Chicago’s Old Finance Hub Gets New Life From ‘Google Effect’
A neglected part of downtown Chicago is perking up as Alphabet Inc. redevelops a 1980s-vintage building designed to house legions of state government workers.
Startups and other small companies have been snapping up space in the LaSalle Corridor district, which once served as the city’s financial center and as backdrop for movies from The Dark Knight to The Untouchables. The catalyst: the renovation of the James R. Thompson Center, where Alphabet’s Google plans to start moving workers next year.
The real estate rush — part of a wider phenomenon often dubbed the “Google effect” in which the tech giant drives real estate investment around its offices — is fueling signs of recovery in a hard-hit part of downtown as Chicago struggles to rebound from the pandemic. Since Google announced the project in 2022, office leasing volume has advanced 14% in LaSalle Corridor, compared with a 13% drop in the broader Central Loop district of which it’s a part.
....
Startups such as ElectronX, a power-derivatives exchange, are betting that Google’s presence will bolster the neighborhood. The area also has strong transit options and a wealth of offices, hotels and restaurants within walking distance.
“From a recruitment perspective, from just that proximity perspective, I would expect there to be lots of other more innovative companies coming in around here,” said Sam Tegel, CEO of power-derivatives exchange company ElectronX, which recently moved into a building across the street from the Thompson Center. “That gave us comfort and confidence.”
Real estate veterans share the sentiment.
John Vance, a principle with Stone Real Estate, said Google’s move is “such a statement of ‘Yeah, we believe in the office as the best environment to work for most people,’ and that is important for all downtowns.”
Allen Rogoway, a broker with tenant representative firm Cresa, recently assisted a subsidiary of French technology services company Equiniti in relocating from West Town to LaSalle Street.
“When clients talk about submarkets and places to be, it’s real,” he said. “Get in now because expectations are that as the submarket starts to build on itself with Google, it will be going up.”