Chicago has rapidly become a prime spot for tech companies, and there’s no end in sight to this mass relocation and expansion in the Windy City. As more startups, tech firms, and industry giants as far-flung as San Francisco lease space in the Midwest, one starts to wonder what’s created this vulnerable tech mecca, and why Chicago’s own homegrown tech companies are exploding.
The Windy City is an appealing industry hub for a variety of reasons. For starters, the city offers a convenient, centralized location that’s equally as accessible to New York City as it is to the West Coast. Given Chicago’s penchant for manufacturing and dependence on freight and a reliable supply chain, transportation is a booming industry, which benefits numerous sectors.
What’s more, the vast manufacturing and transportation industries create an unmatched talent pool in Chicago. As a result, companies that open manufacturing space in the Windy City can expect to find excellent teams of people to work with.
With these hub-related benefits already in place, Chicago was bound to become a naturally attractive destination for technology firms. Information technology has become one of the city’s most popular industries and its fastest-growing sector. Many of the country’s largest tech firms are choosing to relocate to Chicago to take advantage of its globally competitive location.
One of the leading reasons behind Chicago’s rapidly growing tech industry lies in the West Coast. Since 2013, Bay Area-based companies have leased office space in the Windy City. In 2018 alone, Chicago’s occupied tech company office space grew by 4 million square feet, and much of that was a result of West Coast expansions.
The River North area of Chicago is one of the most popular and highest-priced areas for tech companies, averaging 32% more expensive than the rest of the market. This ultra-stylish, urban district boasts studios, art galleries, and a lively nightlife all tucked away in former warehouses. In fact, this area has the largest concentration of art galleries in the country outside of Manhattan. Despite the River North’s status as a tourist destination, tech companies occupy more than one-fourth of the neighborhood’s office space — many of them within a single building: the iconic Merchandise Mart.
Spanning two city blocks and once occupying its own ZIP code, “theMART” is the world’s largest commercial building and a premier location for international businesses. It consists of 4.2 million gross square feet and 25 stories, offering enough room to house hundreds of tenants, including restaurants, corporate offices, showrooms, and other services.
Chicago even has a hub for digital startups housed inside theMART — an incubator called 1871, which UBI Global ranked the best in the world. The 1871 incubator works with universities, trains hundreds of IT students, and hosts more than a thousand events each year. The incubator has graduated around 40 companies and generated more than 500 jobs, further cementing Chicago’s reputation as the place IT professionals and tech companies need to be.
Steady Growth at a Lower Cost
Across all industries, tech companies accounted for 21% of Chicago’s major corporate leasing activities during the first half of 2019. This figure was up from 11% since 2011.
The most recent report from 2019 shows that Chicago’s tech-based workforce now consists of 73,000 workers. In 2017 alone, the city added 4,500 new tech jobs. This steady and somewhat rapid growth is thanks in large part to Chicago’s highly skilled workforce. Without it, the world’s largest tech firms wouldn’t be trying to tap the market’s immense talent and resources.
It also helps that Chicago comes with a much more affordable location than coastal alternatives, so even prime office space like those at theMART are typically more competitive than Bay Area real estate. Consider the fact that Chicago’s cost of living is 54.5% lower than San Francisco’s. Tech companies not only enjoy more affordable lease terms, but they can also pay highly skilled professionals a lower salary. On average, employers in the Bay Area must pay 18.2% more than Chicago-area employers.
Considering that Chicago offers world-class amenities that rival any iconic American city, the work-life balance in the Windy City is too attractive for many tech companies to pass up.
MedTech on the Rise
Another key factor in Chicago’s tech sector boom lies in its healthcare industry. Chicago is home to a multitude of nursing care facilities, insurance carriers, hospitals, and med tech companies. Over 40 national associations are headquartered here, including the American Hospital Association, the American Dental Association, and the American Medical Association.
Thanks to this healthcare hub, Chicago’s MedTech sector is on the rise. Between the city’s numerous colleges and universities, as many as 3,000 biomedical and engineering students graduate in Chicago each year, creating a highly concentrated area of innovative talent. This perfect storm has led to leaps in medical manufacturing and advancement, creating just another reason why technology companies are finding Chicago irresistible.
Recent figures place the Chicago MedTech workforce at 26,634 employees. Major segments in this highly specialized area of the tech industry include the development, engineering, and manufacturing of surgical and medical equipment, ophthalmic goods, electromedical apparatus, dental equipment, and other health-related supplies. The Greater Chicago area also hosts Argonne National Laboratory and Fermilab, a national laboratory specializing in high-energy particle physics which has the highest concentration of accelerator experts in the world.
Chicago’s entrepreneurial ecosystem is impressive, but it’s also sustainable, making it a great place to set up shop for the long haul. Other cities might offer corporate benefits for the foreseeable future, but ultimately go stagnant or take a downturn. On the contrary, Chicago shows no signs of stopping.
It’s rare to find a destination with a built-in talent pool, supportive infrastructure, industry diversity, and capital efficiency that you find in Chicago. It’s also a livable city, ranking highly for its stability, cost of living, and amenities. With so much going for it, Chicago is poised to remain an attractive hub for startups and giants alike.