Across the U.S., Fortune 500 companies are leaving their leafy office parks and moving back into cities. In Chicago, for instance, United Airlines (UAL), Archer Daniels Midland (ADM), Hillshire Brands (HSH) and General Electric’s (GE) Transportation unit are among the big businesses feeding an urban revival.
Is this a fad or a long-term trend?
This question was the focus of a “Future of Cities” panel that I moderated yesterday at an Economic Club of Chicago lunch. One of the panelists was my Fortune colleague Leigh Gallagher, who, besides co-chairing the Fortune Most Powerful Women Summit and Fortune’s new MPW Next Gen Summit, wrote a very wise book called The End of the Suburbs. With us on stage were the McKinsey Global Institute’s Jaana Remes, who has studied global megacities, and Mitchell Krebs, the CEO of Coeur Mining (CDE), which recently moved its headquarters from Coeur d’Alene, Idaho, to Chicago.
As these experts explain the flow of businesses and people back into cities, you have to believe that the phenomenon is here to stay.
It’s all about “access,” says Krebs, whose company is the largest U.S.-based primary silver producer and a major gold producer as well. Coeur owns mines from Alaska to Argentina, and sells into Europe and Asia, so it is a global company. “And we need to be in a global city,” says Krebs, whose new headquarters is right on Michigan Avenue. Sixty-five of his 80 employees there are new hires since the company relocated. And now that he’s in the big city, Krebs has better access to talent and more job applications coming in than ever before.
Practically all of those 65 new employees in Chicago are at either end of the age spectrum, notes the CEO. They are young, in their 20s, or empty nesters in their 60s. And they are, Krebs noticed, craving the very same thing: a sense of community.
“Many suburbs don’t provide that anymore,” says Gallagher, whose book describes the movement of wealth and investment from suburbs to cities.
People are also desperate for shorter commutes, she notes. “Millenials don’t like to drive, and they’re using more and more public transportation.”
Coeur chief Krebs calculated that he cut two full weeks off his annual travel schedule by gaining better access to a major airport, Chicago’s O’Hare.
Reflecting the trend, Chicago’s population is likely to reach 10 million by 2025, making it a global “megacity,” according to McKinsey. And what will sustain a megacity? “A great bone structure of infrastructure—public transportation, good education, and affordable housing that provides opportunity for everyone,” says McKinsey’s Remes.
Opportunity for everyone, not just the super-wealthy, is key. “Cities that start to decline do so because they can’t attract people, especially young people,” Reemes adds. “It’s the next generation who will matter.”