus to replace the Northbrook property.
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