The wave of exits causes calm among Chicago’s business elite

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

The tech giant’s intention to buy the James R Thompson Center building, designed by German-born architect Helmut Jahn, in Illinois comes as Chicago’s business community takes on a momentous task: combating a narrative that companies are fleeing the region.

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

A third blow came the following week, when billionaire Ken Griffin announced that his Citadel hedge fund would move its headquarters from a Loop skyscraper to Miami.

The series of high-profile departures has tarnished Chicago’s reputation as a major trading capital.

“Chicago has a close-knit business community, so it’s certainly disappointing that they’re all leaving,” Roger Hochschild, chief executive of Chicago-based Discover Financial Services, told the Financial Times.

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

He has given more than $600 million to Chicago organizations, even funding the reconstruction of the city’s pedestrian and bicycle path along Lake Michigan. Two weeks after the headquarters announcement, he gave another $110 million to 40 organizations including universities, museums and hospitals, leaving local civic leaders to guess whether the gifts would be his last.

Ken Griffin’s Citadel moves from Chicago to Miami © Christopher Dilts/Bloomberg

The departures also coincide with an increase in gun violence that has made headlines elsewhere. The trend has aroused concern among company managers.

“I’m very concerned about the exodus of businesses,” said one Chicago business and civic leader. “Chicago doesn’t feel like a winner right now,” contrasting it with Dallas, Miami and Atlanta.

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

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 per cent. The number of professional jobs, the types of office roles filled at Boeing, Caterpillar and Citadel, rose 3.4%.

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

Second quarter 2022 bar chart (thousands) showing Chicago metro area employment by industry

“The rumors of Chicago’s demise are greatly exaggerated,” said David Casper, chief executive of BMO Harris, the U.S. arm of Chicago-based Bank of Montreal. BMO Harris’ lineage predates the Great Chicago Fire of 1871, which leveled much of the city.

In announcing the split into three separate companies in June, Michigan-based food group Kellogg said it would place the headquarters of the largest in Chicago.

The health and medical device company Abbott Laboratories, based in the outer suburbs of Chicago, has leased offices in downtown’s most famous skyscraper, the Willis Tower.

Hochschild said Discover, the financial and credit card company, is expanding a new advanced analytics center downtown after opening a call center last year in Chatham, a South Side neighborhood that has a 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, executive director of the Chicagoland Chamber of Commerce, said, “For the past 10 years, technology has been the fastest growing part of our economy.”

Gun violence has increased in many U.S. cities since the pandemic began, but in Chicago the increase has been alarming. Shooting incidents in the city more than halved in 2020, with 4,077 people struck and 774 killed by bullets, according to the University of Chicago Crime Lab. Shootings rose again last year, with 4,419 people shot and 801 deaths.

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

Chicago police officers secure a car suspected of being connected to a fatal shooting

Chicago police officers secure a car suspected of being linked to a fatal shooting in May © Tyler Pasciak LaRiviere/Chicago Sun-Times/AP

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

The business community is “deeply concerned” by the violence and reputational damage to the city, said Laurence Msall, president of the Civic Federation, a tax and financial watchdog, who called it “singularly damaging to to Chicago’s economic development and business attraction.”

Chicago companies are also coping with workplaces transformed by the pandemic. Office occupancy in the Loop averaged 46.3 percent in June, the Chicago Loop Alliance reported. City offices were nearly 100 percent occupied in the weeks leading up to the 2020 lockdowns, according to security firm Kastle Systems.

The James R Thompson Center in Chicago's Loop
Google spends $105 million for James R Thompson Center in Chicago’s Loop © Armando L Sanchez/Chicago Tribune/Getty Images

Michael Fassnacht, CEO of World Business Chicago, said he traveled to London and Paris last month with Chicago Mayor Lori Lightfoot to attract European companies to Chicago. He also wanted to “learn what we can do better” to sustain investment in the Loop, including prioritizing “holistic placemaking” that combines office, retail, arts and living spaces.

Google said the $105 million it is spending for 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 get in on the ground floor of a broader revitalization of the Loop,” the tech company said.

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