Dermody’s Suburban Chicago Logistics Campus Lacks Tenants

Dermody Properties is encountering significant leasing challenges at its speculative $500 million Logistics Campus in Glenview.

The first phase of redevelopment at the 232-acre former Allstate headquarters, at 2775 Sanders Road, was completed in October, a year later than planned. And the Nevada-based developer is grappling with a slower-than-expected market, the Chicago Tribune reported.

The sprawling site remains mostly vacant, leaving developers and market observers searching for answers. It was designed as a hub for e-commerce and distribution; it has five warehouses spanning more than 1 million square feet; and its location near Interstate 294 and the Wisconsin border offers strategic access.

California-based Upside Foods, planned to use 187,000 square feet to build the country’s first large-scale cultivated meat facility. However, the company paused its plans in February, leaving the campus without an anchor.

Overdevelopment during the pandemic has left Chicago with an excess of vacant warehouse space. Leasing activity dropped to its lowest point since 2005, with 6.5 million square feet taken off the market in the third quarter, when the vacancy rate was sitting at about 5.5 percent, according to Transwestern. Meanwhile, sublease availability climbed to an all-time high, with 13.4 million square feet available.

The project’s location has also presented unique hurdles, as it is outside of traditional industrial hubs, making it less familiar to some potential tenants.

“We love that location for a lot of clients, and we continue to look at it. I think it’s going to find a user relatively soon,” said Meredith O’Connor of JLL.

Despite the leasing challenges, Dermody is pressing forward with plans for the campus’ second phase.

— Andrew Terrell