A Nevada developer has closed on its $232 million purchase of the former Allstate headquarters and is set to break ground on a massive logistics facility in the northern suburbs.
Dermody Properties plans to redevelop the sprawling 232-acre campus along I-294, which was recently annexed to Glenview, as a 10-building, 3.2 million-square-foot logistics park, reflecting both the rise of e-commerce and the shift to remote work, trends that have been accelerated by the COVID-19 pandemic.
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The project, which is expected to cost more than $500 million including land acquisition, will be one of the largest urban logistics developments in the U.S., bringing new jobs, a new streetscape and vastly different traffic patterns than the former insurance headquarters.
“This is, ultimately, a sort of an indicator of this new economy we live in,” Neal Driscoll, Midwest region partner at Dermody, said Wednesday. “Everybody wants to order online, to get their product faster.”
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Dermody plans to break ground Oct. 27, beginning the first phase of construction on five buildings totaling 1.2 million square feet on the northern end of the campus, with completion targeted for the second and third quarters of 2023. The remaining 125 acres will be available to develop up to five more buildings totaling 2 million square feet.
The logistics campus will create 1,900 full-time jobs when completed, based on employment at similar developments, Driscoll said.
Located on Sanders Road, the Allstate campus had been a corporate fixture in what was previously unincorporated Northbrook since 1967, when it moved its offices from Skokie to a six-building complex near I-294. In November, with most of its nearly 8,000 Illinois employees working remotely during the pandemic, the insurance giant agreed to sell its campus to Dermody.
Allstate purchased a 10-story building at 29 N. Wacker Drive in Chicago’s Loop in January, and it also leases Chicago office space in River Point, at 444 W. Lake St., and the Merchandise Mart. But the company still lists Northbrook as its corporate headquarters, with many employees continuing to work remotely.
“Allstate employees have more flexibility with where and how they work, so our office needs are changing,” Allstate spokeswoman Mallory Vasquez said in an email. “We’re considering options for a modern headquarters in Illinois that will support the way our employees are working now and into the future.”
Dermody has already had to navigate some logistical hurdles to redevelop the Allstate campus, starting with annexation of the property into a neighboring suburb. In July, Glenview annexed the entire campus after agreeing to pay Prospect Heights 18% of the property and sales taxes collected annually on the logistics park. About 30 acres of the campus were previously located in Prospect Heights.
Driscoll said Glenview topped Northbrook and Prospect Heights as the best pathway to facilitating the logistics development.
“We get the horsepower of Glenview’s staff and scale to execute permits very quickly, and Prospect Heights, in exchange for de-annexing that 30 acres, got the opportunity for tax revenue going forward,” Driscoll said.
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The campus will also shift from well water to Lake Michigan water through Glenview, Driscoll said.
Job one is demolishing more than 2 million square feet of office space on the Allstate campus, before beginning construction on the first buildings near Sanders and Willow roads on the north end of the campus.
When fully developed, the logistics park will see about 6,000 vehicle trips per day, or about 75% of what the Allstate campus generated at its peak. While there will be more trucks plying the roadways, travel will be spread out across the day, as opposed to the rush hour traffic jams that used to clog Sanders Road, Driscoll said.
“There will be more trucks, but we designed this in a way that we think it’s going to be primarily on-and-off traffic jumping onto the interstate,” Driscoll said. “So in sort of a global sense, it’s going to feel like less, even though it will be more truck traffic at the intersection itself.”
For passersby on I-294 and Sanders Road, the new development will look different than the familiar Allstate campus. The industrial buildings will include “lots of glass features” and deeper setbacks, with “almost all” of the landscaping remaining in place, Driscoll said.
Dermody is meeting with the Glenview arborist this week to discuss the relocation of hundreds of trees that have already been tagged.
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“To a great degree, the whole sight line is going to change,” Driscoll said. “But I think it will be very attractive. It’s really meant to blend in.”
