A wave 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 shakeup in the heart of the city’s central business district.

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

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

The third blow came 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 series of high-profile exits hurt Chicago’s reputation as a big-shouldered business capital.

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

While Boeing and Caterpillar were seen as more symbolic losses, Citadel’s departure is a gut punch for a city to which Griffin has provided consistent, nonpartisan material support.

He has donated 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 announcing the headquarters, he gave another $110 million to 40 organizations, including universities, museums and hospitals, leaving local civic leaders guessing whether the gifts would be his last.

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

The exits also coincide with rising gun violence that has made headlines everywhere. The trend has caused concern among corporate executives.

“I’m very concerned about the exodus of companies,” said one longtime Chicago business and civic leader. “Chicago is not seen as 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 metropolitan area added a net amount of 6,656 businesses in the first two years of the coronavirus pandemic, an increase of 2.6 percent. The number of professional job titles — the types of office roles held at Boeing, Caterpillar and Citadel — increased 3.4 percent.

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

2022 Q2 bar chart (thousands) showing Chicago metro area employment by industry

“Rumours of the death of Chicago have been greatly exaggerated,” said David Casper, chief executive of Chicago-based BMO Harris, the U.S. arm of Bank of Montreal. BMO Harris’ pedigree 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 base its largest headquarters in Chicago.

Medical equipment and healthcare company Abbott Laboratories, based on the outskirts of Chicago, has leased offices in downtown’s most famous skyscraper, the Willis Tower.

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

Salesforce, the San Francisco-based technology company, plans to put its name on a new glass tower it will occupy along the Chicago River.

Jack Lavin, CEO of the Chicago 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 US cities since the start of the pandemic, but in Chicago the increase is 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. The number of shootings rose again last year, with 4,419 people shot and 801 killed.

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

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

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

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

The business community is “very disturbed” by the violence and reputational damage done to the city, said Lawrence Msall, president of the Civic Federation, a tax and financial watchdog organization, calling it “uniquely harmful to Chicago’s economic development and attractiveness.”

Chicago businesses are also coping with jobs transformed by the pandemic. Office occupancy in the Loop averaged 46.3 percent in June, the Chicago Loop Alliance reported. Offices in the city were almost 100 percent occupied in the weeks leading up to the 2020 lockdown, according to security firm Kastle Systems.

The James R. Thompson Center in the Chicago Circuit
Google is spending $105 million on the James R. Thompson Center in the Chicago area © Armando L Sanchez/Chicago Tribune/Getty Images

Michael Fasnacht, CEO of World Business Chicago, said he traveled to London and Paris with Chicago Mayor Laurie Lightfoot last month to attract European businesses 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 residential 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 get in on the ground floor of a broader revitalization of the Loop,” the tech company said.

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