The Logistics Campus, a planned, 10-building development, is located at the site of the 232-acre former Allstate Corporation headquarters in Glenview, Illinois. Once completed, it is estimated that The Logistics Campus will create jobs for more than 1,900 full time employees and generate millions in additional tax revenue that can go towards supporting schools and other local taxing districts.
Answers provided by Neal Driscoll, midwest region partner at Dermody Properties
Chicago Industrial Properties: Could you provide more details about the vision and objectives behind The Logistics Campus project, and how it aligns with the continued trends in work from home and e-commerce?
Dermody Properties: The Logistics Campus is designed to serve logistics customers seeking to provide immediate access to local consumers, including the high density and affluent communities of the northern and northwest suburbs of Chicago. This redevelopment project stands at the intersection of two significant and durable trends—work-from-home and e-commerce.
Much of this goes back to the broader secular change around consumer behavior. This change, how consumers acquire goods over the last eight of 10 years, was turbo charged during the pandemic. Our customers, which are e-commerce and omni-channel retailers, are finding that much of that demand experience is holding and anticipate the demand will remain.
They are working to optimize their supply chains and warehouse networks. What they really want is to be close to their customers. They want to be able to compete on delivery. These customers, our customers, want to be closer to the end customer. The Logistics Campus allows them to do just that.
Chicago Industrial Properties: The campus offers a range of building sizes, clear heights, and other features. How did you determine these specifications, and what benefits do they offer to potential tenants?
Dermody Properties: The buildings in Phase 1 are designed to accommodate different end users. We intentionally designed the buildings so they would provide for a diverse tenant roster. Some buildings have off building trailer parking stalls which are beneficial to logistics operations, while others do not. Typically larger tenants require deeper buildings to maximize their operating efficiency, so they will gravitate toward larger building footprints like Buildings 3 and 5, while smaller tenants will gravitate to smaller footprints like Buildings 2 and 4.
Chicago Industrial Properties: A press release detailing the groundbreaking mentions flexibility in accommodating built-to-suits. Can you elaborate on how the campus is designed to meet the diverse needs of users in terms of size and specifications?
Dermody Properties: The later phase of The Logistics Campus is essentially a very large rectangle which allows for a great deal of flexibility to build something large, or a series of smaller buildings like Phase 1. Additionally, we have flexibility to build up to 120 feet of exterior building height on the balance of the campus which could be highly advantageous to operators utilizing sophisticated racking systems, or mezzanines, as examples.
Understanding our customers’ physical requirements is key to our success. Our experience enables us to know what our customers need in a building. That understanding, combined with a willingness to take strategic risks, have led to speculative and build-to-suit success in key markets throughout the U.S., including the Midwest.
The project design also incorporates highly attractive exteriors and will benefit from the repurposing of existing mature landscaping and ponds to ensure the new development seamlessly integrates into the community from a visual perspective.
Whenever possible, the majority of the project’s building layouts will be intentionally designed to consolidate truck traffic within the internal section of the campus. In addition, we anticipate project traffic counts at full buildout are likely to be lower than the peak usage of the existing office campus.
Chicago Industrial Properties: The planned facilities are described as Class A with energy-efficient designs. Can you discuss the specific energy-efficient features and technologies that will be incorporated into the buildings?
Dermody Properties: Environmental, social governance is a strategic priority for Dermody Properties. One of the ways we develop sustainably is to use or recycle material that’s on the existing properties. At The Logistics Campus, we’ve done this by recycling everything we could. From the steel at the site to interior items like sinks, toilets and doors, which were sold to salvage companies—everything is evaluated for possible reuse or recycling. We even reused the concrete gathered during demolition, grinding it up and using it as fill on the site. Minimizing waste is crucial.
In Dermody Properties’ owned and managed properties, which includes The Logistics Campus, we are committed to encouraging customer energy reduction, in addition to building upgrades and features including:
- LEED certification
- LED lighting with motion sensors
- Skylights/clerestory windows
- Reflective roofing system
- The buildings will be designed to accommodate alternate fuel sources such as EV stations
- The buildings are structurally designed to accommodate the additional roof load weight of solar panels to be ‘solar ready’
Chicago Industrial Properties: The campus is expected to create jobs for more than 1,900 full-time employees and generate additional tax revenue. How do you plan to engage with the local community and ensure a positive impact on the region?
Dermody Properties: The conversion of the office campus–with buildings dating back to the 1960s and 70s–to modern logistics buildings offers benefits to the community, which Dermody Properties has been engaged with since the concept of the campus was first presented.
During the public process, which lasted about a year, we encouraged the surrounding communities to come out and meet us—to talk to us and be open-minded about what we were offering their community and to what we were looking to do with this vacant and older office campus. Several discussions were held with the Village of Glenview and with neighboring businesses.
The U.S. economy is witnessing a resurgence of what is commonly referred to as on-shoring, and near-shoring of industrial uses. These include light manufacturing, assembly, food and beverage production, and a host of additional, value-add industrial operations which provide great employment opportunities. And in addition to the jobs, they bring workers to the community who spend their money in the local community patronizing restaurants, grocery shopping, etc, all of which add to the local economy.
When fully complete, The Logistics Campus will result in increased tax revenue for the local taxing districts–including school districts–compared to the past campus structures. While it is estimated that The Logistics Campus will create jobs for more than 1,900 full time employees, it is also estimated to generate $134 million in additional tax revenue that can go towards supporting local schools.
Chicago Industrial Properties: The preservation of mature plant life and trees on the site is also mentioned as part of the project’s design. Can you explain the significance of this preservation and how it contributes to the overall project?
Dermody Properties: When meeting with the local community, Dermody Properties heard from many people how important it was to preserve the atmosphere of the park-like campus. As a result, Dermody Properties will preserve 50 years of mature plant life and ground cover on the periphery of the site. We created and relocated dozens of trees that surrounded the office buildings to an on-site nursery. Once we landscape the future buildings, those trees will be relocated to their future homes along the parkway and around the buildings. By doing this, we are accelerating decades of tree growth compared to planting new, low caliper trees to maintain the character and views of The Logistics Campus in a similar fashion to the former office park, an important commitment we made at the start of the project.
Chicago Industrial Properties: Can you provide more details on the accessibility and benefits of its location, particularly its proximity to O’Hare International Airport and Downtown Chicago?
Dermody Properties: The North Suburban O’Hare Industrial market of Chicago extends along I-294 from I-90 to the south to Lake Cook Road to the north. This is the best performing submarket in Chicago in terms of vacancy rate and currently is the lowest in the entire metro market. This market benefits from excellent access to O’Hare International Airport and the CBD of Chicago and is home to some of the area’s largest middle- to upper- income residential neighborhoods. The Logistics Campus is located in the heart of the market along I-294 and Willow Road between the Wheeling/Northbrook markets, the Niles/Skokie markets, and the Des Plaines/Elk Grove Village markets to the south. Its access to transportation, labor and amenities is unparalleled relative to the entire metro Chicago market.
Chicago Industrial Properties: As of this time last year, construction had already begun on several buildings. Could you share an update, including the timeline for the project’s completion and any plans for remaining acreage?
Dermody Properties: Currently, we are working through demolition, north to south, clearing all buildings required for development. We are sequencing buildings a bit differently than first anticipated. Building 5 is almost shell complete and panels are going up on Building 3. The balance of Phase 1 slowed a bit due to delays in permitting, however, it is back on track and we feel good about delivering all five buildings, which are part of Phase 1, by early next year.
Chicago Industrial Properties: Is there anything else you’d like to mention?
Dermody Properties: Right now, for The Logistics Campus, we are seeing strong interest from specialty light manufacturers including the food and pharmaceutical industries, in addition to logistics companies. Most recently, UPSIDE Foods selected The Logistics Campus as the location for its Midwest headquarters.
Demand and absorption has remained positive in the Midwest. While there was peak supply in 2022, less will be delivered in 2023 given interest rates, cost of debt and cost of equity. We think we’ll be delivering when there will be fewer options. When we say there’s been a little tapering—that’s off of very, very high levels of absorption and growth—particularly in the infill markets, which is very hard to replicate.