Wave of corporate exits sends Chicago’s business elite shivering

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

The tech giant’s intention to buy the Illinois-state James R. Thompson Center building, designed by German-born architect Helmut Jahn, came as Chicago’s business community took on a momentous task: combating a narrative that businesses from the region escape.

Boeing announced in May that it would swap its high-rise headquarters in Chicago’s West Loop neighborhood for its campus outside of Washington, DC. In June, Caterpillar, known for its bright yellow earthmoving equipment, decided to move its base from the Chicago suburbs to a town near Dallas.

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

The string of high-profile departures has tarnished Chicago’s reputation as a broad-shouldered commercial capital.

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

While Boeing and Caterpillar were viewed more as token losses, the departure of the Citadel is a blow to the city’s stomach, which Griffin had provided steady, bipartisan material support for.

He has donated more than $600 million to Chicago organizations and even funded the rebuilding of the city’s pedestrian and bike path along Lake Michigan. Two weeks after the headquarters announcement, he donated an additional $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 exits also coincide with rising gun violence that has made headlines elsewhere. The trend has unnerved business leaders.

“I’m very concerned about corporate brain drain,” said a longtime Chicago business and civic leader. “Chicago is not perceived as a winner right now,” unlike 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 6,656 net businesses in the first two years of the coronavirus pandemic, an increase of 2.6 percent. The number of professional jobs — the types of clerical jobs at Boeing, Caterpillar and Citadel — rose 3.4 percent.

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

Bar chart for Q2 2022 (in thousands) showing the Chicago metro area, employment by industry

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

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

Outskirts Chicago-based medical device and healthcare company Abbott Laboratories has leased offices in downtown’s most iconic skyscraper, the Willis Tower.

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

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

Jack Lavin, chief executive of the Chicagoland Chamber of Commerce, said, “Over the last 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 the increase in Chicago has been alarming. The number of shootings in the city rose by more than half in 2020, with 4,077 hit and 774 killed by bullets, according to the University of Chicago Crime Lab. Shootings increased again last year, with 4,419 people shot dead and 801 killed.

Shootings in the Loop, a hub for business, government and tourism, rose from two in 2019 to 27 last year. As of July 12, there were a dozen more shootings in the county in 2022.

Chicago police officers secure a car suspected of being involved in a deadly shooting

Chicago police officers secure a car believed to be involved in a deadly shooting in May © Tyler Pasciak LaRiviere/Chicago Sun-Times/AP

Prior to Citadel’s announcement, Griffin compared the city to “Afghanistan, on a good day” because of the violence and claimed it has become more difficult to recruit workers to Chicago “when you read the headlines.”

The business community is “extremely concerned” about the violence and reputational damage being inflicted on the city, said Laurence Msall, president of the Civic Federation, a tax and financial watchdog organization, calling it “uniquely detrimental to Chicago’s economic development and business appeal.”

Chicago businesses are also having to cope with workplaces transformed by the pandemic. Office occupancy in the Loop averaged 46.3 percent in June, the Chicago Loop Alliance reported. The city’s offices were almost 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 on the James R. Thompson Center in Chicago’s Loop © Armando L. Sanchez/Chicago Tribune/Getty Images

Michael Fassnacht, executive director of World Business Chicago, said he traveled to London and Paris with Chicago Mayor Lori Lightfoot last month to bring European businesses to Chicago. He also wanted to “learn what we can do better” to sustain investments in the Loop, including a priority on “holistic site design” that combines office, commercial, art and residential 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 people in the Fulton Market neighborhood of Chicago.

“By establishing a presence in Chicago’s CBD, we will join a broader revitalization of the loop on the ground floor,” the technology company said.

Leave a Comment

Your email address will not be published.