Crain's: Corporate campuses in twilight

[iheartthed]

On the heels of the news that UBS is ditching suburban Stamford, CT to return to Manhattan:

Crain's Special Report: Corporate campuses in twilight

Like the disco ball, the regional shopping mall and the McMansion, the suburban corporate headquarters campus is losing its charm.

Remote, sprawling and splendidly isolated, such headquarters epitomized corporate America in the last quarter of the 20th century. Fleeing urban decay, companies like Motorola Inc., Allstate Corp. and Sears Roebuck & Co. built fortress-like complexes on the fringes of metropolitan Chicago. Jobs and residential development followed, fueling sprawl and congestion across the region.

Today, Sears Holdings Corp. and AT&T Inc. are looking to escape their compounds in northwest suburban Hoffman Estates. A shrunken Motorola has space to let in Schaumburg. Sara Lee Corp. eyes downtown office space after less than a decade in Downers Grove. Companies from Groupon Inc. to GE Capital hire thousands in Chicago while their suburban counterparts shed workers.

All reflect changes in the corporate mindset that spawned the campuses dotting outer suburbia. Empire-building CEOs from the 1970s through the 1990s craved not only cheap real estate but total control of their environments. They created self-contained corporate villages that cut off employees from outside influences.

As the 21st century enters its second decade, many companies are discovering the drawbacks of the isolation they sought. Hard-to-get-to headquarters limit the talent pool a company can draw on and feed a “not-invented-here” insularity that ignores major shifts in industries and markets.

Companies seeking to tap a broader talent pool and get into the flow of innovation are looking back to the urban core. Sara Lee is only the latest suburban company to seek a new headquarters in downtown Chicago. United Airlines made the move in the past decade, as did Navteq Corp. and Allscripts Healthcare Solutions Inc. Some of the most successful local companies of recent years, like Morningstar Inc. and Accretive Health Inc., never left the city.

“The whole corporate campus seems a little dated,” says Joe Mansueto, chairman and CEO of Morningstar, who moved the company's 1,100 headquarters workers across the Loop to a new office tower at 22 W. Washington St. two years ago without even considering a move to the suburbs. “We've always liked being in Chicago. It helps keep employees on the pulse of what's happening in our society. It keeps them current with cultural trends and possibly technological ones.”

...

Motorola brought its headquarters to northwest suburban Schaumburg in 1976. The then-remote location reflected the company's aloof style, based on engineering prowess that produced the first cellular telephone. But after dominating the industry in the early 1990s, Motorola was slower than competitors like Cupertino, Calif.-based Apple Inc. to see the potential in digital technologies that gave rise to the smartphone.

“They are an example of a company that thought they could do it all because they hired really smart people,” says Thomas Kuczmarski, president of Kuczmarski & Associates Inc., a Chicago-based management consulting firm. “They probably needed to be more focused on where the consumer was going.”

Sanjay Jha, CEO of one of the two companies Motorola was split into earlier this year, has acknowledged as much. His company, the cellular phone business Motorola Mobility Inc., will keep its headquarters in Libertyville but is hiring hundreds in Sunnyvale, Calif., near Google Inc.'s headquarters.

...

Some companies that retain suburban headquarters establish downtown outposts to draw skilled younger workers, many of whom prefer to live and work in the city. Motorola opened a design center in 2003, in part to “attract hip, young designers,” a Motorola Mobility spokeswoman says. Likewise, drugstore giant Walgreen Co. has an office for its new e-commerce division downtown rather than at its Deerfield campus.

Last week, finance giant GE Capital announced plans to add 1,000 employees downtown in the next several years, almost doubling its workforce here, with some of those jobs coming from suburban offices.

...

One of the biggest local companies to go public in recent years, hospital revenue consulting firm Accretive Health Inc., last year won a tax-increment financing subsidy and state incentives to build a processing and training operation at 231 S. LaSalle St. after considering sites in Albuquerque, N.M., Jacksonville, Fla., and Nashville, Tenn., according to the planning department's staff report.

Accretive pledged to hire 650 people for the facility over 10 years, in addition to maintaining a headquarters staff of 175 on North Michigan Avenue.

Sara Lee, which moved its headquarters to Downers Grove from Madison and Dearborn streets just six years ago, is considering a return. The foodmaker is shedding several divisions to focus on its North American meats business, which is scouting for about 150,000 square feet downtown, real estate sources say.

...

If growing firms continue to opt for city locations, transportation planners need to focus less on suburban highways and more on getting people into and around an expanding central city business district.

“Your transportation investments ought to be driven by your desire to grow the economy, not to spread investment across the state as if it were peanut butter, which is what we do now,” says Frank Beal, executive director of Chicago-based Metropolis Strategies, a regional economic development group. “The global economy is changing in ways that demand higher densities that can only be serviced with transit.”

Former United Airlines chief Glenn Tilton said access to transit was key in the company's decision to leave its 1-million-square-foot campus in Elk Grove Township, which dates to 1961, and move its main operations facility and more than 2,500 workers to the former Sears Tower. United had moved its 350 headquarters staffers to 77 W. Wacker Drive in 2007.

At a press conference in August 2009 in the Willis Tower lobby, Mr. Tilton said 80% of the company's employees live within five miles of a Metra station.

Read more: http://www.chicagobusiness.com/artic...es-in-twilight

Sounds like Metro Detroit has a lot more work to do to become competitive. And it goes far beyond just cutting taxes...

[Bham1982]

As usual, Crain's is just making up stuff to further their agenda.

The proportion of suburban jobs in Chicagoland has actually risen in recent years. Downtown Chicago has a lower proportion of regional workers than at any point in history.

The Census and Brookings Institution have all this data by metropolitan area.

It's kinda like how everyone was claiming that Chicago was home to this huge back-to-the-city movement from the burbs. Then the Census came out, and Chicago lost almost as many people as Detroit, while the burbs boomed. Oops.

[iheartthed]

As usual, Crain's is just making up stuff to further their agenda.

The proportion of suburban jobs in Chicagoland has actually risen in recent years. Downtown Chicago has a lower proportion of regional workers than at any point in history.

The Census and Brookings Institution have all this data by metropolitan area.

Actually it's flat, but the article never claimed that the share of jobs rose in the city. It is saying that corporations are trending away from suburban office parks. It also said that the share of high paying jobs are rising in Chicago city versus Chicago suburbs. So yeah, McDonalds might be hiring in the burbs, but who cares?

[JBMcB]

But after dominating the industry in the early 1990s, Motorola was slower than competitors like Cupertino, Calif.-based Apple Inc. to see the potential in digital technologies that gave rise to the smartphone.

And Apple is located... in an enormous corporate campus in a suburb of San Jose [[or an extreme exurb of San Francisco, take your pick)

I think the rise of smaller companies and the contraction of larger companies has more to do with outmoded business and management models than simply location.

Besides which, there is the simple equation - if you are a fast growing *large* business, that needs a lot of space to do what you do, land is cheaper outside the city. If you are a relatively small start-up, it's easier to find cheap space in a city, not to mention possibly more convenient.

[Bham1982]

Actually it's flat, but the article never claimed that the share of jobs rose in the city. It is saying that corporations are trending away from suburban office parks. It also said that the share of high paying jobs are rising in Chicago city versus Chicago suburbs. So yeah, McDonalds might be hiring in the burbs, but who cares?

I agree that there may be a trend away from the single-use corporate campus. They're relatively inflexible re. use, often difficult to reach, and environmentally questionable. Younger workers often don't like them.

But, I sense that this article is very agenda-driven. There's a theme of "downtown is booming and suburbs are losing" and the facts don't support this theme.

Chicago's Loop is in relatively good shape for a U.S. downtown. But there's little evidence of any nationwide back-to-the-city movement. And I notice, particularly in the case of Chicago, there seems to be this avalanche of propaganda that is completely contrary to reality.

I know folks trying to sell condos in downtown Chicago. They're incredibly cheap, and still no takers. Loop office space is cheap, and plenty of availabilities. There's a new downtown mall on State Street that's mostly vacant. Just don't tell the rah-rah types.

The fact is that Chicago, and most U.S. cities, have deep problems and are generally in relative decline. There are some bright spots, but they generally have a long way to go. NYC may be an exception. Maybe DC too.

[j to the jeremy]

Environmentally questionable is an understatement.

[Detroitnerd]

I agree that there may be a trend away from the single-use corporate campus. They're relatively inflexible re. use, often difficult to reach, and environmentally questionable. Younger workers often don't like them.

But, I sense that this article is very agenda-driven. There's a theme of "downtown is booming and suburbs are losing" and the facts don't support this theme.

Trends don't start overnight, or even well heralded. What you do is begin looking at the exceptions to the rule and note that they are growing in number. It seems fair to note the rise of the exception, and to speculate what it means for the greater trend. Isn't that what good business reporting is?

[iheartthed]

And Apple is located... in an enormous corporate campus in a suburb of San Jose [[or an extreme exurb of San Francisco, take your pick)

I think the rise of smaller companies and the contraction of larger companies has more to do with outmoded business and management models than simply location.

Besides which, there is the simple equation - if you are a fast growing *large* business, that needs a lot of space to do what you do, land is cheaper outside the city. If you are a relatively small start-up, it's easier to find cheap space in a city, not to mention possibly more convenient.

That is true that Apple is in an office park and is currently successful, but it's also arguable that they are particularly adapt at recognizing changing tastes and trends. They are most successful at being trendmakers... But they have also tended to exist in a bubble, and that's in part why they struggled for nearly a decade [[or a third of their existence as a corporation). Microsoft has had the same problem as it has matured into its corporate campus bubble.

[DetroitPlanner]

Musical Building Chicago Style.

I doubt regional shopping centers are going the way of this article.

Companies will locate in different places for different reasons. But the bottom line is they need to make the right choice or they will be out of business.

[JBMcB]

That is true that Apple is in an office park and is currently successful, but it's also arguable that they are particularly adapt at recognizing changing tastes and trends

Doesn't that kind of refute the idea that you need to be in a downtown, urban environment to spot trends? Many of the most consistently successful tech companies have campuses in or around Palo Alto. Google is nearby in Mountain View. Dell is in a campus in the suburbs of Austin. Microsoft is in a suburb of Seattle.

Success does not seem to be tied to campus location.

[Bham1982]

And Facebook is building a massive suburban corporate campus in Silicon Valley.

Many of the urban corporations also basically have corporate campuses. Sometimes they're vertical, but it's the same concept.

IMO, there appears to be little correlation between location and economic success.

[Detroitnerd]

Well, just anecdotal, but I did meet some people who work at an advertising agency that is relocating downtown. They were very excited about working downtown, and described the office park where they're located as half-empty and depressing. They looked forward to shorter commute times, being able to bike to work, and having entertainment options at hand. I think that's a driver in this emerging trend: You can attract people who enjoy diversity and city life are less interested in the office parks of the suburbs.

[Richard]

IMHO to me I would be more interested in the changes of the average income levels within the city verses population.But in the past I thought the whole reason of the corps moving out to the burbs was because that was where workers were.

I remember riding with my father from the burbs to downtown MLPS in the 1960s to where his work was and I am sure he carried that lead filled x military club with him for a reason,but MLPS always had strong industry ties to help it rebuild,Pillsbury,Du Pont ,Dayton Hudson,3M etc. etc.

[iheartthed]

Doesn't that kind of refute the idea that you need to be in a downtown, urban environment to spot trends? Many of the most consistently successful tech companies have campuses in or around Palo Alto. Google is nearby in Mountain View. Dell is in a campus in the suburbs of Austin. Microsoft is in a suburb of Seattle.

Success does not seem to be tied to campus location.

Well, yes and no. Google for instance does have its main campus in Mountain View, but they also maintain a very large office in Manhattan. Microsoft does as well. So they do at least place some value on maintaining a presence in urban locations. [[You might say they are here because it's New York, but they could just as easily set up shop in a suburban office complex in suburban New York and pay much less in rent and taxes.) And none of those tech companies started off in big suburban office parks, but instead they moved there after they became "dinosaurs". Most of them either started out on college campuses or in major cities.

[wolverine]

It's kinda like how everyone was claiming that Chicago was home to this huge back-to-the-city movement from the burbs. Then the Census came out, and Chicago lost almost as many people as Detroit, while the burbs boomed. Oops.

The "back to the city movement" involves a highly skilled and educated population holding professional jobs. The census tracts that lost [[over 200,000 in population in total) have populations with the lowest levels of academic attainment, and lowest levels of median income in the city. As a top tier global city you are offered plenty of well paying job opportunities if you are educated or have alot of professional experience. If you don't, everything else is an uphill battle, and that's why many people have left.

It's a reverse of historic trends where college grads get good corporate jobs in suburban office buildings. Even better, is that families are staying as schools improve and neighborhoods become better places for raising children.

But I wouldn't correlate all corporate moves to the Loop with the city's population. Metra's regional transit system provides a quick and easy way to get from suburb to downtown. We have no "circle connector" here in Chicago to link north suburbs to south suburbs. So it's still just as time consuming and a hassle for residents to get across the metro by car. Better to just consolidate all your business into one place. And it's not like suburbs are fuming over all these losses. There's reciprication with quite a bit of metropolitan cooperation out here.

Seriously, how many of you metro Detroiters walk to your meetings to see another client? Wouldn't it be nice to just have everyone downtown?

[Bham1982]

The "back to the city movement" involves a highly skilled and educated population holding professional jobs. The census tracts that lost [[over 200,000 in population in total) have populations with the lowest levels of academic attainment, and lowest levels of median income in the city. As a top tier global city you are offered plenty of well paying job opportunities if you are educated or have alot of professional experience. If you don't, everything else is an uphill battle, and that's why many people have left.

We'll definitely have to disagree on this. And I think the Census numbers back up my position.

Chicago, like all major cities, has always had "highly skilled, educated" professionals in its core. Most of the buildings on Lake Shore Drive were built in the 60's and 70's. Lincoln Park, Old Town and Lakeview all gentrified long before most of us were born.

So the concentration of yuppies in, say, River North, is nothing new. What is [[relatively) new, however, is the sea of blight and decline in Chicago and most U.S. cities. River North and its ilk are basically a small island in a growing sea of decline.

In the past, there were some decayed blocks on the South and West Sides, but now almost everything in Chicago that isn't downtown is poor or [[at best) working class immigrant. The middle class, non-yuppie, black and white neighborhoods have disappeared.

And I'm not sure I would call Chicago a "top tier global city". Yeah, it's no Detroit or Cleveland, but it's no NYC or London either. It's King of the Midwest, but not particular global nor top tier. Even Big 10 elites trend towards the coasts, to say nothing of the Ivy League.

[JBMcB]

[QUOTE=iheartthed;251808]So they do at least place some value on maintaining a presence in urban locations.[quote]

True, many large companies have satellite offices all over the place. But the discussion here is about large corporate campuses supposedly being in decline. Other than a couple of possible exceptions, I haven't heard enough to make a new rule.

And none of those tech companies started off in big suburban office parks, but instead they moved there after they became "dinosaurs". Most of them either started out on college campuses or in major cities.

If by "dinosaurs" you mean large and hugely successful, then yeah. Except for Apple - they started out in a garage in the suburbs, then moved - to a larger complex in the same suburb.

[BrushStart]

Wow, man... Have you been to Chicago recently? I was there last month and was all over the city, from Wrigleyville, to Wicker Park, to Lakeview, to downtown, to Logan Square, to River North, and many places in between. The city is JUMPING with young people and youthful energy. Lively and vibrant is the only way to describe that town. There are surely poor areas that have declined, but most everything else is booming. Needless to say, there is a massive, cohesive portion of the city that is thriving.

We'll definitely have to disagree on this. And I think the Census numbers back up my position.

Chicago, like all major cities, has always had "highly skilled, educated" professionals in its core. Most of the buildings on Lake Shore Drive were built in the 60's and 70's. Lincoln Park, Old Town and Lakeview all gentrified long before most of us were born.

So the concentration of yuppies in, say, River North, is nothing new. What is [[relatively) new, however, is the sea of blight and decline in Chicago and most U.S. cities. River North and its ilk are basically a small island in a growing sea of decline.

In the past, there were some decayed blocks on the South and West Sides, but now almost everything in Chicago that isn't downtown is poor or [[at best) working class immigrant. The middle class, non-yuppie, black and white neighborhoods have disappeared.

And I'm not sure I would call Chicago a "top tier global city". Yeah, it's no Detroit or Cleveland, but it's no NYC or London either. It's King of the Midwest, but not particular global nor top tier. Even Big 10 elites trend towards the coasts, to say nothing of the Ivy League.

Chicago is categorized as an Alpha Global City, and ranks #6 on the global cities list, just below Hong Kong and above Los Angeles. Where does Birmingham, MI rank?

[wolverine]

We'll definitely have to disagree on this. And I think the Census numbers back up my position.

Chicago, like all major cities, has always had "highly skilled, educated" professionals in its core. Most of the buildings on Lake Shore Drive were built in the 60's and 70's. Lincoln Park, Old Town and Lakeview all gentrified long before most of us were born.

So the concentration of yuppies in, say, River North, is nothing new. What is [[relatively) new, however, is the sea of blight and decline in Chicago and most U.S. cities. River North and its ilk are basically a small island in a growing sea of decline.

In the past, there were some decayed blocks on the South and West Sides, but now almost everything in Chicago that isn't downtown is poor or [[at best) working class immigrant. The middle class, non-yuppie, black and white neighborhoods have disappeared.

And I'm not sure I would call Chicago a "top tier global city". Yeah, it's no Detroit or Cleveland, but it's no NYC or London either. It's King of the Midwest, but not particular global nor top tier. Even Big 10 elites trend towards the coasts, to say nothing of the Ivy League.

You are somewhat correct, so I'm not sure why you entirely disagree. Yes, the middle class of Chicago has largely disappeared. Immigrant areas on the south and west sides + yuppie gentrified areas such as Bridgeport, Wicker Park, Bucktown, and Logan square were the only areas to grow. Basically 25% of the land area of the city had low to steady population growth with 200% growth around the core...and yes it goes well beyond just River North.

I'll accept your Northside argument, but keep in mind, alot of the parts of the far northside were working class as well. Those people are either leaving or dying off. They are being replaced by professionals, young college grads, and even students.

As for the global city argument...we are top tier. Chicago has alpha classification. The only American alpha city higher than us is New York, which recieves Alpha++ classifcation. Los Angeles is an alpha city as well, but could easily be considered equal classification with Chicago in its influence, but probably even more by its culture. I'm not willing to debate whether the other 8 Asian cities deserve more merit. They are big. They are important. Regardless, Chicago makes the shortlist of an elite 40.

[iheartthed]

[QUOTE=JBMcB;251893][QUOTE=iheartthed;251808]So they do at least place some value on maintaining a presence in urban locations.

True, many large companies have satellite offices all over the place. But the discussion here is about large corporate campuses supposedly being in decline. Other than a couple of possible exceptions, I haven't heard enough to make a new rule.



If by "dinosaurs" you mean large and hugely successful, then yeah. Except for Apple - they started out in a garage in the suburbs, then moved - to a larger complex in the same suburb.

By dinosaurs I mean rich, huge and increasingly out of touch. Think of the big tech stories of the past decade. How many of the new innovations were originated by a company located on a big corporate campus in the suburbs? Only Apple comes to mind. Microsoft's only source of pride recently has been the X Box... And they are likewise having an increasingly hard time recruiting talent. Google's strategy seems to be just buying up start-ups to keep its ideas pool fresh. But the biggest tech stories of the decade, Facebook, Myspace, Groupon, Youtube, Paypal, Napster... None of them were conceived of at a big company on a suburban campus.

[illwill]

I have to agree with BrushStart,

Chicago is a city that's recently taken a beating from a number of things but is no doubt still a vibrant and powerful North American world class city. It's still very affordable and although the city continues to bring in an educated and talented work force, it is maintaining a middle class and working class population as well. If you take the time to drive through so many of these neighborhoods, they're doing pretty well and filled with middle class families. Who do you think supports the service industy in Chicago? The working class and middle class. Basically Chicago still has it's bones.

I personally think Mayor Richard Daley had a lot do with businesses and residents leaving the city a few years back. He was Kwame Kilpatrick on steroids...he never gave a shit about the residents of Chicago, only drained them financially by increasing taxes, inventing fees and running them all away. What many of the businesses that are returning or considering returning to the city are expressing is the "new" direction of the city. The new leadership being Mayor Rahm Emanuel.

I think Chicago took it's bumps and bruises during the recession like all major cities in the US have. Businesses shut down and people fled. But mark my words: watch out, because under the new leadership Chicago is on it's way to becoming a very powerful and dominate global city, currently in the process of reinventing itself once again. This time the new Mayor is ultimately focused on making Chicago a city where quality of life is number one. Family, jobs, safety and education are his priorities and he is already making drastic changes. People in Chicago are already saying they feel the difference under Rahm Emanuel. People and businesses are returning to Chicago under the new leadership and we've seen this happen many times in MANY cities where people and businesses flee because of poor leadership.

[Hypestyles]

more needs to happen to entice more area businesses to relocate to urban detroit..

[Malcove Magnesia]

Facebook currently leases space across a number of buildings scattered around Palo Alto. It makes sense that they would want to get the majority of their employees into one compressed area. Same thing with Apple. If an operating systems guy needs to talk to a hardware guy about some dongle that isn't working as expected, s/he just crosses the campus [[or across DeAnza Boulevard) and they can get the answers they need pretty quickly.

As much as I would love to see all the buildings of Detroit light up at all hours with business, it's going to be a very tough sell to get additional large corporations downtown. Thousands of employees won't fit into a single already-existing building in any downtown area. Maybe a couple buildings, yes. But Compuware had to build a brand new building for their headquarters [[and get some major concessions / incentives from the city), to get everyone in one place.

The businesses that Detroit should be trying to entice are medium sized businesses [[that can easily fit into the retrofitted UA building, for example) and emerging technologies [[the kind that brings lots of investments, dynamic people, jobs, etc.).

[DetroitPlanner]

Thousands of employees won't fit into a single already-existing building in any downtown area. Maybe a couple buildings, yes. But Compuware had to build a brand new building for their headquarters [[and get some major concessions / incentives from the city), to get everyone in one place.

A company as large as Compuware projected 5,000 employees. Yes it would be better for them to be in one building than in a few. However many companies that have moded downtown are nowhere near that large. Even Little Caeser's was able to fit everyone in a 10 story building with relatively little of it devoted to office space.

[bailey]

A company as large as Compuware projected 5,000 employees. Yes it would be better for them to be in one building than in a few. However many companies that have moded downtown are nowhere near that large. Even Little Caeser's was able to fit everyone in a 10 story building with relatively little of it devoted to office space.

Did Compuware "need" space for 5000? aren't they leasing a large portion of their building to Quicken folks?