• Fri. Jun 21st, 2024

These Downtown Chicago Farmers Bet Produce Will Soon Sprout From Nation’s Office Towers


Apr 11, 2023
A nonprofit venture called Farm Zero wants to grow basil and other produce in former office space within the Burnham Center in Chicago, center. It is across from City Hall, at right. (Robert Gigliotti/CoStar)


While some Chicago developers look to turn vacant office space into affordable apartments, a new partnership envisions a much different conversion for older towers: rows of produce such as basil, tomatoes, cucumbers and lettuce.

A nonprofit venture called Farm Zero is negotiating to lease 70,000 square feet, and possibly much more, in a 22-story office tower across the street from City Hall, company founder and CEO Russell Steinberg told CoStar News.

If a deal is completed with building owner Golub & Co., the Burnham Center will become the first in a series of Farm Zero spaces in Chicago’s Loop business district, potentially producing much of the city’s fresh produce and generating thousands of new jobs. In addition to desks, chairs and conference rooms, buildings could also house grow lights and racks of crops.

Steinberg and his partner, Canadian firm Agriplay Ventures, hope Chicago will become a model for urban high-rise farming as cities throughout the country grapple with what to do with vacant space as layoffs and three years of remote work brought on by COVID-19 have curbed demand.

“Everyone is going to end up following, but Chicago will wind up winning because they’re taking it and running with it,” said Agriplay President Dan Houston. “This is how everybody’s going to grow their food. Chicago is going to become a world leader.”

The concept is billed as another way, besides costly residential conversions, to breathe new life — and rental income — into office buildings throughout the country, helping landlords avoid foreclosures or other financial distress while creating jobs and addressing gaps in the food supply chain.

But since there’s no established track record for large-scale downtown farming in big U.S. cities, Farm Zero and Agriplay could face unknown challenges, especially when it comes to outfitting buildings, particularly older ones such as the Burnham Center. Also, in some areas where there’s a shared water supply, shortages could be a concern.

Vertical farms already operate in several types of buildings, typically low-rise structures such as warehouses.

Using stacking trays, New Jersey-based AeroFarms grows crops in older industrial buildings, new ones it is building in Danville, Virginia, and near St. Louis, as well as in unexpected places, such as public housing complexes, a former paintball facility and a vacant nightclub.

There is an increasing field of competitors, including San Diego-based real estate investment trust Realty Income’s recently announced plans to invest up to $1 billion in developments supporting the expansion of indoor agriculture firm Plenty Unlimited.

The partnership’s first project is a vertical farm campus planned in Richmond, Virginia. California-based Plenty’s other investors include retail chain Walmart and Jeff Bezos, the billionaire founder of e-commerce giant Amazon.

Additionally, Dutch urban farming giant Infarm is planning its largest facility to date in Columbia, Maryland, and said it is looking to launch five centers totaling more than 500,000 square feet across the U.S. with a larger goal to be operational in 20 countries by 2030.

A recent report by market research firm Market.US estimates the vertical farming market will exceed $35 billion by 2032, up from $5.6 billion in 2022.

Realty Income President and CEO Sumit Roy estimated during a recent earnings call that vertical farming will grow into a $50 billion industry over the next few years.

While low-rise indoor farming applications have become relatively commonplace, Farm Zero and Agriplay are aiming higher in Chicago. They seek to grow millions of pounds of produce annually in the same towers where office workers simultaneously sit in cubicles.

To start, Farm Zero is negotiating lease terms in the more than century-old office building named for Daniel Burnham, the architect who designed it. Golub Managing Principal Lee Golub declined to comment on the lease negotiations to CoStar News.

Steinberg said he already has an agreement to sell the millions of dollars in produce to be grown in the office tower at 111 W. Washington St. to a food company. He declined to name the company, which would distribute the food to restaurants and grocery stores throughout the city.

Embracing Burnham’s famous quote, “Make no little plans,” Farm Zero aims to have more than 3 million square feet of downtown Chicago office space converted to agricultural use within the next year, Steinberg said.

That would be enough space to generate well over 60 million pounds of produce per year, he said, and that figure amounts to 10% of the city’s annual produce supply. For comparison, Michigan ranks first in the nation for asparagus production with up to 23 million pounds per year, according to a state website.

Vertical farming would offer an unexpected alternative to adaptive reuse of unwanted office space in Chicago, where outgoing Mayor Lori Lightfoot recently selected three LaSalle Street proposals to potentially receive a combined $188 million in city funds to help transform corporate space into affordable housing.

It is yet to be seen whether city-backed affordable housing redevelopments will win final City Council approval under major-elect Brandon Johnson.

Farm Zero already has completed a feasibility study for the Burnham Center, more than 30% of which is vacant, and it is studying several other buildings nearby, Steinberg said.

“This is the first in a series of projects that are going to transform Chicago,” Steinberg said of plans for the Burnham Center. “What we’re doing is utilizing all the vacant real estate to feed Chicago.”

Chicago operations will use the same proprietary technology developed by Agriplay and recently launched within the Tower Centre in Calgary, Alberta. Agriplay has leased 64,000 square feet in the Canadian office complex, and it expects to expand into 1.5 million square feet in Calgary and in Edmonton by the end of this year, Houston said.

Late last year, Farm Zero agreed to a licensing deal to use Agriplay’s technology for urban farming in Chicago. Agriplay also is in talks to bring its system to cities throughout the world, Houston said.

Canada’s Agriplay Ventures has begun growing produce in former office space within the Tower Centre office complex in Calgary. It now plans to bring the technology to Chicago office towers. (Agriplay)

Agriplay’s modular system includes 4-by-8-foot-wide racks that rise 8 feet to 10 feet high, with each rack connected to containers with water and nutrients and Agriplay’s hardware and software that monitor feeding and LED lighting systems.

With technology improvements, farming can operate with about the same amount of energy that a traditional office tenant would use, and the self-contained system requires less water than outdoor farming and no pesticides, Houston said.

“We didn’t invent agriculture,” said Houston. “We invented the tech stack that allows us to do agriculture inside an office building. Vertical farming has been around for 25 years. It’s just a new approach to vertical farming.”

Within months of setup, an office floor can begin generating thousands of pounds of leafy greens, tomatoes, cucumbers and other produce. Although his initial focus in Canada is lettuce, Houston said the technology can be used for 150 varieties of produce, including melons, microgreens and peppers.

Flexibility is important because local growers can adapt to changing needs of customers, he said. The initial focus in Chicago will be basil.

“In Chicago, people were flying in basil from Hawaii, so the price was ridiculously high,” Houston said. “That’s very profitable if you were to grow basil using our system.

“Imagine everyone hears that and starts growing basil. Our system allows you to shift to something else where there’s a gap in the market, and 30 days later you’re selling strawberries.”

Chicago may seem like an unlikely place to plan a fast-growing urban farming operation, considering the city is not far from sprawling farms throughout Illinois and other Midwest states.

Yet most farms in the region are focused on a few crops, such as corn and soybeans. Virtually all produce consumed in Chicago comes from places like California and Mexico, Houston said.

Controlled-environment farming can bring fresh produce to urban consumers more efficiently, according to Farm Zero and Agriplay.

The expected expansion of indoor farming is important because of climate change, water-supply concerns in the West, supply-chain breakdowns and, most recently, global fertilizer shortages since Russia’s invasion of Ukraine early last year, Houston said.

Meanwhile, the number of urban office towers in financial distress is expected to keep rising as companies pull back on space. Vertical farms can quickly take over former office space with minimal base building, said Houston, a former office leasing broker in Calgary.

“My friends in real estate were joking: ‘Could you build something that would nuke 5 million square feet of office space?’” Houston said. “That’s why we built Agriplay. With this, you don’t even have to change anything. You don’t even need a zoning change.

“In places like Chicago that were hit hard by COVID, it’s a revitalization and diversification play.”

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