Motorola and the Merchandise Mart have more than 160 years of local history between them. Now the two institutions are giving Chicago's burgeoning high-tech scene a major boost.
Smartphone-maker Motorola Mobility is moving its headquarters from Libertyville to the Merchandise Mart in summer 2013. The relocation will bring 3,000 employees to downtown Chicago, the company and Mayor Rahm Emanuel announced Thursday.
About two-thirds of the workers are engineers. Motorola Mobility, which was acquired by Google Inc. for $12.9 billion in May, will invest $300 million in the move. This figure includes rent on a 15-year lease for nearly 600,000 square feet encompassing the top four floors and rooftop of the world's largest commercial building.
"We think we can create a place where the best and brightest, whether they are already working (in the) industry or coming out of school, and who want to work in technology and who are from the Midwest, can go and have a career and create a product that millions of people can use," Motorola Mobility Chief Executive Dennis Woodside told the Tribune on Thursday.
Motorola Mobility is jumping into a blossoming startup community in Chicago's River North neighborhood, joining a growing number of entrepreneurs building Web and mobile technology. The city and the company are betting that Motorola Mobility's new presence will invigorate the local high-tech sector with fresh talent and the expertise of an established industry player.
Many of the city's technology players have long sought to make Chicago a nationally recognized, top-tier innovation hub. With Motorola Mobility and its thousands of employees, the city might be a little closer to that goal.
"We've never had a place where all the intellectual capital can come and be generated, and that's what's going to happen, both at the Merchandise Mart and with Google/Motorola's presence," Emanuel told the Tribune. "It will be a game-changer for that capacity."
Motorola Mobility's move is a significant milestone for River North, a neighborhood that began attracting tech companies more than a decade ago and is a hotbed of startup activity.
This year, 1871, a collaborative workspace for digital entrepreneurs that has financial backing from local technology investor J.B. Pritzker and the state of Illinois, opened at the Mart. Several venture capital firms and universities have offices in 1871, which hosts networking events and seminars. At 600 W. Chicago Ave., the former Montgomery Ward catalog building is the site of Groupon Inc. headquarters, and venture capital firm Lightbank and its portfolio companies.
"You look around the country at startup ecosystems and they're clustered around big companies, medium-size companies and small companies," said Kevin Willer, president of the Chicagoland Entrepreneurial Center, which runs 1871. "Right now in River North, from Groupon and Lightbank in 600 West Chicago down to the Mart and a lot of places in between, you've got startups and all sorts of companies in the (industry) working in the same neighborhood. It's a cluster of innovation."
The neighborhood's access to public transit and bike lanes are also attractive to the typical startup employee, who tends to be young and urban-dwelling.
Take Jeremy Smith, for example. The 25-year-old worked in Motorola Mobility's finance department for several years, commuting to Libertyville first from Skokie and then from Chicago's Bucktown neighborhood, before launching a startup called SpotHero with a friend in 2010. The company, which lets drivers reserve and prepay for Chicago parking, is one of 10 companies selected for this year's Excelerate Labs, a startup incubator program based at 1871.
"You're in a place where you've got like-minded people who are all interested in technology working on their own products, but you're leveraging the resources and experience that they have," said Smith, who has traded an hour-plus car commute for a 20-minute ride on his bike. "When we ... have bumps in the road, all we have to do is ping someone next door and say, 'Hey, how does this work?' "
The startups at 1871 and in the surrounding area will have a new neighbor that brings not just global experience and networking opportunities but the potential for partnering with or even acquiring smaller companies.
Ryan Leavitt, president of Catapult, a collaborative workspace for startups that opened in River North last year, said he has seen more large companies lend their support to entrepreneurs in recent years. Catapult, which houses 14 startups, has several corporate sponsors and works out of space provided free of charge by Foley & Lardner LLP.
"To have more (firms) ... with great experience building technology companies in the Chicago area is a great asset to have, as well as the fact that we have exposure to them without a one-and-a-half-hour drive," Leavitt said.
The boon to Chicago is a blow for Libertyville, and Motorola Mobility's relocation might stoke tensions between the suburbs and the city as they compete for high-value jobs. The city did not provide financial incentives for the move, although the company has already received incentives to remain in Illinois.
Woodside, who will divide his time between Chicago and Sunnyvale, Calif., where many members of Google's senior leadership are based, said Google "will work with Lake County and the city of Libertyville to figure out a good use for that space."
Motorola Mobility will be building engineering labs in its new facilities. It will also be the first tenant to occupy the rooftop, said Mark Falanga, president of MMPI, the real estate management firm that owns the Merchandise Mart. Falanga said the building has sought tenants that represent cutting-edge creative fields to complement the existing mix of design firms. This search has brought in digital advertising firms, 1871 and now Motorola Mobility.
"River North has had a great history in transitioning from a manufacturing base to a creative base, and I think we'll continue to see an evolution," Falanga said. "We'll see another 3,000 employees coming into the neighborhood who are going to drive tremendous economic impact to Chicago and the River North neighborhood. These are people who are on the cutting edge of technology."