Even on a bright day in the middle of a work week, downtown Chicago can’t shake the gloom.
Prime corners in many places are vacant, and the surviving restaurants, if they are smart, have window or sidewalk signs declaring themselves open. Apart from the commute or lunch rush, any day can seem like a drowsy Sunday from before the pandemic hit, now three years ago.
The companies are in a “long COVID” battle for themselves. Some have changed hours and competitive approaches. But few who run them are sure of the rhythms of the city life they depended on. Although the pandemic has receded as a health threat, it has had a lasting effect on where people want to work and therefore spend.
For Atlas Stationers, a family-run business in the Loop that dates back to 1939, new thinking had to happen in a short time. When the shutdown happened in March 2020 – three years ago this week – a business that serviced fully staffed offices around it found its income down to zero overnight. So President Don Schmidt, with the persuasion of sons Brian and Brendan, implemented a plan.
The store is still at 227 W. Lake St., but visitors who haven’t been there in a while will do a double-take. They may remember the old look – stacked to the ceiling with notebooks and accordion files like a storage room for office supplies. It now glitters like a jewelry store, but not to show off rings and watches. Fancy fountain pens and stationery are on display.
They form the core of Atlas’ new business, 75% of which consists of online orders shipped across the U.S. The store’s active social media presence encouraged interest in old-fashioned pen-and-paper writing that emerged as people with time at home took up hobbies, said the Schmidts.
Don Schmidt said it took a year for Atlas to reach its pre-pandemic revenues. Now it does three times as much business and has added five employees in recent weeks, bringing its total workforce to 16. “I think that total is a peak for us,” Schmidt said.
The store itself has been redesigned to put fewer items on lower shelves with more attractive displays, catering to tourists and walk-ins who discovered their niche online.
“Saturdays have become our busiest day,” and the family looks forward to warmer weather bringing people to the Riverwalk near the store, Schmidt said.
He said the online presence makes even first-time visitors feel like they know the place. A sense of welcome and certain in-store events can help retailers survive, Schmidt believes. At Atlas, in the middle of valuable floor space, is a table where people can test pens and some of the store’s 600-plus ink colors, and Schmidt said people love it.
He has been able to track downtown’s comeback and how it differs from other areas. “You look at Fulton Market. That place rocks. It’s packed,” mostly younger people who work from home, Schmidt said. “But the loop itself, it’s better. It was empty, but it is stable now.”
Like other merchants, Schmidt believes the old habit of five days in the office is gone. “I think Monday, Friday [office visits] may be in doubt for the foreseeable future, he said.
Similarly, Mike Flanagan, chief growth officer at Chicago-based Arch Amenities Group, has seen opportunities out of the pandemic, but knows the risks are great. His company is a private equity-backed firm that has acquired weaker competitors in managing gyms, salons, coffee shops and other services for office owners and hotels. There are even bowling alleys and virtual golf simulators set up.
It has more than 400 locations around the country, including 52 in Chicago and another 10 in the suburbs. Flanagan said Chicago’s downtown recovery is ahead of those in San Francisco, Portland and Seattle. But while office owners think about how to make buildings more enjoyable to draw users back, some are slow to commit to expensive work.
“What used to be a four- to eight-month decision-making process has become two years,” he said. As a result, Arch has laid off a few workers.
Flanagan said improving facilities could cost a building between $25 million and $30 million. Often, office building owners face a costly conversation about converting ground-floor space that typically commands high rents into a tenant offering, he said.
Weekly data from Kastle Systems, which tracks the comings and goings of buildings where they have security equipment, has shown that as of late January, about 50% of downtown Chicago office workers were in the room daily. The share has increased only slightly in recent months, marking a recovery that Michael Edwards, head of the Chicago Loop Alliance, has called “excruciatingly slow.”
A key component of downtown life, the hotels, have fared better and expect more bookings as convention business picks up throughout the year. With tourism this summer also expected to improve, hotels are slowly increasing their average rates, according to data from research firm STR provided by the Illinois Hotel & Lodging Association.
But things may not return to pre-pandemic normalcy for at least two more years, said Michael Jacobson, the association’s president and CEO.
Broader measures of the economy show its resilience and the stabilizing effect of federal government assistance. They also show that a job, even if it is a job from home, is still a job. The state government’s annual count of private sector employment found that through March 2022, there had been little overall change in the number of jobs in Chicago’s central area since 2019, the last full year before the pandemic.
Overall, Chicago is still slightly below its pre-pandemic record of 1.2 million private sector jobs in 2019, the data show.
Other research from the labor-backed Illinois Economic Policy Institute covering job growth or decline through 2021 showed that most of the post-pandemic gains were in high-paying outsourced occupations in such areas as management and financial services. The occupations that fell the most included administrative support roles as well as in restaurants and similar food services, all jobs related to being in a location.
Meanwhile, while some business leaders are pushing for at least a part-time return to office work, many employees resist and still choose a couch over a workstation. It may not matter if the office has free pizza. Preference for telecommuting may even benefit suburban office buildings, where brokers report an increase in leasing activity as companies tempt workers with shorter commutes.
Whether more downtown workers return may depend on concerns about crime, said Schmidt of Atlas Stationers. He said that during the unrest following the police killing of George Floyd, the store’s windows were broken, but nothing was taken. A WBEZ survey found that riders cited crime, unreliable service and dirt as reasons for not using the CTA more often.
To revitalize downtown, “it comes down to crime and taxes,” Arch Amenities’ Flanagan said.
Schmidt and Flanagan both favor city-led efforts to bring more housing downtown, such as with a program to offer developers incentives to improve the La Salle Street corridor. It may require outdated office layouts of the market, but requires expensive renovations. But there is no rah-rah in their view, just realism.
“I don’t think the city has an alternative,” Schmidt said.