Allstate to sell Northbrook campus for $232 million to industrial developer for massive new logistics facility [Chicago Tribune]

Chicago Tribune (IL)

Insurance giant Allstate has reached an agreement to sell its longtime Northbrook headquarters for $232 million to an industrial developer that plans to turn the longtime corporate campus into a massive logistics facility.

The sale to Nevada-based Dermody Properties, which specializes in e-commerce and logistics sites, encompasses the majority of the sprawling campus along I-294 in an unincorporated area of the northern suburb. The transaction is expected to close next year.

“Allstate is selling the property as employees have more choice about where they work and many are choosing to work from home,” the company said in a news release Monday.

Dermody plans to redevelop the Allstate campus as a logistics and fulfillment operation, expediting delivery of products to consumers and businesses in the Chicago area amid shifts to remote work and digital commerce, trends that have been accelerated by the COVID-19 pandemic.

Once completed, the $500 million project will be one of the largest urban logistics developments in the U.S., according to Douglas Kiersey, Dermody’s president.

“Our intent is to replace the existing office campus with about 3.2 million square feet of logistics space,” Kiersey said.

Founded in 1960, Dermody has developed 100 million square feet of industrial and logistics space nationally.

Kiersey said building a modern logistics facility in a “unique” suburban location provides great access to both customers and labor, with transportation infrastructure already in place to handle the thousands of Allstate workers that commuted to the site daily for decades. He said traffic counts for the logistics operation will not approach the “peak level” of the corporate headquarters.

Allstate has been a Northbrook corporate fixture since 1967, when it moved its offices from Skokie to a six-building complex on a 122-acre campus. The company said it plans to keep a “significant presence” in the Chicago area, including its existing Chicago office space at River Point and the Merchandise Mart.

The sale to Dermody is for 232 acres, including the original headquarters and adjacent property acquired by Allstate.

Most of the land is in unincorporated Cook County, with about 30 acres located in Prospect Heights, which Allstate bought in 2010 from HSBC North America Holdings.

Dermody would look to have the entire property annexed into neighboring Northbrook, Glenview or Prospect Heights as part of the redevelopment.

“It would be our first choice to annex into a community that found value in our project,” Kiersey said.

Kiersey said job one will be demolishing more than 2 million square feet of office space on the Allstate campus, with hopes of beginning construction of the logistics facility next year.

Northbrook will remain Allstate’s corporate headquarters “for now,” and the company will “move out gradually over the coming months,” the company said in an email.

The sale of Allstate’s headquarters comes as more major employers push back a return to the office until 2022 amid the ongoing pandemic, with many adopting a hybrid approach that will include work-from-home as a long-term option. In its 2020 annual report, Allstate said 95% of its employees were working remotely “while maintaining internal controls and productivity” throughout the year.

Beyond real estate, the company is also shedding its life insurance and annuity businesses as it focuses on auto and homeowners insurance products. Life insurance sales have been declining at Allstate since 2018 and annuity sales were discontinued in 2014.

In June, Allstate agreed to buy low-cost auto insurance provider SafeAuto for $300 million, expanding its state-minimum auto coverage offerings.

Founded in 1931 as part of Sears, Allstate remains one of the nation’s largest publicly held personal insurers.

Allstate had 7,892 employees in Illinois and more than 44,000 across the U.S. as of October, according to its website.

Turning a once-bustling suburban corporate headquarters into a logistics center is a sign of the times, where the COVID-19 pandemic has made both remote work and online shopping the new normal, Kiersey said.

“You put those two trends together and you have a project like this,” Kiersey said.

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