Boeing Moving Headquarters to Chicago

Boeing selected downtown Chicago, Illinois, as the location for their world headquarters. Chicago was chosen over Dallas-Fort Worth and Denver. Upon arriving in Chicago, Boeing Chairman Phil Condit said, “We are here, not because we wanted to leave Seattle, but because we wanted to build a bigger, more capable Boeing Co. We believe that having our world headquarters separate from any one of our major businesses will help us to achieve our goals of growing this company.”

Boeing plans to begin operations in its new headquarters at 100 North Riverside Plaza in Chicago, along the west bank of the Chicago River, by Sept. 4. Boeing wants the move to its new home to occur by late summer, before the start of the school year, to facilitate employees with children. Chicago is home to a major Boeing customer, UAL Corp.'s United Airlines, though that was not a factor in the company’s selection decision. Boeing expects to have 500 workers in Chicago, with 300 or 400 of them relocating from Seattle and elsewhere.

Boeing will use the top 12 floors of the 36-story office tower, about 250,000 square feet of space. Boeing will pay a market-rate rent of US$20 per square foot in the first year. The rent will increase 3 percent a year, and the landlord will give Boeing a one-time payment of US$30 per square foot for the interior renovation of its new offices. Boeing’s lease runs through 2016. The total cost of the renovations is expected to be more than US$100 per square foot to bring the building up to Boeing's high-security and high-tech needs, and includes the addition of a small marina at the base of the riverfront building. The building, built in 1990, includes inside parking for 435 cars, a large portion of which will be reserved for Boeing. Boeing's modifications will not include adding a heliport to the building, as was considered at one point. Boeing will use helicopters to ferry its executives in and out of the downtown area, but the site of the heliport hasn't been determined. The office building was the former headquarters of salt company Morton International.

Illinois agreed to provide Boeing with up to US$41 million in tax breaks and various state grants over 20 years, while the city of Chicago offered an additional US$19 million in property-tax relief over a similar period and a US$2 million grant. The city has also promised to establish a downtown area heliport that can be used by to transport executives to and from the central city. The city also agreed to contribute US$1 million to retire the lease of the existing tenant in the space that Boeing will occupy. While the economic value is difficult to calculate some of the financial impacts will be immediate. Several hundred families will be buying or renting homes and then decorating them. Boeing's fleet of 20 corporate aircraft must be fueled and maintained in their new Chicago base at a local airport. In the longer term, the headquarters will draw people from other places to come here and do business. They will fly to Chicago, stay in hotels, eat in restaurants, and stay, up to several weeks, to negotiate deals.

Boeing, which ranks 15^th on the Fortune 500 list, has nearly 198,900 employees at various sites, in 26 states across the United States and overseas. The move is being made with the expectation of enabling all of the business units to operate more independently. The move to Chicago will separate its headquarters from its commercial jet unit, located in the Seattle region - where the company was founded in 1916, and now employs nearly 78,400 people. Boeing did not consider relocating to St. Louis or southern California, where the company has its Military and its Space & Communications units, respectively. Boeing manufactures satellites in El Segundo, Delta rockets in Huntington Beach, and the Sea Launch operations are headquartered in Long Beach, all in southern California.

None of Boeing’s major operations are planned to follow the headquarters to Illinois. Boeing has not yet announced where it will build the Joint Strike Fighter should it beat out rival Lockheed Martin for the initial Pentagon contract. Boeing has said it might build a new commercial jetliner, the proposed “Sonic Cruiser,” somewhere other than at its factories in the Seattle area. The company did send a letter to both Denver and Dallas saying it would consider locating future operations there. “In the future, we will often be looking at opportunities on where to place business activity. You can be assured that as these opportunities arise, we will be looking at [Denver/Dallas] very closely,” the letter said. Boeing has complained for years about long building permit delays, high property taxes and millions of dollars the company pays to fund new roads and schools when it expands in Washington state. Also, being in Seattle cost some executives as much as a month of travel time, annually.

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