Walgreens shrinks headquarters, cites hybrid work

Dive Brief:

Pharmacy chain Walgreens Boots Alliance will be selling two office buildings in its Deerfield, Ill. corporate headquarters campus as it adjusts to a hybrid work model that’s resulted in underutilized space, according to an emailed statement sent to CFO Dive.
Starting in the spring, the company will begin to implement the changes that will include closing ofice buildings at 200 and 300 Wilmot Road and relocating employees from those locations into the remaining four buildings on the Deerfield campus that will accommodate 2,700 employees working in a hybrid environment, the statement said.
“Obviously the way we’re working is changing,” company spokesperson Fraser Engerman said in an interview. He said the company remains committed to keeping its headquarters and another site in downtown Chicago’s Old Post Office.

Dive Insight:

Walgreens’ office sales come as some CFOs are taking advantage of the changing needs of hybrid workforces by shrinking their real estate footprints and cutting costs. Office space is often the second or third largest expense for service companies after labor, CFO Dive previously reported.

Engerman declined to comment on the the savings that would be realized. The company statement said Walgreens is seeking “to reimagine the space to fit our current needs and create efficiencies that allow us to invest in the business...We remain committed to a presence in Deerfield and we’re confident this provides enough space to help facilitate more opportunities for meaningful in-person interactions.”

It’s not the first time Walgreens has sought to shrink its suburban Chicago footprint, according to a Monday Chicago Tribune report. Last year about 575,000 square feet of now empty buildings were put up for sale, the Tribune reported.

Last summer, the company also signaled it was zeroing in on changes to its retail real estate strategy. It created a new role — chief format concepts and design officer — that will oversee store design and architecture, Industry Dive sister publication Retail Dive reported. Min Cho, previously vice president of global concepts in the growth and concepts organization at Starbucks, will focus on “innovative store design and architecture which embraces creativity and functionality,” according to the report.