Wave of corporate layoffs brings calm to 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 jolt to 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 a narrative that companies they 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, 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 hedge fund Citadel would move its headquarters from a Loop skyscraper in Miami.

The string of high-profile exits has damaged Chicago’s reputation as a big-shouldered commercial capital.

“Chicago has a tight-knit business community, so it’s certainly disappointing that they all left,” 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 steady, 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 to speculate whether the gifts would be his last.

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

The exits also coincide with an increase in gun violence that has made headlines elsewhere. 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 perceived as a winner right now,” comparing it to 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 network of 6,656 businesses in the first two years of the coronavirus pandemic, an increase of 2.6 percent. The number of professional jobs — office-type roles at Boeing, Caterpillar and Citadel — rose 3.4 percent.

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

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

“Rumors of the death of Chicago are greatly exaggerated,” said David Casper, chief executive of Chicago-based BMO Harris, the U.S. arm of Bank of Montreal. BMO Harris’ origins predate the Great Chicago Fire of 1871, which leveled much of the city.

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

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

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

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

Jack Lavin, chief executive officer 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. 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 killed and 801 killed.

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

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

Chicago police officers secure a car allegedly connected 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 “very concerned” about the violence and reputational damage done to the city, said Laurence Msall, president of the Civic Federation, a tax and financial watchdog, calling it “particularly damaging to the economic development of Chicago and the attraction of business”.

Chicago businesses are also grappling with 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, city offices were almost 100 percent occupied in the weeks before the 2020 lockdowns began.

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

Michael Fassnacht, 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 also wanted to “learn what we can do better” to keep investment in the Loop, including placing a priority on “holistic placemaking” that combines office, commercial, arts 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 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.

Leave a Comment

Your email address will not be published. Required fields are marked *