The move stands out as a massive new commitment to office space at a time when many companies are embracing remote work and rethinking their office needs. A wave of space-shedding has cost the suburbs 3 million square feet of tenants and driven up suburban office vacancy to a record-high 27%, according to data from brokerage Jones Lang LaSalle. Ace’s move provides a major lift for Oak Brook and suburban office landlords overall, and highlights the premium that companies are putting on high-quality office space that will compel employees to show up rather than work from home.
“We feel blessed to have found a space that not only offers us a runway for more growth but also provides a spectacular environment to reinforce our culture and inspire our people,” Ace President and CEO John Venhuizen said in a statement.
Ace said in the statement it plans to begin renovating the former McDonald’s main corporate office building later this year. The company also has an option to expand by 47,000 square feet, which would give it the entire building.
The new lease—the largest new deal signed in the suburbs since 2015, according to JLL—injects new life into a campus that was purchased in 2019 by a venture of billionaire hair-care mogul John Paul DeJoria. The co-founder of John Paul Mitchell Systems paid $40 million for the property, rebranded it as Oak Brook Reserve and hired JLL to market it to new office users.
Tech consulting company BDO Digital gave the owners their first leasing win last year when it signed on for 30,000 square feet at 2715 Jorie Blvd., a 100,000-square-foot building that formerly served as McDonald’s Hamburger University training center. That building still has roughly 28,000 square feet available, but the Ace deal secures a major piece of long-term revenue at the property. The campus also includes a 218-room Hyatt hotel.
Ace’s pending move is a setback for its current landlord, a venture of El Segundo, Calif.-based Griffin Realty Trust. Griffin paid $37 million in 2014 for Ace’s two-building, 206,000-square-foot headquarters, where the hardware giant’s lease runs through November 2024, according to Bloomberg data tied to Griffin’s debt on the property. The buildings are part of a Griffin portfolio tied to a $375 million loan that was sold off to commercial mortgage-backed securities investors, making the property’s financial information publicly available.
The Ace properties generated nearly $2.2 million in net cash flow in 2021 against about $870,000 in debt service, Bloomberg data shows.
A Griffin spokeswoman did not provide a comment.
Ace’s lease is the largest suburban office deal since Baxter International spin-off Baxalta signed a deal for more than 260,000 square feet in Bannockburn in 2015, according to JLL research.
Ace Hardware ranked eighth on the most recent Crain’s list of the Chicago area’s largest privately-held companies with estimated 2021 revenue of $8.6 billion. The retailer said it has 5,500 locally owned and operated hardware stores across 65 countries.
Jeff Shay and Jack Connors of JLL oversee leasing at Oak Brook Reserve. David Lind of CBRE represented Ace Hardware in negotiating the lease.