Big Companies Start to Leave the Suburbs

August 3, 2017

timrockOver the course of four decades, more than 80,000 people have learned how to become McDonald’s managers on the the leafy grounds of Hamburger University. The company long considered this 86-acre Oak Brook, Illinois, institution to be the perfect place to train employees while also attracting top-level executives. Then last year McDonald’s surprised staff by announcing the company would move its headquarters out of the suburbs and into the West Loop of Chicago.

Located near an “L” train stop and surrounded by high-rise construction, the fast food chain’s new hub couldn’t be more different than its previously sprawling campus. But despite the size and splendor of Hamburger University, its suburban location simply wasn’t appealing to the skilled tech workers that McDonald’s needs to attract in order to grow. These young workers largely prefer to live in densely populated areas with access to restaurants, nightlife and other urban amenities. With small communities like Oak Brook unable to offer these things, many companies have begun to leave the suburbs to set up shop within major cities.

Along with McDonald’s, the construction firm Caterpillar recently announced it would be leaving the small Illinois town of Peoria to move to Deerfield, located about 25 miles from Chicago. The decision shocked residents who had been expecting the company to start building a new headquarters in Peoria soon. “It was really hard. I mean, you know that $800 million headquarters translated into hundreds and hundreds of good construction jobs over a number of years,” said Peoria Mayor Jim Ardis. Caterpillar’s move highlights how relocating a corporate hub affects the community as a whole. Restaurants near the former headquarters will likely lose business while Peoria residents will also miss out on maintenance and subcontracting work. The trend is likely to continue, though, as companies like Aetna, Marriott, and General Electric plan to leave the suburbs behind within the next few years.

Questions:

  1. Why are companies like McDonald’s and Caterpillar leaving their longtime headquarters behind?
  2. What are the advantages and disadvantages of locating a company’s headquarters in a big city rather than the suburbs?

Source: Jonathan O’Connell, “As Companies Relocate to Big Cities, Suburban Towns Are Left Scrambling,” The Washington Post, July 16, 2017. Photo by Timrock.

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