Rare example of a corporate return to the city: Sherwin-Williams and Cleveland

So reports the Cleveland Plain Dealer, "The return of Sherwin-Williams’ workers may revive downtown Cleveland — but not without resistance."

Companies did move back to the city.  While there was a trend of corporations that had moved to the suburbs moving back to the city--examples like Compuware and Rocket Mortgage in Detroit, and Panasonic to Newark, it wasn't universal.

I had hoped DC had a shot with this, and companies like AES, Nestle, and Hilton, but it wasn't to be.  

Remember, MCI was based in DC for a long time, mostly because of accessibility to its regulator, the FCC, and all the cases it brought to open long distance telecommunications to competition.

-- "Could bringing premier regionally headquartered business enterprises to the Pennsylvania Avenue Corridor be key to its renewal and revitalization?" (2015)
-- "Do tax incentives pay off? : Illinois; Tennessee; Rosslyn + "The Airport Access Factor"" (2017)

And corporations left legacy cities for the South.  Plenty of corporations moved out of legacy regions altogether to the South, especially Atlanta and Texas ("Next Phase of Clustering of Business away from the Midwest"). 

For example, while Panasonic was moving to Newark ("A lesson that seeing is believing: Panasonic's new building in Newark, NJ as an example, positive and negative, in businesses coming back to the city center"), Mercedes-Benz moved their headquarters from New Jersey to Atlanta, leveraging the naming rights they've paid for the Atlanta Falcons football team.

Companies continue to leave smaller cities.  Like Caterpillar from Peoria to the Chicago suburbs and then to Texas ("Caterpillar to move headquarters to Texas, marking second major corporate departure from Illinois in 6 weeks," Chicago Tribune), and Winston-Salem ("Smaller cities lose out when it comes to business consolidation and headquarters relocation: WInston-Salem, North Carolina").  

A big concern is airport access and size, needing convenient connections to multiple places from a close by airport.  Plus, as manufacturing shifts South, eventually, so do companies 

Car versus transit accessibility.  Or companies choosing locations for branches, like State Farm in Dallas and Atlanta, they chose based on freeway access, unlike the quest by Amazon HQ2 made transit accessibility a major criterion ("Amazon's HQ2 Hunt Is a Transit Reckoning," Bloomberg) .

CEOs move to get away from progressive taxation and politics.  And corporations like those owned by Ken Griffin ("Ken Griffin poised to pay extra $1.4M in taxes for NYC properties thanks to Mamdani’s pied-à-terre tax: report," New York Post) and Starbucks ("Is Starbucks breaking up with Seattle?," Seattle Times) continue the trend of companies moving out of cities where they believe the regulatory environment is unfavorable.  

Griffin doesn't want to pay extra tax on his $238 million condo in NYC, after leaving Chicago because of its crime ("Billionaire Ken Griffin says Citadel’s Chicago exodus was ‘not hard,’ cites crime, taxes," Fox").  Starbucks isn't happy with Seattle City Council's passage of an employment tax.

Corporate consolidation.  There is still the issue of corporate consolidation cutting businesses, like banks and railroads.

And aging buildings.  A counter-force to in city location is aging building stock.  As buildings age companies don't want to pay the high renovation cost, so they move to new facilities, often in the suburbs where the company can spread out, on a campus ("Dallas Is Booming—Except for Its Downtown," Wall Street Journal).  From the article:

This city is a hotbed for commercial property. The metro area’s population is booming and financial-services firms are flocking here, earning the area the sobriquet “Y’all Street.” Yet at its heart is one of the country’s worst-hit central business districts: Downtown Dallas.

Companies are abandoning this neighborhood and its aging office towers. They are heading to the Uptown district or the thriving suburbs, often over concerns about crime and homelessness. Left behind are defaulted loans, foreclosures and deeply discounted property sales.

Plus new buildings generally are outfitted with the kinds of amenities that younger employees seek ("10 Must-Have Commercial Building Amenities That Attract (and Keep) Top Tenants," Fooda).

Cleveland.  Has a new corporate headquarters with a worker mandate to work in the office every day.  The addition is a boon after the recent closure of the Downtown Heinen's Supermarket (" Farmers market replaces Heinen’s in Cleveland," Supermarket News).  But it comes with costs.

... Sherwin-Williams has opened its new roughly 1-million-square-foot headquarters near Public Square, requiring office employees to show up in person five days a week.

For the city, that is welcome news. The deal was written to protect jobs and taxes. And the return of so many workers has become something bigger: the spark city officials and business leaders hope will finally bring a pandemic-battered downtown back to life.

For many of those workers, however, it feels like a loss. The return-to-office mandate ended a hybrid arrangement many had built their lives around. They arranged child care, bought homes and reshaped their daily routines around working remotely — and now that flexibility is gone.

The result is a 36-story tower standing at the intersection of three competing interests: a company’s push for in-person collaboration, a city’s fight to bring downtown back to life and a workforce that had reorganized life around working from home.

In any case, in recent times, it's a win for legacy cities, and "the Rust Belt."

Where should cities focus their economic development resources?  However, some economists make the point that cities do better when building up and developing smaller businesses, than focusing on large corporations who may stay just a short time ("How U.S. Cities Lost the Economic Development Plot," CommonEdge).  I call this the difference between "building a local economy" and traditional "Economic Development."

I suppose I come down in the middle.  Some companies seem to be worth recruiting, like Amazon HQ2, although post covid it hasn't worked out as well.  High paying jobs, reasonable amounts of subsidy, secondary development, e.g., with Amazon HQ2, that's seeded a Virginia Tech campus.

But as pointed out in the aftermath of the closure of the Pfizer research lab in Ann Arbor, and the number of companies that developed out of it, that many small companies rather than one big one reduces risk for the local economy ("How the closure of a Pfizer research center in Ann Arbor, Michigan led to the development of a more robust and independent biotech sector").

Doubles and triples, especially in a stage of the US economy that is focused on smaller companies, rather than the big corporations of past decades.  E.g., big GE is now three smaller companies with others sold off.  Same with Honeywell.  Large corporations of the old days are smaller or non existent today.

Goldman Sachs is building a new campus for more than 5,000 employees in Dallas, its largest in the U.S. outside New York City. (Shelby Tauber/For The Washington Post)

This trend is furthered by how new technologies such as electrification of automobiles or AI make it easier for new entrants and harder for legacy companies ("Factors undergirding the decline of economic clusters").  

NYC under Mayor Bloomberg made a good move in funding the start of a new "technology and engineering higher education institution"--Cornell Tech--as a way for the city to stay relevant economically in the face of shrinkage of the financial industry among others ("Bankers are leaving Wall Street for ‘Y’all Street’," Washington Post).