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Chicago Mayor Emanuel’s exit creates a marketing challenge

Rahm Emanuel was perhaps the best salesman Chicago has ever had, which is going to make him a very hard act to follow as mayor when it comes to keeping up the city’s reputation as a desirable place to do business.

Since he took office in 2011, Chicago has landed over 50 headquarters, as Emanuel never fails to mention when he welcomes another business to the city. Chicago, as Emanuel also reminds his audiences, has been the nation’s top metro area for corporate relocations for five years running. Downtown’s workforce has jumped 24 percent to 565,000.

“Rahm was a superstar mayor who brought the role of economic development into his office,” says John Boyd, a principal at a location-consulting firm in Princeton, N.J., named Boyd.

“He put his personal stamp and star power behind Chicago’s economic development efforts.”

Like his predecessor, Richard M. Daley, Emanuel had a clear vision of Chicago as one of an elite set of global cities: the major corporate and financial centers with the talent, connectivity, intellectual capital and physical infrastructure to continue to thrive.

The reasons for Emanuel’s surprise announcement that he’s not running for re-election will come into focus in due time. But the impact is clear now. With several major deals on the line, there is worry. How much it’s justified remains to be seen.

Emanuel was as enthusiastic a pitchman for Chicago as Daley, which is saying something. But after years as a national Democratic fundraiser, Emanuel had access to CEOs across the country, if not around the world. That included tech chiefs like Amazon’s Jeff Bezos, Salesforce’s Marc Benioff and Google’s Eric Schmidt. When word broke a year ago that Amazon was looking for a second headquarters, Emanuel already had been working on Bezos.

“He understood he had access to the tech community at a level very few people have,” says Howard Tullman, a veteran tech entrepreneur and avid watcher of Chicago politics who traveled with Emanuel overseas on recruiting trips. “He used that great advantage. The biggest loss (in Emanuel’s decision to leave office) is he had an international reputation. You saw this in Japan, China. People wanted to meet and work with him because of his stature. He had the ability to talk about national and global politics.”

Emanuel also put CEOs at ease, and it showed in the parade of companies that moved their headquarters to downtown Chicago from other countries, other states, downstate Illinois and the suburbs during his two terms. The list includes Motorola, Archer Daniels Midland, GE Healthcare, Conagra, McDonald’s, Beam Suntory and Kraft Heinz. Though they’re not ribbon-cutting full-fledged HQs, Walgreens Boots Alliance, Google and Facebook are staffing up significantly downtown, too.

“Businesses want to know the mayor and the administration understand the private sector—that they don’t view it as an enemy,” says Steve Koch, a former investment banker who was Emanuel’s point person on economic development for five years as deputy mayor. “The private sector really wants to know the mayor is committed to fiscal responsibility. They want to know the city has a vision for the future. Rahm was extraordinary at that. He’s an unbelievable bundle of energy. With his commitment to (what companies care about), you were already 75 percent there.”

That’s why there is plenty of concern around town right now. Chicago is chasing Amazon’s HQ2 project and its promise of up to 50,000 well-paying jobs. It’s also in the late stages of negotiating a deal with Salesforce to anchor a new office tower downtown and add up to 5,000 jobs to the 1,000 already here. Ditto for Google, which recently topped 1,000 employees at its West Loop office.

Will Emanuel’s decision change the calculus of any of those deals? “Companies can walk and chew gum at the same time, and they realize politics is fluid,” says Boyd, the location consultant. “There is no mayor or governor for life.”

‘PEOPLE HAVE TO HAVE CONFIDENCE’

As for Amazon, Emanuel himself says he can’t say if it will now look elsewhere. “I can only say this,” he adds. “People have to have confidence in the public sector” to deliver on the economic plan.

The project that seems most likely at risk is the downtown-to-O’Hare express train. Emanuel hit it off with Elon Musk, whose Boring Co. proposed tunneling between the two destinations and then whisking passengers back or forth in 20 minutes. Musk has plenty of bigger issues in front of him at Tesla these days. Emanuel was the O’Hare project’s main patron. Emanuel says he still believes in the idea and that his administration expects to complete negotiations and present a contract to the City Council this year.

Beyond the big out-of-town deals, Emanuel was a champion of the Chicago tech scene, especially startups. While he loved to announce jobs, pushing companies to make commitments that made easy headlines, there’s no mistaking that the mayor was interested in tech companies. “You want to be in a city that has tech as one of its top priorities, because it helps attract and retain talent,” says Kelly Manthey, CEO of Solstice, a software development and consulting firm that Emanuel recently toured. “He was really an evangelist.”

That’s because Emanuel knew tech was the fastest-growing sector of the economy, especially during the post-recession doldrums Chicago was in when he took office. “His strategy as mayor was the city has to grow our way out of this,” Tullman says. “You only do it by growing revenue and opportunity. Tech offers that.”

Emanuel’s departure comes as a group led by former Commerce Secretary Penny Pritzker and software entrepreneur Chris Gladwin is working on a blueprint for how Chicago can improve its stature as one of the nation’s top tech cities. The effort, which involves more than 200 business leaders, isn’t dependent on City Hall. But it’s hard to imagine a mayor more receptive to whatever ideas they come up with than Emanuel.

His departure also adds further questions to the Discovery Partners Institute, Gov. Bruce Rauner’s plan to build a research and classroom facility that would provide a physical presence in Chicago for the engineering program at the University of Illinois at Urbana-Champaign. With Rauner’s re-election in doubt, backers of the $1 billion-plus DPI were quick to point out the project could still have a future without the governor because Emanuel wants it, too. Though J.B. Pritzker might also push it ahead if he becomes governor, it’s hard to see how such an ambitious undertaking gets done if both Rauner and Emanuel leave office, particularly because its fate rests in large part on private donors.

The real worry is whether Emanuel’s departure means Chicago will elect a mayor and City Council members who are more in tune with the wave of populism that surfaced four years ago, when Emanuel ended up in a runoff with Jesus “Chuy” Garcia—a force that has since gotten stronger. As the economic divide grows wider, Amazon and other tech companies have become targets in San Francisco, Seattle and Washington, D.C. Emanuel’s departure may be less worrisome to them than the uncertainty of what lies ahead.

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