The Next Evolution In Suburban Development: Mimicking Downtown-Style Mixed-Use
Motorola Solutions’ former Schaumburg campus has been a ghost town since the company moved its headquarters to 500 West Monroe in August 2016. UrbanStreet Group Managing Partner Bob Burk sees the 225-acre site as ushering in a new era in suburban development — one with a variety of uses and density similar to urban cores.
“The suburban development model is still relatively young, from an urban planning context. Now the suburbs have to evolve,” Burk said.
Last week, Schaumburg village trustees approved a new zoning district and design parameters for the Motorola Solutions campus — which rivals the Loop in land area — and opening the site to projects one would expect near Chicago’s downtown core. Where suburban development used to be characterized by minimum setbacks and maximum heights, Schaumburg approved maximum setbacks and no height restrictions for Motorola Solutions, except for a three-story minimum.
Burk said the village’s planning process leading to this decision was consistent with what UrbanStreet Group and its partner in the redevelopment, Trilogy Investments, envisioned for the site: a need for density, diversity of uses and walkability. Burk sees the village’s decision as validation.
“We purchased the site without zoning based on the belief Schaumburg would be on board,” Burk said of the 14-month process.
Burk envisions the campus with heavy multifamily and office density, along with complementary uses like entertainment and hospitality.
Last month, UrbanStreet Group and Trilogy secured $30.1M in financing from Pangea Mortgage Capital and T2 Capital Management. Burk said that money is earmarked toward demolishing most of the manufacturing buildings on the site, and redeveloping a 350K SF vacant office building into smaller floor plate, open office space. UrbanStreet Group expects to break ground on a 260-unit loft-style apartment building this summer, and expects other parcels of the site to go under contract over the next six months.
This is a major pendulum shift. Burk said the suburbs were originally formulated to segregate uses. In the post-World War II economic boom, veterans fled urban environments in waves to start families and careers, and suburban real estate development in the 1950s and '60s was dominated by mass-produced housing, shopping malls and sprawling low- to mid-rise office campuses. Today, demand from millennials reinvented downtown business districts into 24/7 live-work-play areas, often at the expense of the suburbs.
Chicago is lagging other major markets in suburban development activity. The majority of the 2.4M SF in new office inventory coming to Chicago this year is held in three downtown buildings: 151 North Franklin, 625 West Adams and McDonald’s new West Loop headquarters. That bucks a national trend of new office construction shifting from urban cores to the suburbs.
Schaumburg’s decision to allow more density on the Motorola Solutions site allows UrbanStreet Group to create amenities that are attractive to support the worker base.
MB Real Estate Executive Vice President Andy Davidson said bringing more density to the suburbs is necessary. The younger members of today’s workforce expect amenities, and shifts in office real estate mean developers cannot buy a large campus and expect to backfill it with a single user.
“Developers need to find a way to reposition these sites and make it more usable for the target base that is out there,” Davidson said.
Burk sees UrbanStreet Group’s plans for the campus as building on Schaumburg’s status as a solid suburban jobs destination. He said Zurich North America’s presence in the village is proof there is a large workforce presence, and there is room for growth and innovation in what companies are delivering to their employees.
The Holdup
Transportation remains the biggest obstacle to reinventing the suburbs. Davidson said a market like O’Hare is strong because of the access office buildings have to public transit. Outer suburbs like Schaumburg will have to adjust if they want to attract younger workers more accustomed to taking the train or ride-sharing services to work. With a lack of public transportation options, Davidson said it will be hard to attract companies without other product types in place.
Burk said Schaumburg recognizes the town lacks public transit infrastructure. For now, UrbanStreet Group and the town are committed to making the campus accessible from a vehicular perspective, then gradually reducing the entry and exit of cars by having mixed uses. Schaumburg will build a new road for the campus this summer, and an interchange at Meacham Road to provide better access.
“Public transportation options stem from necessity. Our hope is that will increase as we increase density in the suburban environment,” Burk said.
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