Dermody Properties won’t be embarking on another office-to-industrial project in the northern suburbs after all.
The Nevada-based firm has scrapped its plan to convert the Caremark Towers office property, at 2211 Sanders Road, into a 300,000 square feet of industrial real estate, citing “increased costs related to the higher interest rate environment that continues to impact commercial real estate,” Crain’s reported.
The 18-acre site is just north of the 232-acre former Allstate campus in Glenview, which Dermody is transforming into a 10-building, 3.2 million-square-foot logistics park.
The Caremark Towers redevelopment, dubbed LogistiCenter at Glenview, was poised to contribute to the surging demand for warehouse space in Chicagoland, fueled by an increase of online shopping. Despite a thriving industrial sector in the metro area, broader market challenges were enough to throw a wrench in Dermody’s plan.
“Industrial real estate in particular is still very healthy, and we have strong activity at (the former Allstate property), but current interest rates make it difficult to pursue new opportunities that were initiated with last year’s pricing at its peak cycle,” Dermody’s Neal Driscoll told the outlet.
The Caremark Towers redevelopment received unanimous approval from Glenview’s New Development Commission in October. Dermody will withdraw its plan before it reaches the village’s board of trustees. The company had been seeking a Class 6b tax incentive to reduce property taxes over 12 years.
Community opposition also played a role in Dermody’s decision. Nearby residents opposed the plan because of increased traffic, noise, toxic emissions and environmental impact.
Such concerns have become common with large-scale industrial projects in suburban areas. In Deerfield, for instance, Bridge Industrial’s proposal to replace the 10-building Baxter International office campus with a 101-acre logistics park was met with strong resistance from nearby residents. Bridge ultimately killed the plan due to the pushback.
—Quinn Donoghue
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