Chicago Suburban Developers Lean Into Transit-Oriented Projects
Transit-oriented developments are back in vogue, not only in Chicago’s transit-rich downtown but also in its surrounding suburbs.
Developers are targeting sites near the train and betting on the staying power of TODs, panelists said at Bisnow’s Exploring Chicago’s Northern Suburbs event Thursday. Recent actions from the state’s lawmakers are also boosting their attractiveness.
“If you look at what we've done in the last six, seven years, we're following the rail,” Harlem Irving Cos. President and Chief Operating Officer Rick Filler said at the event, held at Saranello’s.
Harlem Irving Cos. has targeted underutilized Metra parking lots for multifamily development in suburbs like Mount Prospect and Crystal Lake, Filler said. Those lots are often owned by the municipality they are in and are able to be developed into higher-density multifamily.
Filler said the company pursues suburbs with a lot of possibilities for retail and restaurant growth that can support an uptick in residents.
Transit-oriented developers got a major boost from the Illinois government last week when it passed a sweeping $1.5B transit bill that will help the Chicago area’s transit agencies avoid a looming budget crisis. The bill also includes the People Over Parking Act, which restricts municipalities from mandating car parking for residential and commercial uses in areas near transit.
The ban on parking requirements applies to any new construction or renovations that aren’t lodging establishments and that are within half a mile of a public transportation hub or one-eighth of a mile of a public transit corridor.
The removal of parking minimums near significant stretches of the city and its surrounding suburbs could lower costs for developers substantially. The cost of creating a parking space can range from $5K to $10K for surface lots and $25K to $50K per space in structured parking garages, according to Birchwood Law.
In the suburbs, TODs used to primarily serve commuters who wanted to take the train into the city for work, The Drake Group principal Tom Drake said. After the pandemic and a smaller concentration of in-person work in the city, the TOD dynamic still exists and has staying power.
“TOD is not a fad,” Drake said.
Now, TODs serve a different purpose. Drake said residents want to go downtown for non-work-related reasons, all while avoiding traffic on the roadways. The Drake Group’s emphasis on TODs goes back more than two decades, when the developer built in the city itself and had an internal requirement to build its mid-rise buildings close to train stations.
“It's been in demand for a while, and I see it continuing to be in demand until Rick buys up all the remaining sites,” Drake joked.
Even office use of transit is poised to increase.
Suburban office absorption improved in the third quarter, with overall year-to-date net absorption climbing to 836K SF, consistent with prepandemic highs, according to a Q3 Colliers report. Class-A properties were the primary driver, contributing 549K SF of positive net absorption.
Fortune Brands announced a major office move in January, relocating its former Deerfield headquarters to two large towers at 1 Horizon Way in the same suburb. The company has added more than 400 new hires since and is two years ahead of its 2027 goal of adding 400 full-time positions in the Chicago area. Fortune Brands has been in its new headquarters for about a month, Fortune Executive Vice President Leigh Avsec said.
Avsec said that although the company was based in Deerfield initially, it conducted a national search to find the best home for the business. The company decided to stay in Deerfield because of its access to transit, the pipeline of talent from the area’s universities and the park system, among other reasons.
“For us, it's been — again, early days — but a really, really significant success,” she said.
