Data centers are set to replace yet another office campus in the northwestern Chicago suburb of Hoffman Estates, as a Dallas-based developer started tearing down the once-bustling 273-acre former Sears world headquarters at 3333 Beverly Road.
Demolition crews have begun work on the 2.4 million-square-foot former Sears hub, marking the end of an era for the well-known office complex and the beginning of Compass Datacenters’ new tech storage project, the Chicago Tribune reported.
Compass’ redevelopment plans are part of a broader trend sweeping through Chicagoland, where suburban office properties are being torn down and replaced with warehouses, data centers or other industrial-style projects due to dwindling demand for traditional workspace and increasing need for cloud storage and logistics facilities.
As companies increasingly relocate to urban areas, large suburban office campuses are left largely empty, leading municipalities to find replacements to fill the gaps. Nearby Elk Grove Village has already emerged as a significant Chicagoland data center market, and Hoffman Estates is following suit, with big names like Microsoft receiving approval for data center facilities in the area.
“No one is going to come in and say I want 2 million square feet of office space,” said Eric Palm, village manager of Hoffman Estates. “The Sears campus put Hoffman Estates on the map, but there just isn’t a high demand for office anymore.”
In the first quarter, the suburban office market saw its vacancy rate climb to a record high of 31 percent, according to JLL. With traditional office space demand at a low and the rise of remote work, towns like Hoffman Estates are looking to data centers and industrial uses to provide economic vitality and future-proof their commercial landscapes.
“In putting together an economic development strategy, you try to have a diverse portfolio, just like you would in a personal investment portfolio,” Palm said. “One of the sectors we’re trying to build up is the high-tech side of things.”
This strategy can also be seen with the former At&T campus in Hoffman Estates, which the firm Someset is redeveloping into a $200 million “metroburb” with 1.2 million square feet of offices, 60,000 square feet of shops and restaurants, and 60,000 square feet of conference space, storage and amenities. The addition of retail and other uses to the longtime office campus is key to reviving the property in the low-demand era for workspaces.
The transition from Sears’ retail empire to a tech-driven future underscores a significant economic evolution. The new data center complex is expected to draw $10 billion in investment, including funds from future tenants.
The teardown on Beverly Road, which American Demolition Corp. is overseeing, is complex given the scale and structure of the Sears campus. The project is expected to extend into mid-2025, with millions of pounds of concrete being repurposed to create a level foundation for the data centers.
“Tearing down the Sears complex isn’t as simple as pushing over an old single-family home with a bulldozer,” said Jeff Olson, project executive at American Demolition Corp. “We’re chewing through the buildings as fast as we can, but as safely as we can.”
— Andrew Terrell