Generations ago, the suburbs were king with massive, low-slung office properties developed to be closer to where their workers lived. With views of hills and trees, retention ponds and surface parking lots, this was a major departure from the urban office as we knew it that dominated the first half of the 20th Century.
One after another, Fortune 500 companies departed the nation’s CBDs until, eventually, the cycle began to come back around. Young professionals desired 24-hour, live-work-play neighborhoods and expressed more appreciation for the sustainability inherent in a dense, urban lifestyle.
And that’s where we were until recently. Millennials, being on brand as a more nonconformist generation, were slower to form families, to buy houses to, in a sense, do what their parents and grandparents did and settle down in the suburbs.
One has to wonder if the COVID-19 pandemic might compel the pendulum to swing back. As it puts them in close contact with many others, are employees going to be reluctant to take public transit to get to and from work? Likewise, are they going to trade in apartments and condos on busy corridors for split-levels and Cape Cods on cul-de-sacs?
“We have friends on the residential side, and they’ll tell you they are as busy as ever in the suburbs, with people looking to relocate from the city,” said Michael Klein, co-founder and managing principal of Glenstar. “Do I think that there will be a move to the burbs in a greater degree than we’ve seen over the last 10 to 15 years? The answer is absolutely, because there haven’t been many moves in the burbs over the last 10 or 15 years.”
The ultimate question is, will companies follow their workforce out of the city center? There may be some relocations long term, but the more likely trend is that firms will open up satellite offices in greater numbers. Distributing a company’s workforce over multiple locations offers options for employees craving a better live-work balance devoid of long commutes. It also spreads out the risk should there be future outbreaks.
According to Klein, there may be tentative moves in this direction rather soon. When large suburban companies did leave their sprawling offices for the city, most didn’t cut and run—they often set up an outpost in the CBD to test the waters first. The reverse may happen here, but at an accelerated pace as cabin-fever-struck employees yearn to collaborate in person with their colleagues, but maybe not downtown at the end of a packed-in train trip.
“As folks get ready to go back to work over the next three to six months, some will look for something short term. And I don’t think that short term space is necessarily going to be in a co-working environment because of all the potential health and safety issues,” Klein said. “For landlords who are willing to do short-term leases, maybe in a spec suite, I think there’s going to be some activity along those lines.”
Last year, Somerset Development acquired the former Ameritech corporate campus in Hoffman Estates, Illinois. The company plans to create a “metroburb” on the 150-acre, 1.6-million-square-foot campus. Duplicating a concept they developed in New Jersey, the property will be redeveloped as an ecosystem of office, retail, hospitality, event and residential space.
The three-story building—dubbed Bell Works Chicagoland—has two wings branching off of a central axis, with a sky-lit central spine running along the length. At the concourse level, restaurants, retail, fitness and other hospitality uses will serve the office workers on the floors above. Since the whole interior is open, this space has a pedestrian-friendly vibe that could be lifted from a Chicago neighborhood.
“Even in suburbia, people want the convenience and cool of an urban environment,” said Ralph Zucker, Somerset’s president. “We’re developing this entire streetscape, building a town square that even has a fountain in the middle.”
The first phase is on schedule for delivery in about eight to 12 weeks, with approximately 50,000 square feet of office space coming online. Zucker agrees that firms may be more cautious about the space that they commit to right now. That’s one of the reasons why they are instituting a “core” office product at Bell Works Chicagoland.
“We anticipate that the world is going to change a little bit, and there are going to be many companies that are going to be looking for something that’s a little bit fiscally easier to swallow, and maybe quicker to implement,” said Zucker. In addition to co-working, ready to wear spec suites and standard office space, the “core” spaces at Bell Works Chicagoland have lighter build-outs and can accommodate shorter term leases.
For both Glenstar and Somerset, the pandemic has forced a reevaluation of operations and layouts at their properties. According to Klein, suburban assets have a leg up on downtown buildings during the near-term return to work.
Many suburban properties—such as Schaumburg Corporate Center, which Glenstar put $30 million of capital improvements into two years ago—have large, open atria. Yes, these are great amenities for office workers to find respite during their day, but now they can serve as a space for people to safely queue for the elevators during the morning rush. And as most suburban buildings top out at three or four stories, taking the stairs is less of a hassle.
At Bell Works Chicagoland, COVID-19 struck right as the design team was finalizing office layouts. There was just enough time to pivot, especially in the co-working offices, and implement wider spacing of the workstations to help with physical distancing.
So where do we go from here? Have corporations, like people, gotten to the point where they would rather settle down in the suburbs? Probably not, at least not in the way they used to.
“I don’t foresee a pell-mell rush out of the cities into mind-numbing suburban office parks,” Zucker said. I think those days are still long gone.”