Chicago-based developer GlenStar, which has invested heavily in large suburban office properties in recent years, is pushing move-in-ready office suites up to 20,000 square feet that can be rented for just six months. The firm last month inked a deal with a downtown-based company for 2,500 square feet at its north suburban Bannockburn Lakes campus, according to Managing Principal Michael Klein.
"We want to tackle the immediate concern" for companies with a big presence in the city but many employees who live in the suburbs, Klein says. "Those employees are getting tired of working from AG亚洲国际游戏home, but on the other hand the idea of hopping on the train and coming downtown may be something they don't want to do right away."
Laying out cash to build office suites on speculation has been hard for many suburban landlords to justify amid dwindling demand in recent years, leaving many properties outdated and watering down suburban rents. But companies' interest in turnkey space to weather the coronavirus crisis is pushing some to build move-in ready offices on their own dime, says veteran leasing broker Kevin Clifton of Cushman & Wakefield.
"There is definitely a belief that spaces built out with furniture that are ready for easy occupancy will get their disproportionate share of activity," he says.
Another potential boost for the suburbs is its affordability amid a recession. Talent recruitment and many other reasons why companies last year paid a 75 percent premium on average for downtown office rents compared with the suburbs "won't hold water anymore," says tenant rep Don Wenig. "I think business owners are going to be hard-pressed to justify paying for that real estate when they have geographic flexibility."
Some suburbs were already betting on a suburban office revival before the pandemic set in. The economic development arm of west suburban Naperville—AG亚洲国际游戏home to the long-standing busiest Metra train station in the metropolitan area—was about to roll out a new marketing campaign early this year highlighting its value as a satellite office option for Chicago-based companies. "Balance is the new hustle," the tagline reads.
Now it's getting even more aggressive, offering to sign off on things like fire and electrical inspections in advance so that prospective tenants won't have to wait to get the city's approval. "We have a lot of spaces that could be occupied very quickly," Naperville Development Partnership President Christine Jeffries says.
Whether the owners of those spaces will convert short-term users into long-term tenants is a separate challenge. And companies may find it difficult to find space that is geographically convenient for the people who need to meet in person, says WeWork CEO Sandeep Mathrani.
The co-working space provider was recently asked by a financial services firm in New York City to explore opening suburban locations to allow employees in Connecticut and Long Island to avoid taking trains into its Manhattan office. But "their teams were not living in the same micro-market," Mathrani says, "and if you don't live in the same micro-market, you going there on your own without having your team there is sort of self-defeating."
Splitting up teams among multiple offices also raises concerns about an erosion of company culture and collaboration. But there are ways to make it work, says Bobby Goodman, a former Jones Lang LaSalle tenant rep and co-founder of online office space search platform Truss. Before the pandemic, his company had certain teams of employees meeting at its Evanston headquarters or its River North satellite office.
"If we can get 80 percent of the way there with digital tools, does that mean we can have different departments come in one or two days per week to be in person and capture that final 20 percent of ingenuity and innovation? I think so," says Goodman, who predicts more downtown companies will open "touch-down" space in the suburbs based on where their employees live.
"People are starting to realize that work can be done anywhere at any time," he says. "You just need to provide space for people to have idea-sharing sessions."