Orion Properties Bets on Demolition to Move Office Listing

Orion Properties is razing the long-empty former Walgreens office complex at 1411-1435 Lake Cook Road, hoping a cleared site will finally draw a buyer after years of false starts.

The Phoenix-based real estate investment trust tapped CBRE to market the 37.5-acre parcel, which sits along the Edens Spur Tollway, as a “blank canvas” for redevelopment, Crain’s reported.

The 575,000-square-foot complex once served as overflow workspace for Walgreens’ headquarters nearby. Orion inherited it in 2021 after being spun off from Realty Income, which bought the site from Walgreens in an $85 million sale-leaseback in 2013. A redevelopment deal with LG Group collapsed in 2022 as rising interest rates and tight credit froze construction financing. The property’s last tenant of record, Walgreens itself, let its lease expire in August 2023 but had long since vacated.

Orion executives told analysts this month they’re spending roughly $500,000 on demolition to “lower carrying costs materially and make the property more attractive” to would-be investors. In a regulatory filing, the firm listed the site’s net carrying value at $11.1 million. There’s no asking price, per CBRE’s flyer. Orion put the property up for sale in 2022.

The teardown underscores the suburban office sector’s reckoning, where remote work has pushed vacancy to record highs and made sprawling, dated campuses obsolete. While some owners are reinvesting to hold onto tenants, many sites are being repositioned to be redeveloped into hotter asset classes like warehouses, data centers and housing.

Deerfield is already seeing that play out: PulteGroup recently bought part of Walgreens’ headquarters campus nearby, leveling an office building to make way for 42 single-family homes. Orion’s site is already zoned for a wide range of uses, from retail and entertainment to senior housing or a data center, after village trustees approved a rezoning tied to LG’s failed proposal.

Built in stages between 1976 and 1984, the complex represents the kind of suburban corporate real estate falling out of favor with both tenants and lenders.

— Eric Weilbacher