How vacant corporate campuses might gain new life
When large, sprawling corporate campuses were built in the suburbs decades ago housing headquarters for giants like McDonald's, Ameritech and Motorola, no one predicted they would now stand nearly vacant.
Changing lifestyles and corporate decisions have left municipalities and commercial real estate developers scratching their heads, wondering how to fill the large properties dotted with dormant buildings, ponds, elaborate landscaping and scenic amenities.
One thing seems certain: Other large companies are unlikely to step into existing suburban mega-campuses that housed McDonald's in Oak Brook, Motorola in Schaumburg and Harvard, AT&T in Hoffman Estates and Caterpillar in Peoria. There are only so many Amazon- and Google-sized companies out there and they are being wooed by cities across the country, experts say.
The shift away from suburban mega-campuses began as companies downsized, stepped up telecommuting options and moved in an effort to cut costs and appeal to young workers, with many corporate giants relocating to Chicago.
"The difference today is people have different lifestyles. Millennials don't want to start their life in the suburbs," said Dirk Lohan, the architect who designed the 74-acre McDonald's campus and the 150-acre Ameritech campus later occupied by AT&T in Hoffman Estates.
Property managers have unsuccessfully been attempting to find large companies to fill the suburban vacancies. "They have tried to lease the properties and it has not worked. They now are trying plan B," said Fred Ishler, a partner with Avison Young, a commercial real estate brokerage in Rosemont. He added that the market has been soft and these areas are not where large tenants are looking right now.
Alternative plans are beginning to take shape at several suburban properties. In Hoffman Estates, Somerset Development of New Jersey has outlined plans to convert the AT&T campus into a self-contained "city" using the existing buildings for 1.2 million square feet of offices, 60,000 square feet of retail shops and 80,000 square feet of conference space, while new construction would add 375 apartments, 175 townhouse units and possibly a 200-room hotel.
Somerset, which led a similar redevelopment of the Bell Labs complex in Holmdel, New Jersey, has referred to it as a "metroburb."
A similar future is planned for the former Motorola Solutions campus to be a virtually self-contained community of offices, homes, stores, restaurants, hotels and entertainment venues on 225 acres. A proposal has been submitted for a Topgolf sports entertainment facility. Developers are working on a loft-style apartment building as well as plans for owner-occupied row homes, a senior housing facility and a medical office building. Though the Motorola campus was originally 322 acres when it was developed from a farm the company bought in 1964, the land is already the site of Zurich North America's new headquarters as well as Motorola Solution's downsized presence after the company headquarters moved to Chicago.
Will the plan for self-contained cities work in the suburbs? Experts agree it's a bit of a "Sunbelt approach" that has worked in areas of Atlanta, Houston and Phoenix. Ishler said the suburbs are treading on uncharted waters with the concept.
Lauren Tilmont of JLL, a Chicago-based company that offers brokerage and property management services, is optimistic. "I think it's going to work. It may take time. I think it will bring good energy to those areas." The mini-city approach replicates the success of urban areas in Evanston, Rosemont and Naperville's Water Street District, she said.
The fact that millennials are all about convenience prompts her optimism. "As long as they leverage the conveniences and amenities that millennials want appropriately" a plan like Somerset is proposing will work, she said.
While industry experts agree the idea is good, they question whether there is enough office demand for all these properties in areas that are not seeing a great deal of office growth right now. Ishler says the O'Hare market, especially Rosemont and part of Chicago, is one exception and is expected to remain strong for the next couple of years.
Lohan believes the mixed-use redevelopment approach simulating the feel of a city would also work in Oak Brook, home to the McDonald's headquarters since 1971. High-end multifamily or senior housing would be an option for the future of the campus, mixed in with the other urban features, he said.
The Motorola Solutions and McDonald's campuses both are among 10 Illinois sites pitched for Amazon's second headquarters, but local officials and developers aren't standing still while awaiting a decision, expected this year. "Deals of that size are few and far between," said Dan McCarthy of JLL.
Lohan said mixed-use projects are also positive for municipalities and school districts that lose a lot of money when large corporations move out. "In my opinion, a plan like this may be safer for municipalities and schools," he said, adding that they will not suffer the major hit of one large player moving out.
Barrington Unit District 220 school officials said they are cautiously optimistic about the Hoffman Estates proposal. The school district has seen a major loss of property tax revenue from the site since AT&T began moving out a few years ago.
While they welcome the idea of redeveloping these sites, school districts want to ensure the cost of educating students who would live there doesn't outweigh the additional property taxes schools would receive.
Experts say they hope the vacated properties will again see life.
Lohan, now in his 70s and a principal at Wight & Company, says he is optimistic that the proposed projects will be good solutions for the former corporate homes that he designed years ago. "I think of these projects like my children. I want to see them prosper and blossom."