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 Suburban business parks are as outdated and obsolete as fax machines…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.

What will happen to those large, all-encompassing tech headquarters if employees can now work from home?

Employees in the tech industry may have more ability to work from home in the future:

Now that a large company like Twitter has announced the option to not return to the office, it will likely “drive momentum across the industry,” says Aaron Levie, the CEO and cofounder of Box. “Other companies look to those events as a signal for what they should do in their organization.”…

Not all companies are so eager to extend the work-from-home life. Employees at Apple’s headquarters in Cupertino have been told they will start returning to Apple Park in phases, starting in late May. Apple’s security policies, meant to protect the company’s internal work, have reportedly made it difficult for employees to do their jobs while at home, especially if their jobs are related to building hardware….

Of course, Twitter is not abandoning the office altogether. In the wake of the pandemic, Box CEO Levie thinks bigger tech companies are more likely to take what he calls a “hybrid approach,” blending remote teams with in-office ones. “We’re still far from saying, ‘We’ll shut down entire offices,’” Levie says, adding that the realities of childcare would make it difficult for all employees to enjoy working from home permanently. “There’s a lot of power in people coming together, certain types of functions being able to collaborate in person, but there’s equally power in the flexibility and convenience of no commute and being able to work in a more efficient way.”

But other companies may reconsider the expense of office space, or at least downsize it, if enough employees choose to work remotely going forward. In 2017, Automattic—the company that owns WordPress—decided to give up its sprawling 15,000-square-foot office in San Francisco, because its employees never came in. For some smaller startups, this massive work-from-home experiment has made it obvious that they don’t need offices at all.

What does all of this mean for offices and headquarters and big campuses? The big office or work campus, such as those for Facebook, Apple, and Google, offers multiple advantages: the ability for people to meet, gather, and interact formally or informally face-to-face or in the same room; the company can know where everyone is; the ability for the company to control the work environment; and they are status symbols both for the companies and their communities.

But, working from home or away from the office also offers advantages: the employee is more in control of their immediate surroundings; there is limited commuting time; workers can connect via technology when needed and shut that off or limit contact when needing to focus; and expenses related to a big building are reduced.

And, as the article notes, the implications are huge for how organizations operate, what it means to be an employee, and for communities where businesses use land and pump money into the local economy. A more decentralized landscape for companies might reduce the need for cities to compete for headquarters (Amazon example) or even make the competition more cutthroat fighting over scraps. What happens to all that office space and how can communities fill vacant space in an era of budget issues?

For the record, I do not think the big offices will go away. At the least, they provide a physical reminder of the company and social interaction is different in-person than through technology. But, if a significant number of companies allow more employees to work from home, this could transform many physical locations.

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?

 

Looking for productive ways to use the campuses of closed colleges

When college campuses close, what happens to the land and buildings?

Saint Joseph is one of several small private liberal arts colleges across the country to have suffered that fate in recent years. In many of those cases, leaders are left wondering what to do with the shuttered campus. Under the wrong circumstances, buildings can remain locked and quads can lie fallow for years as banks try to recoup unpaid debts or brokers seek buyers who are willing to invest in land filled with outdated or dilapidated buildings…

Conversations between community and state leaders led to a search for partners interested in working with the college. That brought Vermont Works, an investment firm, and Vermont Innovation Commons, a benefit corporation that is a project of Vermont Works, into the picture.

Ideas grew for trying to offer education to a wide range of students, keep Vermonters in the state and attract new residents, Scott said. The direct path from high school through college to employment isn’t necessarily what employers or students want anymore. Professional skills, technical skills and experience are being emphasized much more today than they were in the recent past…

Across the country, the idea of repurposing closed or closing colleges is a critical planning problem, according to experts. College leaders need to be considering their prospects for the future and whether different models can help them fulfill their institutions’ missions, said Nicholas Santilli, senior director for learning strategy at the Society for College and University Planning.

Redeveloping large properties is not an easy task: see shopping malls, big box stores and large retail stores, and office parks. College campuses present their own unique challenges given how the land is used. Simply plopping a new organization into the same set of buildings is likely to be difficult. Location will matter as well; the story above used the example of a more rural college where there is limited demand for land.

As the story hints, it would be great to be able to use the property for an ongoing educational purpose to keep the mission of the college going. If that does not work, perhaps the land could be used for community purposes. Ultimately, simply turning the property back to the free market for commercial, industrial, or residential uses – which could generate more money and taxes for local communities – seems like it could be a loss. Given the predicted fate of numerous colleges and universities, perhaps we will have a landscape in a few decades where it will be hard to know that the land formerly housed a thriving higher education institution.

I wonder if there is a way for college campuses to head off the problem long before they need to close their doors. Would having more permeable membranes between the campus and the community better connect all the land uses? is the impulse to have a controlled campus a bad idea in the long run for communities?

Palaces for the People, Part 2: place-based rather than people-based interventions

I recently read Eric Klinenberg’s 2018 book Palaces for the People. For a few days, I am highlighting a few short passages from the book that make some interesting connections regarding physical places.

In a discussion of policing, crime, and spaces, Klinenberg highlights research showing resources put into improving places can improve social relations:

The Philadelphia studies suggest that place-based interventions are far more likely to succeed than people-based projects. “Tens of millions of vacant and abandoned properties exist in the United States,” write Branas and his team. Remediation programs “make structural improvements to the very context within which city residents are exposed on a daily basis.” They are simple, cheap, and easily reproducible, so they can be implemented on a larger scale. What’s more, they impose few demands on local residents, and the programs appear to pay for themselves. “Simple treatments of abandoned buildings and vacant lots returned conservative estimates of between $5.00 and $26.000 in net benefits to taxpayers and between $79.00 and $333.00 to society at large, for every dollar invested,” their paper in the American Journal of Public health reports. It’s not only more dangerous to leave the properties untended; it’s also more expensive. (70)

Imagine vacant properties in many American cities, particularly in the Rust Belt, transformed. Keeping up the property over time could help show local conditions will not be allowed to decline. Even as residents may come and go, the community is committed to the lot.

But, I wonder how much push back there would be from the public. A typical approach to struggling communities is to argue for more job and educational opportunities. If this works, it gives people options and skills they can then use anywhere over time. Such investments are viewed as showing residents that the community cares about their lives. Would putting resources into places be perceived in the same way?

Generally, infrastructure is pretty invisible in American life. Focusing on vacant properties, very noticeable to both people in the community as well as visitors, might help reverse that.

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.

 

Chicago area malls trying to reinvent themselves yet not adding many residential units

Multiple suburban shopping malls in the Chicago area are trying to turn it around with different uses:

A casino is envisioned for the former Lakehurst Shopping Center site in Waukegan, which closed in 2001 and was demolished in 2004. It was the proposed site of a casino until the 10th and final state license was awarded to Des Plaines in 2008. With the latest round of gambling expansion, Waukegan could revive that dream.

St. Charles has seen little momentum on a concept plan presented two years ago for the largely vacant former Charlestowne Mall site north of Route 64. It called for the property’s complete revitalization, including a residential development, a smaller mall building and the construction of free-standing commercial structures. Mall owners have yet to make a deal with developers.

Stratford Square Mall in Bloomingdale, which opened in 1981, has been struggling for several years having lost three anchor stores since 2014. It launched a multimillion-dollar renovation project featuring interior and exterior improvements at the 1.3 million-square-foot center. An earlier renovation included the 2014 opening of Round1, a 40,000-square-foot entertainment center featuring bowling, billiards, video games and karaoke…

To further increase foot traffic, several suburban malls have incorporated entertainment venues. There’s now a Cinemark movie theater at Spring Hill Mall in West Dundee, a Round One entertainment center at Fox Valley Mall in Aurora, an AMC Hawthorn 12 theater and a Dave & Buster’s at Hawthorn Mall, a Pinstripes near Oakbrook Center and Pac-Man Entertainment (formerly Level 257) at Woodfield.

With retailers everywhere struggling, the trend toward multiple uses in shopping malls continues. The hope is that multiple uses can attract people to the site who after eating might want to shop or who after seeing a movie might want to eat there and so on. (I think this then could lead to the issue of how many entertainment centers can make it in the suburbs but that is another problem to tackle later.)

One piece that is missing from these descriptions: adding residential units. This would likely require some zoning changes as the mall properties probably only allow commercial properties now. Furthermore, it could take some work to reintegrate the full property with the surrounding street grid (which likely includes residential units nearby). Having residents on site could address multiple problems facing suburbs: filling vacant space; providing round-the-clock customers; increased population growth which is an issue in many suburbs with no major land parcels left; and the possibility of having affordable housing. These residential units may not bring in as much money as stores and restaurants that add property and sales tax revenues but they could add life to stand-along properties.

Bringing medical clinics to vacant shopping mall space

Filling emptying shopping malls can be a hard task. Add medical services to the list of possible replacement uses:

Mall of America in Minneapolis, America’s largest mall, announced plans last week to open a 2,300-square-foot walk-in clinic in November with medical exam rooms, a radiology room, lab space and a pharmacy dispensary service. Mall of America is teaming up with University of Minnesota physicians and a Minnesota-based health care system to operate the clinic…

While mall leases for clothing retailers declined by more than 10% since 2017, medical clinics at malls have risen by almost 60% during the same period, according to Drew Myers, real estate analyst at CoStar Group. The growth of medical clinic leases at malls has been the “strongest among all major retail sectors over the past five years,” he said.

Mall landlords are betting that when patients visit for a flu shot or eye exam, they’ll shop around for clothes or electronics. Adding medical clinics also makes sense for mall owners because they draw in doctors, nurses and technicians every day who may shop and eat at restaurants, according to a May research report by real estate firm JLL. Health care providers are also attractive tenants for mall landlords because they tend to have high credit ratings and sign longer leases compared with other retailers, JLL analysts noted.

On the provider and health insurer side, shopping malls give companies convenient locations to set up outpatient care posts and preventative care locations for patients. Providers are increasingly looking to these lower-cost clinics to help patients avoid expensive trips to the emergency room.

The medical offices can serve the new residents and commercial uses that are also now occupying shopping mall space in addition to blending shopping and medical trips (dubbed “medtail” in the article). Just wait until the new hospital takes over the mall and patients and visitors can walk out one door and into a clothing store down the hall.

More broadly, this hints at a blending of activity within single structures that suburbs are not used to. Suburbs are known for separating land uses, often with the goal of protecting single-family homes. Suburban downtowns, places where multiple uses might be found, are limited and now often seem geared more toward entertainment and cultural use. Could the shopping mall truly be a community center in the coming decades with more residential units, medical offices, and community spaces?

An incomplete way to frame it: Lake County loses jobs and HQs to Chicago

The shift of headquarters and jobs from Lake County to downtown Chicago leaves a number of suburban buildings vacant:

The far north suburban county is bracing for the loss of about 2,700 office jobs by early next year, from prominent companies Walgreens Boots Alliance, Takeda Pharmaceutical Co. and Mondelez International…

History indicates corporate campuses in Deerfield and nearby suburbs — and the homes and businesses those high-paying office jobs support — can weather the storm. But the challenge has only intensified as more companies move jobs to downtown Chicago, in pursuit of younger workers who want to live in the city…

McDonald’s, Kraft Heinz, Motorola Mobility, Hillshire Brands, Gogo, Wilson Sporting Goods, Motorola Solutions and Beam Suntory are examples of companies that have moved their headquarters downtown in the past few years. Others, such as Walgreens, have established large offices in the city while retaining suburban headquarters…

A 2013 report outlining the county’s economic development strategy said losing any of the larger employers in the biopharma industry — such as Takeda — would be “devastating” to the county.

Such moves have real consequences for suburban areas. Filling and/or reviving large office parks and suburban campuses can be difficult. The loss of jobs and tax revenue can hurt.

At the same time, a story like this can reinforce notions that when Lake County loses jobs to the city of Chicago, this is a bad outcome. When the suburbs lose jobs to the big city or vice versa, someone is winning and someone is losing. Not necessarily: the region is still benefiting as the cities and suburbs depend on each other. From the perspective of the whole region, there is good news here:

-The fact that these companies want to stay in the Chicago region, whether in the suburbs or downtown, hints at the economic vitality and amenities of the whole area. With the bad news of Illinois’ financial issues, big companies are not leaving the state en masse.

-Other parts of the article hint that while the vacancy rate for office space is high in Lake County, there is still some business demand for these headquarters and campuses. Some locations might require more work to find a sizable replacement but they are not necessarily sitting empty for years.

-This presents opportunities – perhaps unwanted – for suburban municipalities to rethink suburban office parks and campuses. Rather than waiting for the big company to use the whole property, these could be future mixed-use sites featuring office, retail, recreational, and residential space. Rather than rely on single employers, suburbs could work to tie these campuses into the larger fabric of their community.

This could become a bigger problem if suburban properties stay vacant for a long time but these changes seem fairly normal for now: businesses move locations within a region to chase what they think are attractive options for workers (particularly young ones) and their bottom line. Perhaps more importantly, the suburb versus city battle over prestigious headquarters does not need to sour relations or perceptions. The region as a whole can continue to thrive even if there are changes to address within the metropolitan area.

Another use for vacant retail buildings: schools

The Chicagoland suburb of Palatine is considering converting vacant retail space into a school:

Under the proposal, a shuttered Whole Foods Market and other adjacent space totaling about 80,000 square feet would be renovated for a maximum of 32 classrooms for kindergarten through sixth grade. The school would be in the Park Place shopping center opposite a Walmart, southeast of Dundee and Rand.

Stuckey Construction Co. Inc. of Waukegan would buy the space for about $4.1 million and spend another $13.8 million renovating it, Thompson said. He said District 15 would lease the building with an option to buy it within seven years if the idea receives school board approval…

As part of the plan, Park Place’s owner would build four retail buildings closest to Rand. The former T.J. Maxx/Home Goods portion of the plaza would be demolished to make room for the new retail section and a playground and sports fields covering 2 acres for the school.

District 15’s school at the mall would serve 750 to 800 children in the northeast area, where about 22 percent of the students live but don’t have a neighborhood school. Thompson said he projects the new school would have 74 percent Hispanic students and an overall low-income population of 70 percent.

As retail locations struggle, many communities are looking for answers as to how to use the vacant structures. There a number of possible options but rarely have I seen the idea of schools. I suspect converting these spaces to schools has several distinct advantages:

  1. It could reduce the amount of money needed to provide school buildings. Referendums or tax levies to build new structures often face opposition in suburban communities because of the cost. Additionally, the new school buildings might be in response to a relatively new need in the community tied to new growth but the building may not necessarily be needed in the long term. Converting an existing building could save money.
  2. Retailers often locate in key locations near major intersections. This could make accessing a school easier for a broader range of residents.

Yet, there would also be disadvantages to pursuing this strategy:

  1. Converting the retail structures into schools takes possible land off the tax rolls. Many communities hope vacant structures will be filled by land uses that will contribute property taxes and sales taxes. Schools provide neither.
  2. The location may be central or at a key point but residents often have images of what neighborhood schools should be: located in or very close to residential neighborhoods. Several concerned residents are quoted in this story and they raise safety concerns of being located near major roads and higher-crime areas.

I wonder if a school could also be viewed as a community anchor for a larger mixed-use plan in a redevelopment setting like this. Having some new residences alongside some retail space plus new community (school plus parks, plazas, etc.) could create a new neighborhood setting.