A flurry of corporate exits chills Chicago’s business elite

Google expanded its footprint in Chicago last Wednesday, announcing a deal to buy a postmodern landmark in the Loop in a much-needed shake-up in the heart of the city’s central business district.

The tech giant’s plans to buy the James R Thompson Center building, designed by German-born architect Helmut Jahn, from Illinois state came as Chicago’s business community undertakes a momentous task: fighting a narrative that businesses are fleeing the region.

Boeing announced in May that it would swap its headquarters in a tower in Chicago’s West Loop neighborhood for its campus outside of Washington, DC. In June, Caterpillar, known for its bright yellow earth-moving machinery, decided to move its base from a suburb of Chicago to a town near Dallas.

A third blow was dealt the following week, when billionaire Ken Griffin announced that his Citadel hedge fund would move its main office from a Loop skyscraper in Miami.

The string of high-profile exits has tarnished Chicago’s reputation as a big-shouldered business capital.

“Chicago has a tight business community, so it’s certainly disappointing that they’re all gone,” Roger Hochschild, managing director of suburban Chicago-based Discover Financial Services, told the Financial Times.

Citadel founder Ken Griffin compared Chicago to “Afghanistan, a good day” © Christopher Dilts/Bloomberg

While Boeing and Caterpillar were seen more as token losses, Citadel’s departure is a blow to the city to which Griffin had provided regular, nonpartisan material support.

He has donated more than $600 million to Chicago organizations, even funding the reconstruction of the city’s bike and pedestrian path along Lake Michigan. Two weeks after the siege was announced, he gave an additional $110 million to 40 organizations including universities, museums and hospitals, leaving local city leaders to guess whether the donations would be his last.

The exits also coincide with the rise in gun violence that has grabbed headlines elsewhere. The trend has caused concern among business leaders.

“I’m very concerned about the corporate exodus,” said a longtime Chicago business and civic leader. “Chicago isn’t seen as a winner right now,” contrasting it with Dallas, Miami and Atlanta.

Local boosters say there’s more to Chicago’s commercial health than meets the eye.

World Business Chicago, the city’s public-private economic development agency, reported that the Chicago metro area added a network of 6,656 businesses in the first two years of the coronavirus pandemic, an increase of 2 .6%. The number of professional jobs – the types of clerical positions held at Boeing, Caterpillar and Citadel – rose 3.4%.

In 2021, there were 173 major moves and expansions in Chicago with about 11,000 jobs created, WBC said. In the first half of this year, there were 96 such “pro-Chicago” decisions.

“Rumors of Chicago’s demise are greatly exaggerated,” said David Casper, chief executive of BMO Harris, the Chicago-based U.S. arm of Bank of Montreal. The BMO Harris lineage dates back to before the Great Chicago Fire of 1871, which razed much of the city.

Bar chart for 2Q 2022 (thousands) showing Chicago metro area, employment by industry

After announcing a split into three separate companies in June, Michigan-based food group Kellogg said it would have the largest headquarters in Chicago.

Medical device and healthcare company Abbott Laboratories, based in Chicago’s outermost outskirts, has leased office space in downtown’s most famous skyscraper, the Willis Tower.

Hochschild said Discover, the credit card and financial company, is expanding a new advanced analytics center downtown after opening a call center last year in Chatham, a South Side neighborhood that has l one of the highest unemployment rates in Chicago.

Salesforce, the San Francisco-based technology company, plans to put its name to a new glass tower it will occupy along the Chicago River. Jack Lavin, CEO of the Chicagoland Chamber of Commerce, said, “Over the past 10 years, technology has been the fastest growing part of our economy.

Gun violence has increased in many US cities since the pandemic began, but in Chicago the rise is alarming. Shootings in the city have more than halved in 2020, with 4,077 people affected and 774 fatally shot, according to the University of Chicago Crime Lab. Shootings increased further last year, with 4,419 people shot and 801 killed.

Chicago police officers secure a red car that crashed into a fence in the 4500 block of South Marshfield Avenue suspected of being linked to a fatal shooting Tuesday, May 10, 2022 in Chicago

In May, Chicago police secured a wrecked car suspected of being linked to a fatal shooting © Tyler Pasciak LaRiviere/Chicago Sun-Times/AP

Shootings in the Loop, a hub of business, government and tourism, rose from two in 2019 to 27 last year. There have been a dozen additional shootings in the district in 2022 as of July 12.

Prior to Citadel’s announcement, Griffin compared the city to “Afghanistan, on a good day” because of the violence and said it became harder to recruit workers in Chicago “when they read the headlines.” .

The business community is “very concerned” about the violence and damage to the city’s reputation, said Laurence Msall, president of the Civic Federation, a tax and financial watchdog organization, calling it “particularly damaging to economic development. and the commercial attraction of Chicago”.

Chicago businesses are also dealing with workplaces transformed by the pandemic. Office occupancy in the Loop averaged 46.3% in June, the Chicago Loop Alliance reported. City offices were near 100% occupancy in the weeks leading up to the 2020 shutdowns, according to security firm Kastle Systems.

The James R Thompson Center in Chicago's Loop
Google is spending $105 million on the James R Thompson Center in Chicago’s Loop © Armando L Sanchez/Chicago Tribune/Getty Images

Michael Fassnacht, managing director of World Business Chicago, said he traveled to London and Paris with Chicago Mayor Lori Lightfoot last month to attract European businesses to Chicago. He also wanted to “learn what we can do best” to maintain investment in the Loop, including prioritizing “creating holistic places” that combine office, commercial, arts and living spaces.

Google said the $105 million it’s spending on the Thompson Center will help serve a hybrid workforce that works in and out of the office. It already employs 1,800 people in Chicago’s Fulton Market neighborhood. “By establishing a presence in Chicago’s central business district, we will enter the ground floor of a broader revitalization of the Loop,” the technology company said.

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