CHICAGO | Economic & Business Development

[the urban politician]

I do think it would be worthwhile for Site Selection Magazine to put out more of an explanation for their data.

They already explain their methods, but what I'm talking about more is a discussion, or an interpretation of what they are finding. Why is Chicago blowing everybody away? What does this mean? How do we interpret this data? Until they do this, everybody will find this data suspect, especially since Chicago is not particularly booming right now and it's population is stagnant at best.

[jpIllInoIs]

Originally Posted by OrdoSeclorum

So what gives? Is there growth in some specific sector I'm not fully aware of, like warehousing? I know there's a constant trickle of small North American HQs being placed in this central location with a high quality of life, is this more significant and substantial than I know?

Logistics! The number of warehousing/distribution that is being put up in the counties of Will, Grundy, Dekalb, Kankakee, Kenosha is Amazonazing. Also Brown sites in Pullman, Broadview, and the Chicago canal zones are being reclaimed for distribution. The O'Hare effect is still driving expansion and retrofits in Elk Grove, Carol Stream and Des Plaines.
Chicago continues to build on its' extensive Rail Hub network and O'Hare and Rockford cargo capacity.

SSP is full coverage on Fulton, West Loop and all the expansion in the Central core and rightly so. The industrial stuff just isn't reported on here.

[IrishIllini]

Originally Posted by Vlajos

Correct, if you strip out population growth, Texas economic growth doesn't look good. Phoenix looks terrible. Florida is a third world nation.

Dallas does well, but you don't sustain that kind of growth long term, especially when there's nothing special about the city and transit is nonexistent. People like mountains and water. Dallas has neither. I think they're nearing the end of a cycle. Austin is also a high performer, but it's relatively small and economic growth this decade isn't remarkable by any stretch.

I've said this before, but if any city in the US is destined to go the way of Detroit, it's Houston IMO. Phoenix could also be one. Same with much of Florida. If Florida didn't have a steady stream of northern money and retirees flowing in, it would be a very different place.

[marothisu]

Originally Posted by the urban politician

I do think it would be worthwhile for Site Selection Magazine to put out more of an explanation for their data.

They already explain their methods, but what I'm talking about more is a discussion, or an interpretation of what they are finding. Why is Chicago blowing everybody away? What does this mean? How do we interpret this data? Until they do this, everybody will find this data suspect, especially since Chicago is not particularly booming right now and it's population is stagnant at best.

IMO it's kind of simple. These are corporation relocations/expansions so in a large metro area, it doesn't necessarily have an automatic big impact pure job count wise. Maybe it does, maybe it doesn't - it's not deterministic at all from that perspective. It's the whole discussion about while HQ relocation are nice, most of them aren't going to stuff the stat sheet regarding number of jobs.

In my opinion, this is kind of like a health measure of where companies want to actually base their operations. You may have a food company like ConAgra and they have factories all over the place which have their own reasons, but what is the best place for them to run their business from the very top? Maybe it makes sense for them to put a lot of the factories in the south or something due to a number of factors, but from a perspective of where their CEO, VPs, etc might want to be due to talent pool at that level, business environment, being around other competition, airport travel to anywhere in the world, etc....to me that's more of what this is overall kind of measuring. Where do these types of people (i.e. C-Suite) want to work from. The thing is that Chicago, no matter what, is still arguably the best place for this perspective after the NYC area in the country - the Bay Area and Dallas area are both increasingly competing and not tons behind but I wouldn't put them ahead of Chicago right now still. No matter what Chicago is going through, it still holds onto that - the area is still #2 in Fortune 500 HQ and #2 in largest private corporation HQ.

To me, this is kind of what the yearly ranking here from Site Selection states - businesses still want to base their operations in Chicago which means the talent pool of people who can actually run a company continues to increase. If you are a large company looking to put a large office (whether it's HQ or just a regular office), this is going to be important. The major centers with the talent pool for this is NYC and then Chicago with places like the Bay Area, Dallas, and maybe Atlanta areas not too far behind maybe with Boston, DC, Philadelphia next and maybe like Seattle and LA after that.

We all know Chicago is the tale of two cities and this is fairly obvious. It's another metric that shows it. The areas of decline in the city are more typically working class while the areas that are more white collar are not in decline at all on average - quite the opposite. A corporate relocation from some other area just adds on more to the white collar improvement storyline here. There is a reason why Chicago ends up in these rankings as #1 - and I think if you pay attention to news like the fact like Chicago now has the highest percentage of college educated people of any of the top 5 largest US cities (even higher than NYC), you can start to piece together. I don't think it's a fluke that Chicago gained something like 25,000 households of $100K+ more than Houston between 2010 and 2016 even though Houston outgained Chicago by over 200,000 total people. I don't think it's a fluke that Chicago outgained San Francisco for the same measure even though San Francisco is expensive as hell and outgained Chicago in total number of people. These are the things that aren't really making the news (although recently have in a few places.....you are welcome) but show that there's a hell of a lot more going on in Chicago than most people realize that if the decline on the south and west sides stops, you would see a hell of a lot more written about Chicago. It is a big enough place where these two things going on make the bad news more prevalent to the public since that's what people love.

[the urban politician]

^ I certainly agree with what you are saying but your explanation doesn't really reveal the answer to this:

In the Site Selection list, Chicago isn't second to New York, with Dallas and the Bay Area just a tad bit behind.

In this list, Chicago is completely mopping the floor with everyone. Year after year after year.

There is something going on that isn't being discussed. Perhaps it's logistics as mentioned above. Is that alone enough to explain it all? I have no idea...

[Baronvonellis]

Originally Posted by IrishIllini

I've said this before, but if any city in the US is destined to go the way of Detroit, it's Houston IMO. Phoenix could also be one. Same with much of Florida. If Florida didn't have a steady stream of northern money and retirees flowing in, it would be a very different place.

Uh, Florida's major economy is TOURISM! It's surrounded by three coastlines of beautiful beaches and warm sunny weather. As long as the beaches are there it will always have a great economy without having to do anything. The state government runs a surplus. It harvests tourist money and northern retiree money like crazy.

[glowrock]

Originally Posted by IrishIllini

Dallas does well, but you don't sustain that kind of growth long term, especially when there's nothing special about the city and transit is nonexistent. People like mountains and water. Dallas has neither. I think they're nearing the end of a cycle. Austin is also a high performer, but it's relatively small and economic growth this decade isn't remarkable by any stretch.

I've said this before, but if any city in the US is destined to go the way of Detroit, it's Houston IMO. Phoenix could also be one. Same with much of Florida. If Florida didn't have a steady stream of northern money and retirees flowing in, it would be a very different place.

No. Just No. Speaking as a recent Chicago transplant from four years of living in Houston, that is just incorrect. Of course Houston's economy is known for being based on natural resources, namely oil & gas, but it also has other massive sectors such as the downstream/petrochemicals industry (Houston Ship Channel), medical (Texas Medical Center), among others. I definitely agree (and the numbers show it!) that Houston's economy hasn't exactly done very well the last couple of years because of the massive layoffs in oil & gas (I was one of those), the reason it hasn't become a full-blown recession is because of other large economic sectors picking up the slack.

But now back to Chicago. Yeah, most people (and frankly, myself kind of included until recently) don't realize just how massive the industrial/light industrial/warehousing sectors are in the Chicago region. Rail, rail, rail, that's the long and the short of it!

Aaron (Glowrock)

[marothisu]

Originally Posted by the urban politician

^ I certainly agree with what you are saying but your explanation doesn't really reveal the answer to this:

In the Site Selection list, Chicago isn't second to New York, with Dallas and the Bay Area just a tad bit behind.

In this list, Chicago is completely mopping the floor with everyone. Year after year after year.

There is something going on that isn't being discussed. Perhaps it's logistics as mentioned above. Is that alone enough to explain it all? I have no idea...

I think that NY has less relocations or whatever than people think. They already have and had a lot of HQ - by far more than anybody else - like more than the Bay Area, Chicago area, and LA area combined type of thing. It's probably the same reason why you don't see the Bay Area on there much either - both NYC and Bay Area are expensive as hell for anybody from individual people to businesses. Areas like Chicago, Dallas, Houston, Atlanta, etc are much less expensive and thus more attractive to companies looking to relocate to that already have a pretty big talent pool and business ecosystem. I am pretty confident as to why you aren't seeing some of the higher cost areas on there. Honestly when was the last time a major corporation moved HQ to NYC? It doesn't happen as much as we think - even Aetna's plans were scrapped in the last few months.

I'd put money on the reason being that areas like NY and SF cost a ton. We've already seen it in quotes from companies talking about why they've skipped those two areas and it's almost always about the cost of doing business there and how the other areas like Chicago are cheaper. There's no shortage of c-suite talent in the Chicago area and it's only increased in the last decade.

[the urban politician]

^ I can accept your explanation, but I still find it fascinating how badly Chicago is beating the field.

Maybe some of it does have to do with logistics? This just in:

https://www.bisnow.com/chicago/news/...meoville-85866

[LouisVanDerWright]

Guys Site Selection is something you see in the lobby of an industrial real estate brokerage. It's not about which has the fanciest gastropubs or where the most office towers are being built. It's about down and dirty industrial development (which is actually an extremely profitable business if you are for some reason interested in warehouse leasing). Chicago is still the industrial center of the country and rail still dominates. Location still matters for industry, it's just that industry doesn't employ as many people as it used to.

So it should be no surprise to anyone that the historical and current industrial core of the largest economy on Earth is dominating a list of corporate expansions during what's looking like it will be the longest post war economic expansion. There's a shit ton of industrial development going on right now and Chicago is the center of it literally and figuratively.

[marothisu]

I know what you mean, but the index itself is measuring all sorts of businesses, not just one industry. Yes, when ADM moved to the area for example, this index was counting it. When GE Healthcare moved to chicago, this index was counting it. It's corporate relo/expansion...it covers anything from an industrial company relocating in the area to a large corporate csuite office moving from another metro area.

[the urban politician]

In other news, Woodlawn had its most expensive home sale—ever. As reported in Crains

Here’s to hoping that real market rate development and investment happens there. Keep up the momentum!

[Mr Roboto]

Originally Posted by the urban politician

In other news, Woodlawn had its most expensive home sale—ever. As reported in Crains

Here’s to hoping that real market rate development and investment happens there. Keep up the momentum!

So are you going to walk back your statement that there was no demand to live in Woodlawn and the Obama center will have no impact?

[the urban politician]

Originally Posted by Mr Roboto

So are you going to walk back your statement that there was no demand to live in Woodlawn and the Obama center will have no impact?

Well, how do you quantify "demand"?

There is demand to live in Woodlawn, but is there demand from anybody other than African Americans? Could we see a truly mixed ethnicity neighborhood develop here, like Hyde Park to the north, or will it remain lower income and black? The opponents of the Obama Center are using the term "displacement" and "Community Benefits Agreement" in a way that seems to come off as disguised racism, when really they just don't want the neighborhood to see an influx of white people.

I know that some professionals are moving to the area, and right now it's probably just a trickle. But we shall see--I pray that it becomes a torrent.

[sentinel]

Originally Posted by glowrock

No. Just No. Speaking as a recent Chicago transplant from four years of living in Houston, that is just incorrect. Of course Houston's economy is known for being based on natural resources, namely oil & gas, but it also has other massive sectors such as the downstream/petrochemicals industry (Houston Ship Channel), medical (Texas Medical Center), among others. I definitely agree (and the numbers show it!) that Houston's economy hasn't exactly done very well the last couple of years because of the massive layoffs in oil & gas (I was one of those), the reason it hasn't become a full-blown recession is because of other large economic sectors picking up the slack.

But now back to Chicago. Yeah, most people (and frankly, myself kind of included until recently) don't realize just how massive the industrial/light industrial/warehousing sectors are in the Chicago region. Rail, rail, rail, that's the long and the short of it!

Aaron (Glowrock)

...until another 500-year flood hits Houston this year or next (I'm not even being remotely sardonic). At what point does it become cost-prohibitive as well as psychologically and emotionally devastating to live in an environment where there is a background fear of waking up to 3 feet of water in your house and your insurance company no longer fulfilling your claim after the 2nd or 3rd time?

Location aside, the Site Selection ranking is (always) good to see, but I wish Chicago's narrative outside of our immediate surroundings would reflect this on a national and international level, instead of JUST focusing on the local violence, political corruption and weather...three things that a number of other cities also have plenty of.

[the urban politician]

Originally Posted by sentinel

...until another 500-year flood hits Houston this year or next (I'm not even being remotely sardonic). At what point does it become cost-prohibitive as well as psychologically and emotionally devastating to live in an environment where there is a background fear of waking up to 3 feet of water in your house and your insurance company no longer fulfilling your claim after the 2nd or 3rd time?

Location aside, the Site Selection ranking is (always) good to see, but I wish Chicago's narrative outside of our immediate surroundings would reflect this on a national and international level, instead of JUST focusing on the local violence, political corruption and weather...three things that a number of other cities also have plenty of.

Interestingly, one of the reasons I think many people react with disbelief (including Chicago people) at Chicago's stunning performance on this list is exactly because the narrative of Chicago is otherwise so negative. So how could this data be true? I was just debating with another forumer, from Seattle, about this particular issue a few weeks ago.

But once again, that is because the national narratives are very narrow. Right now everybody is laser focused on tech, and VC. Well, those are just 1 industry and 1 financial tool by which to grow a company. That's far, far, far from a comprehensive picture.

But using the above measure, Chicago always trails the leaders, with the Bay Area leading the pack. Does that suddenly make San Francisco the greatest, most successful city in America? Of course not. But that's the narrative being told around that data that gets put out year after year.

Would anybody doubt it if the Bay Area were #1 in Site Selection year after year, even though it doesn't have much warehousing, logistics, etc? Of course not--it's all about the narrative around a place. Chicago's narrative right now is mostly about treading water, crime, etc (some of this is true, actually--but it's missing most of the story by a long shot). I have argued, for example, that one of the reasons there has been so much gang activity in Chicago is precisely because it is such an economically advantageous location from which to run a continent-wide drug empire.

[Mr Roboto]

Originally Posted by the urban politician

Well, how do you quantify "demand"?

There is demand to live in Woodlawn, but is there demand from anybody other than African Americans? Could we see a truly mixed ethnicity neighborhood develop here, like Hyde Park to the north, or will it remain lower income and black? The opponents of the Obama Center are using the term "displacement" and "Community Benefits Agreement" in a way that seems to come off as disguised racism, when really they just don't want the neighborhood to see an influx of white people.

I know that some professionals are moving to the area, and right now it's probably just a trickle. But we shall see--I pray that it becomes a torrent.

I believe that demand from both white and black professionals, as well as other professionals, will increase once the center is built and local amenities improve as a result. Add to that the very good existing building stock, and proximity to Hyde Park and of U of C, Woodlawn has nowhere to go but up - how far remains to be seen. Vocal opposition against gentrification (whether called for or not) tends not to matter much historically, so I dont see it being particularly relevant. A much bigger factor in future development of neighborhood like Woodlawn is the economic health of Chicago in general, which to me is up in the air right now.

[Halsted & Villagio]

Originally Posted by the urban politician

Well, how do you quantify "demand"?

There is demand to live in Woodlawn, but is there demand from anybody other than African Americans? Could we see a truly mixed ethnicity neighborhood develop here, like Hyde Park to the north, or will it remain lower income and black? The opponents of the Obama Center are using the term "displacement" and "Community Benefits Agreement" in a way that seems to come off as disguised racism, when really they just don't want the neighborhood to see an influx of white people.

I know that some professionals are moving to the area, and right now it's probably just a trickle. But we shall see--I pray that it becomes a torrent.

TUP, you know you are one of the guys I respect most on this board, but you missed the mark with this comment. I am a Southsider through and through. I have family all over the Southside, I went to school (elem & HS) on the Southside, my father owned a business on the Southside, my mother was a Doctor on the Southside, I was Captain of the first Jackie Robinson League baseball team to win the State (not World Series) title. Long and short of it, there is not a Southside neighborhood (save Engelwood) that I have not spent SIGNIFICANT time in. With friends and a very large family all over the Southside, I have freely roamed from neighborhood to neighborhood.

In all my time on the Southside I have NEVER ever heard a single person complain about white people moving into the neighborhood. In fact, most people I know are either apathetic about it or they welcome it. Most welcome it as they know that diversity is one of the keys to a better life. They are tired of the segregation, they are tired of being redlined against (real estate) and they are tired of the crime and know that diversity will go a long way towards mitigating crime.

The motivation for the community group you speak of? The same motivation that moves most of the world and that moves the man in the White House - Money.

Money through jobs, through power, through additional donors, grants, etc., etc.

.

[Mr Roboto]

Originally Posted by Halsted & Villagio

TUP, you know you are one of the guys I respect most on this board, but you missed the mark with this comment. I am a Southsider through and through. I have family all over the Southside, I went to school (elem & HS) on the Southside, my father owned a business on the Southside, my mother was a Doctor on the Southside, I was Captain of the first Jackie Robinson League baseball team to win the State (not World Series) title. Long and short of it, there is not a Southside neighborhood (save Engelwood) that I have not spent SIGNIFICANT time in. With friends and a very large family all over the Southside, I have freely roamed from neighborhood to neighborhood.

In all my time on the Southside I have NEVER ever heard a single person complain about white people moving into the neighborhood. In fact, most people I know are either apathetic about it or they welcome it. Most welcome it as they know that diversity is one of the keys to a better life. They are tired of the segregation, they are tired of being redlined against (real estate) and they are tired of the crime and know that diversity will go a long way towards mitigating crime.

The motivation for the community group you speak of? The same motivation that moves most of the world and that moves the man in the White House - Money.

Money through jobs, through power, through additional donors, through grants, through whatever means, etc.

.

You may give him the benefit of the doubt, but TUP has been claiming this reverse-racism crap for years. Just ignore it, its usually irrelevant anyway. The anti-gentrication argument is indeed about access to resources for the existing residents, so you are correct on that point.

[Halsted & Villagio]

Originally Posted by Mr Roboto

You may give him the benefit of the doubt, but TUP has been claiming this reverse-racism crap for years. Just ignore it, its usually irrelevant anyway. The anti-gentrication argument is indeed about access to resources for the existing residents, so you are correct on that point.

Its fine. It is easy to have misperceptions about the Southside because it is so ridiculously segregated. That's one of the main reasons why after law school I moved away... then came back but moved to the Northside, Downtown, Naperville, etc. Everywhere but the Southside. Until ultimately deciding to move back south and purchase a home in Hyde Park. Needless to say, the lack of diversity on the Southside is a major detraction but it also leads to misperceptions like the one TUP showed. But one thing I have observed about TUP though - his heart is in the right place. In other words, I have no doubt at all that his misperception came from a good place.