Glenstar Properties is on pace to spend more than $100 million renovating suburban office properties between 2014 and 2019, part of a bet that millennials will eventually migrate out of the city for work.
The Chicago-based company is focusing its biggest work in Schaumburg, Rolling Meadows, Bannockburn and the area around O’Hare Airport, according to Crain’s.
Glenstar managing principal Michael Klein pointed to data from the National Association of Realtors showing millennial homebuyers are gradually shifting to the suburbs, predicting the young college graduates now pouring into Downtown will eventually settle outside Chicago.
The region’s suburban office vacancy rate ticked up last quarter, hitting 23.7 percent. Even class-A buildings posted negative net absorption compared to last year, according to a report from Colliers International.
Glenstar is spending about $28 million to renovate the million-square-foot Schaumburg Corporate Center, which it bought last year. It remains about 28 percent vacant.
The developer paid $33 million to buy the five-building Bannockburn Lakes portfolio in 2015, and the company has since spent about $10 million on renovations. Last month, it signed medical waste disposal company Stericycle to a 100,000-square-foot lease there.
In August, Rubenstein partners bought out Walton Street Capital’s stake in the Continental Towers office complex in Rolling Meadows in a $121.5 million deal. Glenstar and Walton Street bought in 2013 for $58.5 million. [Crain’s] — Alex Nitkin