➤ Key Highlights
Realty Income paid $176.5M ($260/SF) for two warehouses totaling 678K SF at the former Allstate HQ site in Glenview, IL.
Seller Dermody Properties bought the 232-acre office campus from Allstate in 2022 for $232M.
Dermody is redeveloping the site into 10 warehouses totaling 3.2M SF.
Realty Income's Chicago-area industrial purchases topped $340M in May, including a separate $124M logistics buy.
Exit pricing on two buildings alone recovered ~76% of Dermody's entire land basis.
➤ SIGNAL
Office-to-industrial is quietly producing full-cycle wins while office-to-resi still fights through entitlements.
Net-lease capital is the exit bid for completed conversion product.
Suburban office land at distressed basis plus industrial entitlement is a repeatable trade.
The arithmetic is the story. Dermody paid $232M for the whole campus; two of ten planned buildings just sold for $176.5M. The remaining 2.5M SF of pipeline sits on nearly free land.
This is the conversion trade institutionalizing: buy obsolete office at land value, deliver logistics, sell to income vehicles hungry for durable yield.
Implications
The bid for finished conversion product is real — the constraint is acquiring obsolete campuses at the right basis, not finding the exit.
➤ TAKEAWAY
Two warehouses just repaid three-quarters of an entire office campus.
Source: The Real Deal (June 1) / Commercial Real Estate Direct (June 2) / CoStar
