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Moto Mobility's Mart Move Creates a New Tech Hotspot in Chicago

Google's plan to move Motorola Mobility Inc. from the suburbs into the city's largest office building cements the River North neighborhood as the center of a tech scene that has been gathering momentum for a decade.

July 31, 2012
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Google "Chicago" and "tech," and you'll find the Merchandise Mart.

The search-engine giant's plan to move Motorola Mobility Inc. from the suburbs into Chicago's largest office building cements the city's River North neighborhood as the center of a tech scene that has been gathering momentum for a decade. Built by Marshall Field in 1930 and owned by the Kennedy family from 1945 to 1998, the hulking, 4.2-million-square-foot building has for generations symbolized the city's role as showroom to the world. Now it's a playground for techies.

Google Inc. is moving the region's most recognized consumer tech brand, Motorola Mobility, from Libertyville, Illinois into 572,000 square feet on the top four floors of the Mart.

With 3,000 workers, two-thirds of whom are highly paid engineers, it will be the city's largest concentration of tech jobs. And it's the largest migration of jobs in the generation since Sears Roebuck & Co. left its namesake tower in the West Loop.

"It sets a hard anchor for technology in River North," says J.B. Pritzker, founder of Chicago investment fund New World Ventures, a longtime promoter of the city's tech industry, and an instrumental player in creating 1871, a tech startup center that opened in the Mart in May. "A whole bunch of (potential startup) founders just moved into the Mart. It accelerates the ability of the city to turn its tech community into an equal to other industries that already are important to the economy of Chicago."

Moto's move, slated to take place next year, also "improves the profile of Chicago," Pritzker says. "Motorola brings in partners from all over the world. They're going to be coming downtown to a hub of technology, not someplace that's just a dot on the map outside the city. It does send a signal to other tech companies that they ought to be in the hub of tech activity."

The Mart provides both a symbolic and very real bookend to River North's other big tech hub: 600 W. Chicago Ave., the massive former Montgomery Ward catalog building that is now home to investors Eric Lefkofsky and Brad Keywell and various tech companies they've launched, including Groupon Inc., InnerWorkings Inc., Echo Global Logistics Inc. and their venture fund, Lightbank.

In between are dozens of other startups that have landed millions in venture capital, including Sittercity Inc., BrightTag Inc., Trunk Club, Edo Interactive Inc. and Viewpoints Network LLC. Mountain View, California-based Google also employs more than 400 sales and engineering staff in the neighborhood who won't be moving to the Mart. All together, tech companies will employ well over 5,000 in River North.

"This is a sign of what has to happen in the city," says Austan Goolsbee, a University of Chicago economist and former White House adviser. "The Merchandise Mart is associated with things you put in your house. With people building fewer houses, we've got to shift our economy's focus away from housing to other things like tech."

Google adds gravity and gravitas, what Mayor Rahm Emanuel calls "centrifugal force." He's hoping for the same impact seen in other cities. In the past decade, the company's New York staff grew to more than 3,000 from 30, says Dennis Woodside, a Google exec who now heads Motorola Mobility.

"A number of folks who left started companies right next door," he said. "There are 30 to 40 startups within a five-block radius of Google HQ."

The search-engine giant made a mark on the New York landscape the way it's now doing in Chicago. It paid $1.77 billion for the former Port Authority headquarters, an enormous 3 million square feet spread across a full city block, though Google occupies about 550,000 square feet.

Google didn't buy the Mart, but its 15-year lease puts an exclamation point on a shift that has been under way at the building, owned by New York-based Vornado Realty Trust. About 40 percent of the Mart is office space, most of which is leased by tech tenants such as 1871, which occupies 50,000 square feet, or advertising companies such as Publicis Groupe S.A., which has 200,000 square feet. But Mark Falanga, president of Merchandise Mart Properties Inc., says showrooms aren't going away. "We've always had that balance of showroom and office space in the building."

Both techies and designers crave the massive, wide-open floorplates of the Mart. While the lower floors feature glitzy showrooms for high-end faucets, fixtures and furnishings, Google will have upper floors. Tech companies pay little attention to aesthetics and favor concrete and open ceilings for computer cable, with creature comforts that include caffeine, food and Wi-Fi.

With an el stop attached to the building, it's easy to reach for workers and customers. The Mart, which once had its own ZIP code, also has a bank and restaurants.

"It's got everything," says Howard Tullman, CEO of Tribeca Flashpoint Academy, a technology school that's moving out of the building to make way for Google. He sees the Mart as a powerful catalyst. "There's an area called Shoreditch in London with something like 600 startups. The buzz is electric. We should be that lucky to have River North become a tech hub for advertising agencies, tech companies and startups of every kind."

Filed by John Pletz of Crain's Chicago Business, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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