If the deal is completed, Dermody would likely look to drastically transform a corporate campus at 2775 Sanders Rd. that Allstate has called home since 1967. Allstate disclosed last month that it plans to sell the property and its roughly 1.9 million square feet of buildings there as it embraces the rise of remote work brought on by the COVID-19 pandemic, though it said the company will maintain a “significant presence in the Chicago area.”
The sale would reflect the staggering impact the public health crisis has had on the commercial real estate landscape, with the office sector reeling and seemingly insatiable investor appetite for industrial properties. Office vacancy has jumped to a record high as many companies have rethought their workspace needs after adjusting to life with people working from home. Meanwhile, a stampede of companies have been in the market for warehouse space, driving the local industrial vacancy to near-record lows even as developers and major e-commerce players like Amazon have been on a building spree in densely-populated areas.
A sale at more than $25 per square foot for the property would be a high price for the land—the Chicago Bears are under contract to pay far less per square foot for the 326-acre Arlington International Racecourse property in northwest suburban Arlington Heights—but it could be in line with what buyers have been willing to pay for other large warehouse development sites in the Chicago area, multiple industrial investors said.
Yet redeveloping the Allstate property with warehouses could come with hurdles, most notably winning community support for such a project. Any major overhaul of the land, which is located in unincorporated Cook County, would likely be reviewed by officials in Glenview and Northbrook to evaluate the impact on their communities. That has been a major source of tension as developers have sought to build warehouses in other parts of the Chicago area because residents fear such projects bring with them an onslaught of trucks that create both pollution and traffic congestion.
One longtime Glenview business, however, Abt Electronics, won approval for and is now underway building more than 400,000 square feet of new warehouses adjacent to its existing warehouse and store at 1200 N. Milwaukee Ave., less than two miles south of the Allstate campus along Interstate 294.
A Dermody spokeswoman declined to comment. Spokesmen for Allstate and villages of Glenview and Northbrook couldn’t be reached.
It’s unclear what the sale of the entire campus would mean for Allstate’s employees in the northern suburb. The company said last month that its employees would continue to be able to work from Allstate’s downtown offices at the Merchandise Mart, but it did not offer any information on whether it still planned to have a big office presence in the suburbs.
Allstate said last year it was eliminating about 8% of its workforce—or around 3,800 employees—in a cost-cutting move aimed at becoming more price-competitive. The company has nearly 7,900 employees in Illinois, according to its website.
Dermody, which has developed several large warehouse facilities in the Chicago area, knows Glenview well. The company previously reached an agreement to buy property at 3600 and 3700 West Lake Ave. in the suburb from packaging company Signode for $24 million with a plan to demolish three buildings on the property and build three new warehouses totaling 825,000 square feet. Dermody sought a property tax break last year for the development, though the project’s status was not immediately clear.