What’s Ahead for McDonald’s Former Oak Brook Headquarters?
By Ryan Maher – Associate, NAI Hiffman Office Services
Almost everyone in Chicagoland has heard the news that McDonald’s is leaving its Oak Brook headquarters in 2018 and migrating to Chicago’s Fulton Market District. What’s less talked about is what will happen to the 100 acres being left behind. This massive amount of Oak Brook real estate owned by the fast-food giant includes McDonald’s Plaza, McDonald’s Campus Office, Hamburger University, 711 Jorie (which was recently sold), and 20 acres of land currently being used as soccer fields by the Oak Brook Park District
- This office building on the northeast corner of 22nd St and Spring Road is likely to be redeveloped into mixed use and may include office, retail, hotel, and possible multifamily.
- The retail McDonald’s restaurant and Gibson’s Steak House were developed under a land lease and any change in ownership of the site will have to contemplate these establishments.
- Should a party buy the property and intend to keep it as office space, there would need to be significant structural and interior modifications to the building in order to make it relevant in today’s marketplace. It is challenged by today’s standards due to inefficient floorplates, the lack of modern amenities, a below market parking ratio, an obstructed window line, and possible code compliance issues.
- Even though the likely decision will be to demolish McDonald’s Plaza, there is a notion that a brave user or investor could redevelop it into a Class A office property. Such entities will need to keep in mind that while some large companies like McDonald’s have been moving downtown; in order to compete with neighboring properties for the quality tenants that continue to embrace the Oak Brook marketplace the competition has been actively amenitizing their buildings in a similar fashion to the city.
711 JORIE BOULEVARD
- Recently acquired by Exeter Property Group out of Philadelphia, 711 Jorie is a prime example of how investors can acquire Class B office buildings in the Oak Brook area with the intent to convert to Class A.
- Oak Brook’s vacancy rates in true Class A buildings are at 8.3% (based off of 3.48M SF of Class A Oak Brook space), the lowest they have been since the Great Recession. Rental rates in these buildings are also at an all-time high.
Hamburger University & McDonald’s Campus Office
- This campus spans across more than 70 acres and could be a redevelopment for residential, hospital/medical, multifamily, educational or a new headquarters site. The recently renovated Hyatt Lodge will come with the site and has confirmed bookings over the next 2 years. There are several parties who have expressed sincere interest in the site including medical users, local real estate developers (such as Inland Real Estate), and neighboring user groups.
- As depicted in the map below, there are a number of hospital groups in the area who may find a use for the site for related outpatient services or back office needs.
View McDonald’s Oak Brook Site – Distance to Hospitals in a full screen map
- While currently an active segment in most suburbs, multifamily apartments are not likely to be approved by The Village of Oak Brook.
- Office buildings fronting on Jorie could be a viable option. NAI Hiffman’s leasing team has experienced 500,000 SF worth of leasing activity in nearby Oak Brook office space in the last few years
- It is also interesting to note that this site, in conjunction with McDonald’s Plaza, was included in the bid for Amazon’s HQ2.
20-Acre Land Parcel
Originally rumored to be donated to Oak Brook by McDonald’s; the land is currently being used as soccer fields.
- With several suburban companies consolidating downtown, large blocks of space have become available over the last few years. Many of these large blocks of space have been released or acquired by new users or investors:
- As discussed above, when McDonald’s released 711 Jorie to the market it was acquired by Exeter Property Group.
- Sara Lee moved downtown and left 441,000 SF available at Esplanade II, a Class A building in Downers Grove. This large block was quickly backfilled by multiple tenants.
- When Kraft Heinz decided to make the move southeast to the city, their 679,000 SF headquarters in Northfield was almost immediately backfilled by Medline Industries of Mundelein.
- Caterpillar signed a lease for its new headquarters in Deerfield at a space that had been vacated by Beam Suntory.
- There has been a great deal of public attention focused on the suburban office market as of recently and the following properties are hoping to ride the wave of success:
- AT&T’s 1.6M SF former headquarters in Hoffman Estates is expected to transact in the first half of 2018.
- AON’s 400,000 SF Glenview headquarters has reportedly selected a buyer which plans a conversion to mixed-use residential.
- Office Max vacated 354,000 SF in Naperville and their building is expected to hit the market the first half of 2018.
- Most real estate investors consider the Oak Brook market extremely attractive due to its low tax base, proximity to downtown Chicago, I-294 & O’Hare Airport. Class A rents are at an all-time high in buildings around the mall. In the last three years alone, Oak Brook has seen more build-to-suit office activity than any other suburban Chicago marketplace. These build-to-suits include: Duchossois Group (225,000 SF), Rush Orthopedics (100,000 SF), Hub Group (130,000 SF) and Hub also acquired an eleven-acre parcel on York Road for additional growth. A strong market and a lack of land inventory in a prime, Oak Brook location should bode well for the future development of the McDonalds properties.
WANT TO LEARN MORE MORE? CONTACT: