The wave of corporate exits freezes Chicago’s business elite

The wave of corporate exits freezes Chicago’s business elite

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

The tech giant’s intent to buy the James R Thompson Center building, designed by German architect Helmut Jahn, from the state of Illinois came as Chicago’s business community takes on an important task: fighting the narrative that companies 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 construction 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 hedge fund Citadel would relocate its headquarters from a Loop skyscraper in Miami.

The series of high-profile releases have damaged Chicago’s reputation as a big-shouldered trading capital.

“Chicago has a close business community, so it’s certainly disappointing that everyone’s gone,” Roger Hochschild, chief executive officer of Discover Financial Services, a suburban Chicago company, told the Financial Times.

While Boeing and Caterpillar were seen more as symbolic losses, Citadel’s departure was a punch in the stomach in the city that Griffin had provided constant, non-partisan material support to.

It has donated more than $ 600 million to organizations in Chicago, including funding the rebuilding of the city’s pedestrian and bike path along Lake Michigan. Two weeks after the headquarters announcement, he donated 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
Ken Griffin’s Citadel is moving from Chicago to Miami © Christopher Dilts / Bloomberg

The releases also coincide with the growing gun violence that has made headlines elsewhere. The trend has caused concern among corporate executives.

“I am very concerned about the corporate exodus,” said a longtime Chicago business and civilian leader. “Chicago is not perceived as a winner right now,” in contrast to Dallas, Miami and Atlanta.

Local supporters 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 network of 6,656 businesses in the first two years of the coronavirus pandemic, a 2.6% increase. The number of professional jobs – the types of office roles held at Boeing, Caterpillar and Citadel – increased 3.4%.

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

Q2 2022 bar chart (thousands) showing the Chicago metropolitan region, employment by sector

“The rumors of Chicago’s demise are very exaggerated,” said David Casper, chief executive officer of Chicago-based BMO Harris, the US arm of Bank of Montreal. BMO Harris’ lineage dates back to before the great Chicago fire of 1871, which destroyed much of the city.

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

Healthcare and medical device company Abbott Laboratories, headquartered in Chicago’s outermost suburbs, has rented offices in the city’s most famous skyscraper, Willis Tower.

Hochschild said Discover, the finance 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 one of the highest unemployment rates. Chicago highs.

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

Jack Lavin, chief executive 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 start of the pandemic, but in Chicago the increase has been alarming. City shooting incidents increased by more than half in 2020, with 4,077 people shot and 774 killed by bullets, according to the University of Chicago Crime Lab. Shooting increased again last year, with 4,419 people killed and 801 killed.

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

Chicago police officers secure a car suspected of being linked to a deadly shooting

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

Prior to the Citadel’s announcement, Griffin compared the city to “Afghanistan, on a good day” due to the violence and said it had become harder to recruit workers in Chicago “when you read the headlines.”

The business community is “very concerned” about the violence and reputational damage done to the city, said Laurence Msall, president of the Civic Federation, a fiscal and financial control organization, calling it “uniquely detrimental to economic development and attraction. of Chicago business “.

Businesses in Chicago are also tackling workplaces transformed by the pandemic. Office occupancy in the Loop averaged 46.3 percent in June, the Chicago Loop Alliance reported. According to security firm Kastle Systems, the city offices were almost 100% occupied in the weeks leading up to the lockdown in 2020.

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

Michael Fassnacht, CEO of World Business Chicago, said he traveled to London and Paris with Chicago Mayor Lori Lightfoot last month to lure European businesses to Chicago. He also wanted to “learn what we can do best” to maintain investments in the Loop, including prioritizing “holistic place creation” that combines office, retail, art and living spaces.

Google said the $ 105 million it is spending on the Thompson Center will help serve a hybrid workforce that works in and out of the office. It already employs 1,800 employees in Chicago’s Fulton Market neighborhood.

“By establishing a presence in Chicago’s central business district, we will enter the ground floor of a larger revitalization of the Loop,” said the tech company.

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