Walgreens to sell off Deerfield buildings, shrinking its HQ yet again as more employees work from home

Walgreens plans to sell off more than half of its north suburban Deerfield headquarters, according to a message sent to employees Friday afternoon by CEO Roz Brewer. A hybrid strategy launched last year that allows many employees opportunities to work from home has left much of the sprawling, low-slung office campus along I-94 empty, so the company will shift personnel to its remaining buildings on the property’s southern edge.

No changes are planned for employees working in downtown Chicago’s Old Post Office. Walgreens moved many digital and IT employees there in early 2020, one of the first tenants to occupy the hulking riverfront structure after its renovation into an upscale office property.

“Especially for those who have worked on campus for years, I want you to know this decision was not taken lightly,” wrote Brewer. “I’m confident that we will grow to love the new ‘right-size’ campus, and that this change will help facilitate more opportunities for meaningful in-person interactions.”

The company will move all Deerfield employees into several buildings on the 100 block of Wilmot Road just north of Lake Cook Road and sell its adjacent buildings on the 200 and 300 blocks of Wilmot, she added.

“We recognize the way we work has changed and with our hybrid model valued by our team members, we have underutilized space on our Deerfield Campus,” a Walgreens spokesperson stated in an email to the Tribune. “To reimagine the space to fit our current needs and create efficiencies that allow us to invest in the business, we have made the decision to sell several buildings that are part of our support office.”

The company remains committed to its Deerfield headquarters, the spokesperson added, and more than 3,500 total employees will work between there and at the Old Post Office.

The potential sale is a sign that yet more pain is on the way for suburban office markets. Most were already suffering high vacancy rates after companies, including McDonald’s and Motorola Solutions, shifted their headquarters in the past decade from 1970s-era suburban campuses to sleek new offices downtown. The pandemic then emptied out more buildings as people found they could work comfortably from home, and even with the number of employees coming into the office at least several days per week inching up, many companies realize they need far less space.

“There is a lack of demand, particularly with regard to larger users, which are getting more efficient in how they use their office spaces,” said Jonathon Connor, senior vice president with Colliers International. “This could be a vacancy that sits for a while.”

Stagnant leasing throughout much of 2022 left vacant nearly one-quarter of the north suburbs’ 26 million square feet of office space, according to Colliers, up from about 20% when the pandemic hit in early 2020.

This is not the first time Walgreens shrank its suburban home. Last summer, 575,000 square feet of now-empty buildings once occupied by the retail chain just to the east at 1411-1435 Lake Cook Road were put up for sale. Walgreens purchased the 37-acre site in 2004.

Walgreens is far from the only company to radically restructure its suburban office space. In 2022, health care giant Baxter International Inc. decided to sell its 101-acre Deerfield campus and search for new digs elsewhere in the Chicago area.

A possible future for such properties was also shown last year, when Nevada-based Dermody Properties completed its acquisition of Allstate Corp.’s massive campus in Glenview. The new owner announced in October it will replace the insurance company’s office buildings with a 10-building logistics park totaling more than 3.2 million square feet and capable of delivering millions of packages bought online by north suburban residents.

“This redevelopment project stands at the intersection of two significant and durable trends — work from home and e-commerce,” said Dermody Properties President Douglas Kiersey last October. “The conversion of the office campus — with buildings dating back to the 1960s and ’70s — into modern logistics buildings offers many benefits to the community.”