Bell Works Chicagoland, former AT&T campus in Hoffman Estates, lands more tenants as transformation continues

The owner of Bell Works Chicagoland has taken another step toward revitalizing the massive former AT&T campus in Hoffman Estates.

Inspired by Somerset Development, the New Jersey developer that bought the empty complex in 2019, has signed leases with a new set of tenants, nearly filling a suite of offices designed for small firms and startups. By offering leases only four pages long, fully built-out spaces and amenities, company officials said the 23,618-square-foot suite, called Ready-to-Wear, matches the needs of small companies trying to navigate an office market unsettled by the pandemic.

“You don’t need to bring a lawyer, or a contractor, or a decorator,” said Ralph Zucker, president of Somerset. “We do it all for you.”

“Every other place I went to said it would take three to four months to build out the space,” said Chadd Folkes, president of risksmith Insurance Services, a 4-year-old firm that took about 2,900 square feet at Bell Works last year and just expanded to 5,000 square feet. “Here, it was already finished. It’s almost like having a WeWork, but with a long-term lease. It was literally plug and play.”

The pandemic put a temporary hold on new leasing, but Somerset did renovate the roughly 400,000-square-foot eastern portion of the complex, along with its central atrium, and so far has leased about 150,000 square feet, including a deal with apparel company Club Colors, which established its national headquarters at Bell Works Chicagoland earlier this year.

Filling the remainder could be challenging. Before the pandemic, Somerset renovated the 2-million-square-foot former Bell Labs campus in Holmdel, New Jersey, into a fully leased mixed-use complex, but now companies are shrinking their footprints as employees continue working from home, sending vacancy rates to historic highs and making it difficult for many landlords to sign new tenants.

But Bell Works Chicagoland can buck that trend, Zucker said. The key will be transforming what had been a sterile, 1980s-style complex just north of I-90 into a “metroburb,” an amenity-rich community hub for Bell Works tenants and Hoffman Estates residents, a real downtown for the northwest suburb. Meanwhile, obsolete properties with few amenities will bleed tenants as companies hunt for spaces that offer employees a better environment than home, he added.

“The (space) has to be amazing and give people a reason to come in,” Zucker said. “You’re going to see a lot of office buildings, especially in the suburbs, fall by the wayside. We’re seeing that in New Jersey, and we’re seeing that in Chicago as well.”

The northwest suburban office market was already hurting when COVID-19 hit, with vacancy rising to nearly 30% partly due to major employers such as Motorola Solutions leaving for downtown Chicago, according to commercial real estate firm Colliers International. Vacancy rose to a record 34.9% early this year, but in the second quarter the area finally saw a bit of a turnaround. Vacancy fell to 31.8%, mostly driven by companies leasing top-of-the-line spaces.

“High quality, best-in-class assets continue to see the most activity in the northwest market,” Colliers found. “Class B properties in the northwest market will continue to suffer until class A assets absorb.”

Somerset added new offices, public spaces, pedestrian walkways, cafes such as Fairgrounds Craft Coffee and Tea, a modern gym and coLab, a 15,000 square-foot coworking area, to Bell Works Chicagoland’s vast interior space, where it also hosts public events such as fundraising galas and an Oktoberfest. It is also putting the finishing touches on a second suite of Ready-to-Wear offices, and Zucker said he expects other firms to fully occupy that space over the next few months.

Other new Ready-to-Wear tenants include Stoltmann Law Offices, Victor Construction Co., LinkSpace, a furniture dealership, and Berkshire Hathaway Starck Real Estate, a family-owned brokerage firm.

Folkes said he was not impressed the first time he walked into Bell Works. It was still a raw space back then, with the spartan vibe common among suburban offices in the 1970s and 1980s. But in addition to being able to bring his dogs to work every day, the community events, new promenades, outdoor walking paths and coffee shops have made a difference.

“It’s not like the 1970s anymore,” he said. “It’s fresh, clean and there is an energy to it. You’re starting to see the vision.”