Merchandise Mart in Chicago Attracts Tech Start-Ups

The following is an excerpt from an article in:


The New York Times
Wednesday, September 26, 2012

Merchandise Mart in Chicago Attracts Tech Start-Ups

By ERIN CHAN DING

CHICAGO — Once a dormant area of empty warehouses, the River North section of Chicago has evolved into a nexus of dining, night life and, most recently, an aspiring rival to Silicon Valley. Its 45 square blocks are home to the headquarters of Groupon, the Chicago offices of Google and several hundred technology start-ups.

Now River North’s digital transformation is extending to one of the neighborhood’s most storied — and decidedly low-tech — commercial addresses. The Merchandise Mart, a Depression-era behemoth of limestone, concrete and steel that has long been synonymous with fabric bolts and furniture, is becoming a destination for the city’s digital set.

“River North as an area has become very tech-savvy and very tech-cool,” said Todd O’Hara, founder and chief executive of Toodalu, an app-building start-up that moved into the building this year. “The Merchandise Mart is definitely kind of the pinnacle of all of it because of everyone coming in.”

The biggest newcomer, Motorola Mobility, plans to relocate its headquarters from the suburb of Libertyville to four floors of the mart next year, as well as take up a big chunk of the building’s roof space for entertaining and group events.

It is the third major technology company to sign a lease with the mart since December, and 175 or so small tech businesses like Toodalu sublet space.

With the Motorola Mobility lease — 632,000 square feet in all — the tech sector will occupy about half of the building’s office space, said Mark Falanga, the president of Merchandise Mart Properties, which owns and manages the building and is a division of Vornado Realty Trust of New York.

Before Motorola Mobility announced its move, about 65 percent of the 25-story building was devoted to wholesale showrooms and office space for the furnishings industry — or was vacant. Like similar locations across the country, the Merchandise Mart has lost some of its traditional tenants to the recession and sluggish recovery, as well as to the Web.

When Motorola Mobility moves in, the building will be 95 percent occupied, up from 85 percent, the lowest occupancy rate in a decade. About 55 percent of the building will still be dedicated to showrooms.

“This is an opportunity for refreshing,” said Holly Hunt, who has operated a furniture showroom in the mart for nearly three decades and welcomes the building’s tech renaissance. “I’m hoping it’s making us feel alive again.”

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