Trading Firms Make Contrarian Bets on Downtown Chicago Offices

Chicago’s top trading firms are questioning their commitment to the city in the face of proposed taxes and rising crime. That’s not stopping some of them expanding their footprint.

(Bloomberg) — Chicago’s top trading firms are questioning their commitment to the city in the face of proposed taxes and rising crime. That’s not stopping some of them expanding their footprint.

Optiver, a market maker employing about 400 people in the city, has just moved into One Prudential Plaza in downtown Chicago. The space — a third bigger than its previous office — can house as many as 600 people, allowing the Dutch firm to grow and host 70 interns in the city every year.

“Chicago definitely has challenges,” said Rutger Brinkhuis, Optiver US’s chief executive officer. “But it is still one of the biggest cities in the country, which means it’s a huge magnet for the young graduate talent that we mainly hire into the firm.”

While corporate downsizing has left parts of the downtown hollowed out, volatile markets have boosted activity and fueled a desire for bigger leases. DRW Holdings, owned by Chicago billionaire Don Wilson, expanded last year, according to Jones Lang LaSalle Inc., while Chicago Trading Company and IMC Trading are also taking more space.

Trading firms currently occupy more than 3.5 million square feet in the city, equivalent to 60 football fields. In the past three years, they’ve added about 700,000 square feet, and that doesn’t include the trading divisions of large banks such as JPMorgan Chase & Co.

Chicago has benefited from having CME Group Inc., the world’s largest futures exchange, and options giant Cboe Global Markets Inc., said Matt Carolan, who co-leads a team of real estate brokers at JLL. When trading moved to electronic screens and the city’s infamous pits closed, many employees started their own firms.

“Having all those exchanges here in Chicago attracted a wealth of talent,” he said. “They have continued to make Chicago their home, which has been nothing but a benefit for all of us here.”

Those bonds have weakened recently. Ken Griffin’s Citadel quit the city last year for Miami, citing out-of-control crime and fiscal problems. In April, the city elected progressive Brandon Johnson as mayor and he’s already facing a budget gap of more than $500 million. 

His administration has proposed new levies, including higher real estate transfer taxes and a financial transaction tax, prompting a reaction from Chicago’s trading community to push their case to the city. 

Read more: Trillion-Dollar Industry Powering Chicago at Risk of Leaving (1)

Their argument is simple — the derivatives industry currently employs some 59,100 people in Illinois, the majority in Chicago. Employment grew 17% over the past decade, outpacing the state’s overall growth of 5.9% in the period, according to the US Labor Bureau of Statistics.

While Chicago’s economy is well-diversified, trading is a key part and firms need to work hard to ensure that “the people who run the city keep a strong level of engagement with the trading community,” Brinkhuis said.

Finance has also led a push for workers to return to the office. In Chicago, offices are just 53% full, according to security firm Kastle Systems. 

Optiver, which has taken 100,000 square feet across two floors, is adding incentives for its employees, including a kitchen offering free sirloin and salmon burgers to local beers. 

It also wants to keep growing in the city with plans to add another 100 people within three years, according to Brinkhuis. 

“As for Chicago, it is such a major city — it has the history and deep grounds into the trading industry,” he said. “It’s just important to be part of that ecosystem.”

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