United apparently set to move out of Elk Grove Township

Rolling Meadows authorities expressed disappointment Wednesday that UAL Corp.'s United Airlines has reached an agreement to move its Elk Grove Township operations center to Willis Tower in downtown Chicago.

The decision indicates the airline has decided against other suburban locations it considered, including Rolling Meadows.

United told the Daily Herald two weeks ago that it was reviewing locations throughout the Chicago area and it had informed employees it was looking for new facilities that would, in the words of a spokeswoman, "provide an improved work environment for our people and help us to reduce costs."

Rolling Meadows Mayor Ken Nelson said Wednesday that United officials looked at two sites in his city: Continental Towers, 1701 Golf Road, and the Atrium office center, on Golf Road just east of Route 53. Neither site is vacant, but both have open space, Nelson said.

"I'm disappointed, but pleased to know we were in the running," he said. "That speaks well of Rolling Meadows. From what I understand, Chicago offered them some incentives that we couldn't come close to matching."

Officials at the city of Chicago said it has pulled together an incentive package that includes a TIF, grants and job training. So United can move its operation center into roughly 450,000 square feet inside the Willis Tower. An announcement is expected Thursday.

United spokeswoman Megan McCarthy Thursday declined to comment about the deal.

United officials also haven't told Rolling Meadows they're out of the running, Nelson added.

The struggling United has been looking at various streamlining measures, including this move. United announced in July 2006 that it would take a long-term lease and move its corporate functions into a new headquarters on Wacker Drive by early 2007 with 350 employees. Now, it has about 650 workers there, including senior managers, finance, legal, government affairs, communications and marketing, said McCarthy.

United owns the 55.9-acre, Elk Grove Township campus, which opened in December 1961. It offers about 1.7 million square feet of office space, but about 40 percent of it isn't being utilized, McCarthy said.

During the terrorism attacks in Sept. 11, 2001, the campus had a workforce of about 4,300, compared to its current 2,800.

This isn't the first time that United has considered moving out of Elk Grove Township. It considered moving its headquarters in 2001 to land adjacent to O'Hare International Airport. It also considered a two-story building near its headquarters to serve as its operational communications center, which would have controlled routing.

"It would take a significant investment for us to get the right technology and tools for our employees to do their jobs there," McCarthy said about Elk Grove.

In Mount Prospect, officials said they'll keep a close eye on the Elk Grove Township building when United employees move out.

"We're the only town that surrounds it," said Bill Cooney, Mount Prospect's director of community development. "If you look at a map, that area looks like a doughnut."

More than a decade ago, Mount Prospect officials talked about annexing the building into Mount Prospect, but United officials wanted no part of the deal. Being a part of Mount Prospect would cost the company an additional $500,000 a year in village and library taxes, Cooney said.

"And since the site is greater than 60 acres, it can't be forcibly annexed according to state law," he said.

With the depressed office rental market in downtown chicago, United could get quite a deal on rent, said Basili Alukos, analyst with Chicago-based Morningstar Inc.

"My guess would be the potential incentive savings cancel out any additional costs associated with the move, and the lower rent would be a net positive for United going forward," Alukos said.

Also the recruitment of talent, including younger workers, may be easier if its operations were all in the city, said Ian Savage, associate chair of economics and transportation at Northwestern University in Evanston.

"For younger people, working in the Loop is more attractive than Elk Grove Township," said Savage, "This could be part of their motivation to move. The city offers younger workers more if they want to go out to lunch or go out after work."

To create a new leaner and more determined corporate culture, such a move could be necessary for its many operations, said Joe Schwieterman, director of the Chaddick Institute for Metropolitan Development at DePaul University.

"A smaller workforce with top talent needs a downtown location," Schwieterman said. "Recruiting can be difficult for a 1960's era corporate campus, like in Elk Grove. It's almost a throwback to a slower-paced aviation era when operations were different."

While United could gain more prestige with a setting in downtown Chicago, it could be giving up flexibility, Schwieterman said.

"The suburban campus has a lot of flexibility, especially during a crisis," he said. "Employees can come and go all night long to keep the airline operating. But try that downtown. You have to fight traffic and pay for parking. And try leaving downtown Chicago at 3 a.m. if you don't drive."