Franklin, Ryan target more old suburban offices for industrial conversion

Two developers are tempted to jump on Chicago’s booming industrial train by redeveloping large, outdated office properties in Naperville.

Franklin Partners has considered razing the vacant former Alcatel-Lucent office building at 1960 Lucent Lane, which it paid $4.8 million for last month, and Minneapolis-based Ryan Companies is under contract to buy the 178-acre former BP campus at 150 Warrenville Road, with similar plans in mind, Crain’s reported. Both developers would build warehouse projects at these sites, if approved.

Going the industrial route seems like the wise decision given how well this sector has performed compared to Chicagoland’s slumping office sector. Warehouse vacancies fell to a record low earlier this year, while office vacancies soared to another record high in the last quarter.

Yet, some Naperville officials are reluctant to hop on the bandwagon. Newly elected Mayor Mayor Scott Wehrli recently voiced concerns about a rule passed by the Naperville City Council last year, which required the approval of industrial projects in areas zoned for office, research or light industrial use.

Wehrli cited concerns from suburban residents who are worried about “negative impacts” of office-to-industrial developments, such as pollution, noise and traffic congestion. Christine Jeffries of the Naperville Development Partnership said office properties along the highway, like the ones on Lucent and Warrenville, must be preserved, the outlet reported.

“There’s no question that the pandemic has impacted almost all facets of our lives. Things like working remote or online ordering of products hit hyperspeed during the pandemic shutdowns,” Jeffries said during a city council meeting. “But what lies ahead in the post-COVID economy has yet to be determined. We do know that if we react to today’s conditions — a snapshot in time — we risk losing future opportunities.”

If Franklin Partners and Ryan are able to proceed with their redevelopment plans, they would join the growing list of such conversions in Chicago’s suburbs.

Bridge Industrial has proposed tearing down a 10-building office campus in Deerfield to build a logistics park spanning 101 acres. Dermody Properties has an even grander plan, as it acquired the 232-acre former Allstate campus in Glenview last fall to construct five warehouses totalling 1.2 million square feet.

Franklin Partners is led by managing partners Donald Shoemaker, Raymond Warner and Gary Tamminga. Brian Murray is the CEO of Ryan.

— Quinn Donoghue