A California startup is delaying work on what it had said would be one of the world’s largest commercial cultivated meat production facilities, leaving an uncertain future for the first announced tenant in the redevelopment of Allstate’s former headquarters campus near Chicago into a logistics site.
Upside Foods said it is pausing efforts to build out its planned 187,000-square-foot facility in Glenview, Illinois, within industrial developer Dermody Properties’ 232-acre redevelopment of the former corporate campus.
The producer of lab-grown meat and the developer said last September that Upside Foods was the first tenant committed to The Logistics Campus, in a building Dermody is set to complete in coming months at 2600 Sanders Road. At the time, Upside Foods said it expected to invest $141 million on the project the tenant referred to as Rubicon, with plans to open in 2025 and have 75 employees.
The Glenview project is a high-profile example of a national trend in which industrial developers are seeking outdated office campuses to convert to last-mile distribution centers. The deal with Upside was a milestone for Reno, Nevada-based Dermody, a firm that's in the process of demolishing former Allstate office buildings and replacing them with more than 3.2 million square feet of warehouse space.
Instead, Berkeley-based Upside Foods now says it will focus first on expanding its EPIC (Engineering, Production and Innovation Center) in Emeryville, California.
Upside’s pause on the Chicago-area project, previously reported by Wired, leaves an uncertain future for the Chicago-area facility. The company says it plans to resume the project “in the future,” without providing a timeline or other details.
Public Subsidies
The company had been set to receive $15 million in public subsidies, with plans to produce millions of pounds of cultivated meat grown from animal cells, the company told CoStar News last year.
"In the process of planning for Rubicon, we identified a more efficient and cost-effective way to achieve a similar capacity and timeline of the initial phase of Rubicon by significantly expanding our operations at EPIC,” the company said in an emailed statement to CoStar News.
It added that “this approach will allow us to scale and commercialize our next generation platform and products, currently under regulatory review, while extending our runway and resources for the critical work ahead. We still plan to move forward with building out our full-scale commercial facility in the future.”
In a blog post, the company said that following a small-scale launch of its whole-textured chicken product, “our focus is now on scalability and commercialization” through an expansion of the existing California facility.
Dermody began work on The Logistics Campus immediately after buying the Allstate campus for $232 million in late 2022.
Demolition work is virtually completed, and the first phase of construction, five warehouses totaling about 1.2 million square feet, is set to wrap up in the second quarter of this year, Midwest Region Partner Neal Driscoll told CoStar News.
Driscoll declined to comment specifically on Upside’s pause, but he said: “We feel great about the project. There’s no cause for concern.”
No Other Tenants
The rest of the developent after Upside's space is being built on speculation, or without tenant commitments. Later phases will be for build-to-suit tenants, with options for various building sizes and exterior heights as tall as 120 feet, he said.
“We also get a lot of inquiries about selling land, but that is not one of our goals,” Driscoll said.
Despite a slowdown from all-time high demand earlier in the pandemic, Driscoll said interest from prospective tenants has been strong, including the resumption of some deals that companies put on hold last year.
“Now that we’re nearing completion, activity is picking up significantly,” Driscoll said. “We planned this as a logistics campus because of its attributes, but we’ve seen a much more diverse mix of tenants than what we anticipated.”
He said logistics, light manufacturing and other industries have shown an interest in space, and Dermody expects the market for new space to tighten this year after a recent slowdown in construction starts.
“We’re going to reach the point where new deliveries hit almost nil,” Driscoll said.