Wave of corporate exits sends chills through 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 swoop in the heart of the city’s central business district.

The tech giant’s intention to purchase the James R. Thompson Center building, designed by German-born architect Helmut Jahn from Illinois State, came as the Chicago business community serves an important function: countering a narrative that companies are fleeing the area. Huh.

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

A third setback struck the following week, when billionaire Ken Griffin announced that his hedge fund Citadel would move its primary office from a Loop skyscraper to Miami.

A string of high-profile exits has affected Chicago’s reputation as a major capital of commerce.

“Chicago has 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.

Ken Griffin
Citadel founder Ken Griffin compares Chicago to a ‘good day on Afghanistan’ © Christopher Dilts / Bloomberg

While Boeing and Caterpillar were seen more as symbolic losses, Citadel’s departure is a gut punch to the city, which Griffin provided with steady, non-partisan material support.

He has donated more than $600 million to Chicago organizations, even funding the reconstruction of the city’s pedestrian and bicycle paths 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 speculate whether the gifts would be their last.

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The exit also coincided with rising gun violence that made headlines elsewhere. This trend has increased unease among corporate executives.

“I’m very concerned about the exodus of companies,” said a longtime Chicago business and civic leader. “Chicago is not considered the winner right now,” it is perceived in contrast to Dallas, Miami and Atlanta.

Local boosters say Chicago has more to offer when it comes to occupational health.

World Trade Chicago, the city’s public-private economic development agency, reported that the Chicago metropolitan area added a net of 6,656 businesses, a 2.6 percent increase over the first two years of the coronavirus pandemic. The number of professional jobs — the types of office roles at Boeing, Caterpillar and Citadel — increased by 3.4 percent.

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

“The rumors of Chicago’s demise are greatly exaggerated,” said David Casper, chief executive of Chicago-based BMO Harris, the US branch of the Bank of Montreal. BMO Harris’ lineage dates back to the Great Chicago Fire of 1871, which leveled much of the city.

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

Upon announcing the split into three separate companies in June, Michigan-based food conglomerate Kellogg said its headquarters would be the largest in Chicago.

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

Hochschild said Discover, the credit card and financial company, is expanding a new advanced analytical center after opening a call center last year in Chatham, the South Side neighborhood with Chicago’s highest unemployment rate.

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San Francisco-based tech company Salesforce plans to put its name on a new glass tower that will occupy the banks of 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 pandemic began, but the rise in Chicago has been worrying. According to the University of Chicago Crime Lab, shooting incidents in the city increased by more than half in 2020, with 4,077 people killed and 774 gunned down. Last year there was firing again, in which 4,419 people were killed and 801 were killed.

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

Chicago police officers suspect a crashed car in May tied to a fatal shooting | © Tyler Passiac Lariviere / Chicago Sun-Times / AP

Shooting in the Loop, a hub of business, government and tourism, increased from two in 2019 to 27 last year. In 2022, till July 12, a dozen more firings have taken place in the district.

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

The business community is “deeply concerned” about the violence and reputational damage caused to the city, with Lawrence Mashal, president of the Civic Federation, a tax and financial watchdog organization, calling it “uniquely detrimental to Chicago’s economic growth and business attractiveness”. .

Chicago businesses are also facing workplaces altered by the pandemic. The Chicago Loop Alliance reported that office occupancy in the Loop averaged 46.3 percent in June. According to security firm Kastel Systems, city offices were almost 100 percent occupied in the first weeks of the lockdown in 2020.

James R. Thompson Center in Chicago's Loop
Google is spending $105mn for James R. Thompson Center in Chicago’s Loop | © Armando L. Sanchez / Chicago Tribune / Getty Images

Michael Fassnach, chief executive 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 wants to “learn what we can do better” to keep the investment in the loop, which includes prioritizing “holistic placemaking” that connects office, commercial, art and living spaces.

Google said it is spending $105mn for the Thompson Center, which will help serve a hybrid labor force that works in and out of the office. It already employs 1,800 in the Fulton Market neighborhood of Chicago. “By establishing a presence in Chicago’s central business district, we will be on the ground floor of a comprehensive revitalization of the Loop,” the tech company said.