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TA Realty buys suburban Chicago office from Walgreens for $21M
Decades-old building had been targeted for demolition, industrial redevelopment as suburban office demand stays muted
Boston’s TA Realty picked up a decades-old suburban Chicago office building from Walgreens Boots Alliance for $21 million as the pharmacy company eyes an expansion of its nearby headquarters.
The 284,000-square-foot office campus with three buildings on 26 acres at 4000 Commercial Avenue in Northbrook had been known as the Walgreens Innovation Center, a research facility near the company’s Deerfield headquarters. Walgreens is planning a 14,240-square-foot addition to its Deerfield campus to replace the Northbrook property.
Built in the 1970s, another company called Panattoni, based in Irvine, California, had proposed demolishing the mostly vacant Northbrook building and redeveloping it as a 400,000-square-foot industrial building. It’s unclear whether TA’s purchase of the building was made in tandem with Panattoni as a partner or if the Boston firm has separate plans for the property. Neither company responded to requests for comment.
The site’s possible end as a traditional office building and its potential for redevelopment reflects the suburban Chicago market, which features record-high vacancies of 27.1 percent, according to JLL. Brokers have said the rate is driven upward by offices that are outdated and aren’t in prime locations, and have embraced shifts of some buildings away from office uses.
Meanwhile, the industrial real estate market is booming amid the pandemic as vacancies in buildings of 200,000 square feet or more dropped to a record low of 2.6 percent in the Chicago area in the first quarter, and developers race to meet the demand. They put a record high amount of product in the pipeline in the first quarter, with 44 buildings totaling 23.7 million square feet underway, Colliers found.
The Northbrook property is easy to access along Interstate 294 and was billed as a “great potential for redevelopment, additional development on the excess land on the site, or continued use as a flexible office or mixed-use building,” in a Cushman & Wakefield listing. About 50,000 square feet of the building is used as a merchandising and warehouse space with tall ceilings and dock doors, while the remaining 235,000 square feet is standard office space.
TA Realty has made several other transactions in the suburbs of major U.S. cities lately, including this month’s $58 million purchase of a Whole Foods-anchored shopping center in Connecticut, the March sale of a suburban Miami office building for $25 million and a November purchase of a Safeway store and three other retail buildings for $77 million in Mountain View, California.
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