Finding uses for the “big empties” in the Chicago suburbs

When businesses move their headquarters from sprawling suburban campuses to the city center, they leave behind a lot of building space and land:

Inside the sprawling, 2.4 million-square-foot headquarters — composed of seven interconnected office buildings — there is an almost eerie ghost-town quality, former employees describe. The bank, dry cleaners, hair salon, coffee shop and small sundry shop that once lined the corridor of the main atrium have all closed. Gone, too, are the Sbarro’s and Panda Express restaurants.

Over the years, Sears has hired leasing agents to bring in sublessors without much success. Today, with the economy uncertain and Sears’ days seemingly numbered, the building has become an even harder sell. Only about 3% of the complex is leased to outside tenants…

If Transformco tried to sell the campus, it would face long odds, local real estate experts said. The large complex, custom-built for Sears, is nearly 30 years old. Suburban business parks are as outdated and obsolete as fax machines…

The entire region is a buyer’s market, burdened by other big empties. Right down the road from Sears headquarters are two such examples.

Perhaps the easiest answer to filling these properties is to bulldoze them and build housing on the land. In the suburbs in which these suburban headquarters are located (Hoffman Estates, Oak Brook for McDonalds, etc.), there would be demand for housing.

But, bulldozing buildings adds costs as would changing the infrastructure for the site. Plus, as the article notes, housing would not bring in the same kind of revenue or status that a large corporation did. Additionally, more housing might even lead to a bigger tax burden for the rest of the community if there is more demand for schools and other local services.

Thus, suburbs often hope to find corporate partners for such properties. Finding someone to take over the whole property would be ideal. Or, perhaps create a mixed-use community with some residences but also businesses and restaurants. See more on efforts in Hoffman Estates to transform a former AT&T campus into a “metroburb” (also mentioned in the article).

Side note: this does not bode well for large tech campuses amid a possible shift to more employees working from home.

The largest business park in the United States is over 160 square miles

Reading through a 2019 article in Wired about new fault line research on the West Coast, I noticed this paragraph about the biggest business park in America:

Eriksen’s offices are located in the Tahoe-Reno Industrial Center, the country’s largest business park. TRIC covers more than 160 square miles—three San Franciscos’ worth—of sculpted valleys and rocky hills. Its tenants include Google, Switch, and Tesla, along with 2,000 protected wild horses. TRIC is as sure a sign as any that the Reno area is reinventing itself, aiming to attract younger residents who come not for strippers and slot machines but for lucrative jobs and easy access to the great outdoors. Lance Gilman, the bolo-tie-wearing, larger-than-life businessman behind the development, told me that on his first tour of the land he saw a bird’s nest just sitting there on the ground, catching the light. He took it as a good omen, a sign of Reno’s impending transition from has-been gambling den in the mountains to tech-centric boomtown. (Still, this is Nevada: At one point during the planning phase, Gilman had to assume management of the nearby Mustang Ranch brothel—the first ever licensed in the state—to stop a biker gang from moving in and marring his glorious vision.)

One of Gilman’s employees, a project manager named Kris Thompson, agreed to take me on a tour of the site. We started at Tesla’s Gigafactory, which the company claims will be the largest building on the planet when completed. (“It put us on the world stage overnight,” Gilman told me.) Although still under construction, the Gigafactory was already so colossal that I could not make out its scale against the mountains beyond. As we drove on, Thompson directed my attention to the huge stone pads on which TRIC’s industrial structures are being erected. “We do not cut corners,” he said. “These pads have no subsidence. We have granite-basalt bedrock. For tech companies, that’s great.” (Eriksen seems to agree with this assessment: He and his colleagues have done nothing further to insulate their offices against quakes.) “The lack of a seismic threat in this area is one of our strengths,” Thompson continued.

But, of course, there is a seismic threat. According to Faulds, it’s about the same as what I already live with in California. The San Andreas may be closer to the breaking point, but the Walker Lane could see a major earthquake at any time.

Thompson and I returned to TRIC’s central office, where Gilman, now walled in by paperwork, was gearing himself up for several hours of new business calls. Last year, a company called Blockchains scooped up 67,000 acres of TRIC land to build a libertarian “smart city.” With that sale, the development had all but sold out. It was time, Gilman told me, to pursue new opportunities. “We’re in the path of growth,” he said, as heavy trucks boomed by on the highway, shaking the earth.

This four paragraph section is an interesting aside in the larger discussion of the Walker Lane Fault. But, it is a fascinating aside as office parks and industrial parks are not unique in the United States. Thousands of communities, ranging suburbs to exurban areas to more rural areas, have blocks of land set aside for commercial and industrial use. But, how many places have anything near 160 square miles set aside?

What makes this business park unique alongside the size is the relative location to other place, the particular setting, and the time the land became available. First, a location outside Reno puts the business park within roughly 4 hours of Silicon Valley and the Bay Area. That is not an easy commute but it can be done in a day or for a short trip. Second, the city of Reno and the state of Nevada have some features that are attractive to some companies. Third, having all of this land available now and in recent years means that some momentum can build regarding who is interested in the space (such as Tesla and libertarian-oriented firms). Take away one of these factors and the particular success of a business park of this size might be different or there might be a very different mix of interested companies. More broadly, numerous business facilities and stores sit vacant at desirable locations throughout the United States yet this business park attracts attention.

The scale of warehouse and intermodal facilities in Will County, Illinois

As residents and local officials in Joliet and Will County debated a proposal for a new 1,300 acre office park, WBEZ put the size of the issue at hand in perspective:

The county is home to the largest inland port in North America and 3.5% of the nation’s GDP passes through here…

And $65 billion worth of products moves through Will County annually, according to the Will County Center for Economic Development.

In other words, this an important area for the current economy and the land use case has local, regional, and global implications. A few thoughts:

  1. Joliet and neighboring communities might not want the additional facilities and trucks but having these facilities in this part of the metropolitan region might be good for 9+ million residents. Balancing local interests and metropolitan interests is not easy. And the Chicago region has a lot of railroad and shipping bottlenecks.
  2. This is a symptom of larger economic changes as the economy became globalized, shipping goods across the country and on-time delivery became common, and Internet sales picked up. The effects may be local but Will County is part of a larger system.
  3. The changes in Joliet over time are striking, The news story hinted at how the community, what social worker Graham Romeyn Taylor in Satellite Cities: A Study of Industrial Suburbs in 1915 would have called an “industrial suburb,” has changed:

“Three steel mills closed. Caterpillar went from 8,000 people to a little over a thousand. We had numerous manufacturing plants shuttered,” said John Grueling, president and CEO of the Will County Center for Economic Development.

No other county in Illinois has seen job growth like Will County. It’s the epicenter of transportation for goods that move across the region and country with North America’s largest inland port. Now another real estate company wants to expand in the area by developing a logistics business park, and its raising concerns about the future of the county.

In summary: local land use decisions can have big impacts.

(See an earlier post about how the Will County community of Elwood responded to a large intermodal facility.)

Trying to make vacant suburban office parks more attractive

Filling vacant suburban office parks can be hard. Here are some Chicagoland efforts to renovate these spacess:

At the former OfficeMax headquarters in Naperville, his architecture firm and developer Franklin Partners cut away portions of large trees, put in new smaller ones and strategically replanted some flower beds as part of a multimillion-dollar redevelopment to make the 350,000-square-foot property more appealing to a variety of companies…

For one, grand front desks typically found just inside the entrance of office properties built in the 1980s and 1990s no longer work. Those are being hidden and replaced by amenities that generate the most activity, like coffee bars, fitness centers and conferencing space. “It’s not unlike walking into a hotel,” says principal Roger Heerema. “There’s a feeling of life that is immediately apparent.”

Strategic use of light fixtures and canopies over entrances make a difference, he says, as does making sure tenants are actually noticing them. At the Westwood, a half-empty, two-building office complex being renovated in west suburban Lisle, the tenant lounge is located near a main visitor entrance. So Wright Heerema designed new lounges for both buildings near second entrances where most employees come and go…

In the suburbs’ corporate heyday, office buildings “were machines for working—you packed people into them,” says OKW Architects Chairman and CEO Jon Talty. “That attitude has changed profoundly. The lifeless machines need to have meaning to them to be relevant.”

How office space is designed goes through phases.

It would be interesting to hear more details about these approaches:

  1. How often do the changes involve asking current employees what they want as opposed to executives or designers making decisions and/or focusing on what potential employees might want?
  2. The argument above is that a redesign is going to attract a leasee or new employees. What exactly is the return on investment in good or cool design?
  3. Do companies and designers consider larger changes, such as adding more mixed uses to these campuses or opening up the buildings and spaces to reintegrate them into the surrounding area, or is the primary goal to make a quick fix to fill them with users again? In other words, is the bigger question how to move away from office parks and separate and move to a denser and more integrated suburban landscape?
  4. Does the design for a space work until someone moves out and then a refresh is needed? How often do companies proactively change their spaces in response to changing goals or employee needs?

 

An empty suburban parking lot

In a recent drive through a consequential suburban office park (see more here), I saw this:

abandonedparkinglot.jpg

I found the scene surprising and interesting for several reasons:

  1. This suburb prides itself on its number of white-collar office and tech jobs. A parking lot that looks like this does not fit with this image. The lot is out of the way so it is not going to attract much attention.
  2. This parking lot was on the edge of the property which included other parking lots – with some cars – and a large office building where it looks like there is plenty of activity. Perhaps the building does not have as many workers as it once did, hence the empty parking lot.
  3. Might this have to do with parking space guidelines drawn up by communities? Suburban communities can require a lot of parking for shopping malls, big box stores, and other facilities.
  4. If the parking lot has not been used for a while, I wonder at what point it is worth tearing it up. Might the property need the parking at some point? Would the space be better used as green space? This is likely not like urban parking lots where someone might hold onto the lot until property values skyrocket.

 

A test of taking Lyft from the train to the suburban office park exposes mass transit issues in the suburbs

One company in the Chicago suburbs is running a test to encourage employees to take the train to get close to their office and then use Lyft to complete the trip:

The two-year program aims to solve the “last mile” problem — how to bridge the gap between the train station or bus stop and the rider’s final destination. This problem is especially nettlesome for reverse commuters, who live in the city but work in the suburbs at jobs that are sometimes far from transit stops. More than 400,000 people commute every day from Chicago to jobs in the suburbs, according to the RTA…

GlenStar Properties is paying 75 percent of the cost of transporting employees at its Bannockburn complex on Waukegan Road to and from Metra stops in Deerfield, Highland Park, Highwood and Lake Forest. The Regional Transportation Authority is picking up the rest of the cost, up to $30,000 during the pilot…

The program, which launched in March and is the first of its type in Illinois, is starting small with just a few trips a day, according to the RTA. Bannockburn Lakes tenants get a monthly Lyft pass for the rides.

Many suburban companies, including Walgreens and Allstate, have some kind of shuttle bus program to get workers to and from Metra stations, said Michael Walczak, executive director of the Transportation Management Association of Lake-Cook, a nonprofit that works with companies and the private sector to figure out transit issues.

This is an interesting way to solve a common problem in both cities and suburbs: how to get people and goods that last step (or “last mile”) between a mass transit stop and their destination. Even in cities with good mass transit, the last step can cause a lot of problems.

This strikes me as the pragmatic solution to the larger problem of limited mass transit in the suburbs. The Chicago train system runs on the hub and spokes model where suburban communities, typically their downtowns, are connected to the Loop. This system may help funnel people into the center of Chicago but it is both difficult to get around the region and the train lines run into historic town centers, not necessarily the work and residential centers of today. Ride-sharing can help make up the difference by connecting train stops to workplaces. This can limit long-distance solo trips by car and allow more workers to not have a vehicle or to drive significantly less.

On the other hand, this solution could be viewed as less-than-ideal reaction to the real issue: sprawling suburban sites do not lend themselves to mass transit and the ride-sharing solution is just a band-aid to a much bigger issue. Chicago area suburbs have tried versions of this for decades including public bus systems in the suburbs to connect office parks to train stations, buses from remote parking lots to train stations, and private companies operating shuttle buses (as noted above). This all may work just for a limited number of workers who are located near rail lines and who are willing to use mass transit. But, most suburban workers – and they tend to work in other suburbs – have no chance of using timely and convenient mass transit to get to work. The densities just do not support this (and the office park in the story illustrates that this may be more feasible with denser concentrations of workers).

If companies, communities, and regional actors truly wanted to address these issues in the Chicago region, a more comprehensive plan is needed to nudge people closer together to both take advantage of existing mass transit and develop new options.

Whether tech companies and their workers actually do better in and prefer cities

A recent Chicago Tribune article echoed a theme I have now seen numerous times: companies must have downtown campuses to compete for tech workers.

To lure data scientists and other tech workers, companies in industries from fast food to insurance have opened outposts in the heart of the city, where tech employees want to work. Having hip, downtown spaces has proved worth the extra cost to suburban companies, even as rents have increased…

When suburban companies first started catching on to millennials’ desire to live and work in the city, managers had a new culture to learn, Reaumond said. Employees in the downtown innovation hubs didn’t want to be chained to desks 10 hours a day…

Tech-focused downtown spaces feel different than their suburban counterparts, and that’s how it should be, Arity President Gary Hallgren said. Allstate’s Northbrook campus has a barber, a pharmacy and a doctor, but the Merchandise Mart space isn’t trying to be a campus, Hallgren said. Its goals and culture are different, and the space is too. Arity’s office has a pingpong table and the same fizzy water dispenser featured in the HBO show “Silicon Valley.” It hosts meetups that draw tech workers from outside the company.

The underlying premise in these articles is that tech workers prefer to be in urban settings. However, I do not believe I have seen much data that measures this claim. When Americans as a whole are asked where they prefer to live, they tend to say either small towns or suburbs.

If tech workers do tend to prefer urban settings, is this due to the work itself actually going better in cities (higher productivity, more innovation, more efficiency, etc.) or other factors? For example, these stories often do not distinguish between the work activities of these firms and the age (younger) and generation (millennials) of the featured tech workers. Will the tech workers of today be the suburban parents of ten years from now? There is evidence that cities are innovation centers (see the scaling effects of patent production chronicled in Geoffrey West’s Scale) yet tech innovation is possible in the suburban office park (see the Route 128 area outside Boston, Silicon Valley around San Jose, and Bell Labs research centers in suburbia after World War Two).

And while this is often pitted as an either/or issue – tech firms must be in the big cities or must be elsewhere – I suspect there could be some benefits to each as well as some mixing of locations.