Since the pandemic began in the early months of 2020, what eventually happens with the office as a workplace has been anyone’s guess. While it’s safe to say that 2020 and 2021 have been years where there has been an incredibly fast pace of evolution in workplace design, a shift towards employee empowerment, and a re-emphasis on the office as a place for culture and collaboration, one lingering question remains.
Will corporations choose to stay in Chicago’s downtown or start looking at moving back to the suburbs?
Entering 2022, there really is no longer a tried-and-true approach to a new office space or in overall office trends. Each company is adapting to meet the needs of its employees and customers, and whether that means that staff will continue to work from home for the foreseeable future, then that is an approach many are taking. In other industries, workers are being encouraged to return to the central office, not only for the company’s benefit, but for valuable mentorship and career growth opportunities for individual staff members.
But last week’s announcement from United Airlines that it will be relocating hundreds of workers from The Loop out to Arlington Heights next year could be seen as the proverbial canary in the coal mine. With United’s announcement, can we expect to see others follow?
According to the Daily Herald, United will relocate 900 operations employees from the Willis Tower in downtown Chicago to a property that was once a part of the former Motorola campus in Arlington Heights at some point next year. Representatives for United were quick to dispel any possible rumors of totally abandoning its presence in the city by highlighting its investment in updates to its office space at the Willis Tower, the Daily Herald reported. Roughly 2,500 employees will continue to work out of the Willis Tower after the operations team shift.
However, Crain’s reports that in addition to the 900 employees relocating to Arlington Heights, another 400 could eventually be moved to the suburbs.
The move takes place after years of steady development and investment activity within Chicago’s Central Business District. Site Selection magazine has placed the Chicago area at the top spot for corporate relocations for eight years straight, beating out all other major metros between 2012 and 2020. And many of these big corporate moves or new satellite offices throughout this period were going downtown.
And then there has been the nagging question of what to do with the recently vacated suburban office campuses left behind by legacy corporations who have returned to Chicago in recent years.
In Hoffman Estates, the old Ameritech (and later AT&T) HQ has been fully renovated and repurposed as a mixed-use office and retail complex. Hundreds of new residences are also planned for the campus, which is expected to bolster retail activity and potential future office demand.
More recently, Allstate announced its intentions to leave its Northbrook campus and said it already had a buyer lined up. Dermody Properties is looking to transform the insurance giant’s former office campus into a new industrial campus for transportation and logistics businesses. Industrial’s big moment has led to intense competition among developers for new sites for future projects, and shuttered office campuses may be ripe for adaptive reuse.
Absorption was down last year for suburban office space. However, tenants continued to seek preferable lease terms this year, such as flexible lease periods and tenant improvement allowances.
However, if more major corporations follow United’s lead, these vacant suburban campuses could very well be used for their intended purpose: office space. Despite the ongoing uncertainties caused by the pandemic and new variants of the COVID-19 virus, it’s still unclear whether there will be a winner and a loser in the office real estate world, or if both the city and suburbs can expect to see steady growth.