I was able to put back the CastorInstallDir function by taking Eric's advice

that one only need to escape the $ENV{DESTDIR}.

CMakeLists.txt

@@ -127,6 +127,10 @@ function (CastorAddProC _name)
     PROPERTY COMPILE_FLAGS "${ORACLE_CPPFLAGS} -Wno-error")
 endfunction ()
 
+function (CastorInstallDir _name)
+  install (CODE "FILE(MAKE_DIRECTORY \$ENV{DESTDIR}${_name})")
+endfunction ()
+
 function (CastorInstallEtcCronD _name)
   install (FILES ${_name}.cron_d
     DESTINATION /etc/cron.d
@@ -262,10 +266,10 @@ if(NOT DEFINED COMPILE_PACKAGING)
 endif(NOT DEFINED COMPILE_PACKAGING)
 
 ################################################################################
-# Create shared directories at install time
+# Rules to install the shared log and spool directories
 ################################################################################
-install (CODE "FILE(MAKE_DIRECTORY \$ENV{DESTDIR}/var/log/castor)")
-install (CODE "FILE(MAKE_DIRECTORY \$ENV{DESTDIR}/var/spool/castor)")
+CastorInstallDir (/var/log/castor)
+CastorInstallDir (/var/log/spool/castor)
 
 ################################################################################
 # Include the subdirectories of the project

xrootd/CMakeLists.txt

@@ -113,14 +113,14 @@ CastorInstallSysconfigExample (xrootd.manager)
 ################################################################################
 # Rules to install the log, spool and run directories of xrootd
 ################################################################################
-install (CODE "FILE(MAKE_DIRECTORY \$ENV{DESTDIR}/var/log/castor)")
-install (CODE "FILE(MAKE_DIRECTORY \$ENV{DESTDIR}/var/spool/castor)")
-install (CODE "FILE(MAKE_DIRECTORY \$ENV{DESTDIR}/var/log/xrootd/manager)")
-install (CODE "FILE(MAKE_DIRECTORY \$ENV{DESTDIR}/var/log/xrootd/server)")
-install (CODE "FILE(MAKE_DIRECTORY \$ENV{DESTDIR}/var/log/xrootd/manager/proc)")
-install (CODE "FILE(MAKE_DIRECTORY \$ENV{DESTDIR}/var/log/xrootd/server/proc)")
-install (CODE "FILE(MAKE_DIRECTORY \$ENV{DESTDIR}/var/spool/xrootd/admin)")
-install (CODE "FILE(MAKE_DIRECTORY \$ENV{DESTDIR}/var/spool/xrootd/core)")
-install (CODE "FILE(MAKE_DIRECTORY \$ENV{DESTDIR}/var/spool/xrootd/manager)")
-install (CODE "FILE(MAKE_DIRECTORY \$ENV{DESTDIR}/var/spool/xrootd/server)")
-install (CODE "FILE(MAKE_DIRECTORY \$ENV{DESTDIR}/var/run/xrootd)")
+CastorInstallDir(/var/log/castor)
+CastorInstallDir(/var/spool/castor)
+CastorInstallDir(/var/log/xrootd/manager)
+CastorInstallDir(/var/log/xrootd/server)
+CastorInstallDir(/var/log/xrootd/manager/proc)
+CastorInstallDir(/var/log/xrootd/server/proc)
+CastorInstallDir(/var/spool/xrootd/admin)
+CastorInstallDir(/var/spool/xrootd/core)
+CastorInstallDir(/var/spool/xrootd/manager)
+CastorInstallDir(/var/spool/xrootd/server)
+CastorInstallDir(/var/run/xrootd)