Nestled in suburban foliage, spacious corporate campuses symbolized much of American life: car addiction, the desire to get away from the crowds and urban desolation, the tendency of business leaders to build a monument to their idea of efficiency and putting the competition to shame while they’re at it.
Over the past dozen years, the world has not been sympathetic to these developments. What was a sign of corporate ambition became a liability, first when the debt crunch hit suburban real estate investments hard.
Then some companies, perhaps with an aging workforce they wanted to get rid of, decided city lights were better for recruiting young talent. And who needed all those landscaping bills anyway?
More recently, the pandemic has scrambled plans for where businesses want to be, raising questions about the future of work in many contexts.
“These big corporate campuses are dinosaurs,” says a man who, with partners, owns one. It’s Ralph Zucker, president of New Jersey-based Somerset Development, and he’s not complaining. He explains an opportunity.
Somerset in 2019 acquired the former AT&T research complex at Hoffman Estates. At 150 acres, what is now called Bell Works Chicagoland stretches to the horizon, but AT&T left it in 2016.
There’s starting to be activity, with small businesses moving in and entrepreneurs taking up space in shared offices. In a few months, there will be a large Fairgrounds café with take-out food, a wide assortment of coffees, teas and — for afterwork — alcohol.
It will be the start of what Somerset is betting it will become a new town centre, what it calls a “metroburb”.
The main building is a massive 1.2 million square feet of lettable space. Zucker is reopening it in phases and has so far reserved 200,000 square feet of leases to tenants including Heritage-Crystal Clean, Platinum Home Mortgage and Headline Solar.
The building has a lobby that promises to be a walk. Zucker’s company has a similar campus in New Jersey on a fully leased former Bell Labs site, and he’s counting on similar success at Hoffman Estates.
“We’re betting straight that we’ll have more demand than supply,” he said.
The village has also licensed the property for up to 550 residential units, built as townhouses and apartments. Zucker hopes to start building these in a few weeks. He said the houses will give vitality to the site.
“People don’t want to be isolated. They want to be part of what’s going on around them and see other people and other businesses,” he said.
Or consider the estate-like setting in Oak Brook where McDonald’s feasted until its move to Chicago in 2018. It spans 80 acres and, with ponds and walking paths, has always been attractive to the nature.
“If you’re a renter looking for neon lights and lots of visibility, that’s not what we offer,” said Jeff Shay, executive vice president of Jones Lang LaSalle, the property’s leasing agent.
Now marketed as Oak Brook Reserve at 31st Street and Jorie Boulevard, the property scored a big win in May when Ace Hardware said it was moving its offices there nearby. Shay said Ace will occupy the entire largest building on campus, which measures around 300,000 square feet, by the middle of next year. The smaller building is the former research center of McDonald’s, its university in Hamburg. Consulting firm BDO Digital is taking nearly 30,000 square feet there, leaving a roughly equal amount for rent.
Shay said the site, owned by haircare magnate John Paul DeJoria, has the zoning power to build more commercial space, perhaps offices or restaurants to cater to growing crowds.
DeJoria had wanted part of the site to be occupied by housing, but the village refused. Shay is confident the property will attract a growing number of office tenants.
“Before, companies had to have the downtown office to recruit, but we’re starting to see a movement of millennials moving out to the suburbs,” he said. Employers, in turn, are experimenting with smaller satellite offices so workers worried about the pandemic don’t have to congregate in one place, he said.
The suburban office market remains weak, with overall vacancy rates around 25%. Properties that attract the most rental interest add amenities to stand out, said David Florent, director of real estate firm Colliers.
He said successful landlords would help businesses tackle two pressing issues as companies shake off the pandemic: how to ‘right-size’ office space and bring a mostly remote workforce back under the same tent. . In addition to fitness centers and tenant lounges, landlords are trying decoys like soft music and scents in the lobby.
“It comes down to hospitality,” said Florent. “It’s like working in a hotel.”