Allstate’s sprawling former campus, which spans nearly 2 million square feet over 122 acres in north suburban Northbrook, will become the site of a new logistics operation. According to new reports, developer Demody Properties has committed to purchasing the property to repurpose for industrial use — and it’s one of the biggest deals in the region this year. Crain’s has reported that Dermody is paying a whopping $232 million for the site, which will feature upwards of 3.2 million square feet of warehouse space over 11 buildings.
The purchase is not a done-deal however, as approval of the sale agreement is still to be completed by U.S. Securities and Exchange Commission. But once completed, the overhauled site — including land costs and construction — is expected to cost over $500 million, the Chicago Tribune and Sun-Times reports. As large, developable sites near the region’s population center have become more and more rare, industrial developers have gone to great lengths to acquire land for new warehousing, logistics, and manufacturing use.
And the purchase of the Allstate site by Dermody is yet another example of the red-hot industrial market in the Chicago area and demand for new space.
While 3.2 million square feet of new industrial space will likely be leased rather quickly in this market, it’s just a drop in the bucket in terms of satisfying current demand for new industrial product. By the end of Q3, there was over 25 million square feet of new industrial product still under construction across the greater Chicago metro area; much of it already accounted for. And the overall industrial vacancy rate, also at the end of Q3, was just over 5% in the region.
A potentially big hurdle for Dermody’s path forward will be support from local communities for industrial use. Across the country, some neighbors are starting to reject the runaway growth of new industrial campuses and projects. However, as much of the campus is currently located in unincorporated Cook County, the developer may have options to be annexed into a community that does want the investment and jobs that the development would provide.