Vol. 2 - A Tale of Two Neighborhoods, Part 1: The Loop

The Building Blocks Column | Volume 2
An exploration of the role of arts, culture and heritage in economic and community development; past, present and future

This is the first of two blogposts examining the economic and cultural impact of arts investment on two essential Chicago communities. The second post will focus on Bronzeville.

When Mayor Richard M. Daley took office in 1989, The Loop - Chicago’s central business district - was of utmost importance to the city’s economic and fiscal health. Throughout the 1960s and ‘70s, the manufacturing sector, which had been the heart of its economy and rapid growth since the 19th century, was in a rapid decline. Manufacturers were closing factories, downsizing or relocating to the suburbs or out of the region. Thousands of jobs, a great many of them union jobs, were disappearing. Between 1970 and 1996, Chicago lost more than 300,000 manufacturing jobs. In 1970, 48 percent of the industrial jobs in the greater metropolitan area were located within the city of Chicago; by 1996, the city’s share had dropped to 25% (American Prospect, 2002). And this downturn in the manufacturing sector was continuing to gain momentum as Daley took office.

By 1982, for the first time in its history, employment in Chicago’s service sector overtook employment in the manufacturing sector (Economic Perspectives, 1990). This was part of a national trend away from a manufacturing based economy and towards a services based economy. But while the decline of Chicago’s manufacturing sector outpaced the national decline, the growth of its service sector trailed the rest of the nation.

The Today Theater at W. Madison near Dearborn (originally the home of the Pasttime Theater)  was one of the  adult movie theaters that took over many of The Loops historic movie houses in the 1980s (Photo Credit: https://cinematreasures.org/theaters/1020)

The Loop had long served as the heart of Chicago’s financial and retail sectors. Its famous skyscrapers provided office space to thousands of business people and office workers, and the department stores along Main Street remained destinations for shoppers. But the Loop, like many central business districts across the country, was in a low ebb of its own. Pawn shops filled many of the stores along the El tracks, historic movie palaces now housed porno theaters. At 5pm, the Loop emptied out, as office workers worried about crime and lacking appealing cultural opportunities quickly departed for their home communities. If the services sector was going to make up for the hollowing out of the manufacturing sector, The Loop would need to become a more appealing place for businesses, workers, shoppers, tourists, and potential new residents.

The Pritzker Pavillion in Millenium Park. (Photo Credit: Chicago Architecture Center)

And so, Mayor Daley bet big on the cultural life of The Loop. The cornerstone of this investment was Millennium Park, which was and is Daley’s signature accomplishment. Daley also championed the creation of the North Loop Theater District. Daley secured agreements with private developers for the restoration of the historic Oriental, Bismark and Shubert Theaters. He was also a key player in the Goodman Theater’s move from the Art Institute, where it had been housed since its founding in 1922, to its current location at 170 N Dearborn on the the site of the original Selwyn, Harris and Woods theaters. The city contributed $18 million of the project’s total $46 million cost. I had a chance to interview Goodman Theater’s recently retired Executive Director Roche Schulfer for a grad school paper I wrote about the North Loop Theater District. According to Schulfer, Mayor Daley’s support was critical to the campaign’s success, “you know, from our perspective it was the mayor. It was the mayor. I know that because of the Mayor’s power, he was able to secure us support from corporations and foundations that we might not have received support from otherwise” (Schulfer interview, 2020).

Photo Credit: Goodman Theatre

Chicago’s investment in arts and cultural infrastructure in the Loop throughout the 90s and early 2000s transformed a business district that emptied at 5pm into a major cultural destination that attracts and retains businesses of all sizes, and draws visitors from throughout Chicagoland and around the world. There are 72 arts and cultural institutions and more than 250 cultural assets located in the Loop (Loop Alliance, 2019, p. 6). As Schulfer said, “if you took, I think it’s about 120 square blocks in downtown Chicago and look at the cultural activity taking place within that area you have the greatest concentration of world class cultural institutions within walking distance of one another of any place in the world” (Schulfer interview, 2020). 

Each year more that 1.6 million people engage with arts and cultural activities in the Loop, generating over $233 million of total economic impact and creating nearly 6,000 full time equivalent jobs in the arts and entertainment industry (Loop Alliance, 2019, p. 3). Indirect and induced economic impact of arts and cultural institutions in the Loop includes “$113.5 million in Loop restaurant revenue, $81.3 million in Loop real estate revenue, $78 million in hotel revenue, $63 million in Loop retail sales, $43 million in transportation and parking revenue and $40 million in tax revenue ($34 million for the State of Illinois and $6 million for the City of Chicago)” (Loop Alliance, 2019, p. 7).

And the economic impact of this investment has spread beyond the Loop. River North, Fulton Market and the South Loop have all seen tremendous levels of development, new businesses, job growth and population expansion as the area in and around the Loop have become a major cultural destination.

Today, The Loop faces a new crisis with the post-Covid shift in our work patterns. Knowledge workers want to maintain the flexibility to work remotely. Many employers have tried to coerce workers into returning to work in person. Nonetheless, a large portion of office workers and other professionals now work from home at least a couple of days each week. Many companies have shuttered or significantly reduced the footprint of their offices. The vacancy rate for office space in The Loop has increased each year from 2020 - 2024, rising to a vacancy rate over 25% (Chicago Agent Magazine, 2024). Retail vacancy rates have also hit record highs in The Loop, as businesses that barely survived the pandemic have been unable to survive the now lower levels of foot traffic from office workers and other commuters (Loop Chicago, 2003).

In response to this crisis, the Lightfoot administration launched the LaSalle Corridor Revitalization Plan in 2022. To date, the City has invested over $750M (including more than $250M in TIF funding) to convert 1.6 million square feet of vacant office space into 1,400 mixed-income housing units. The City also created a $5M grant program that would award up to $250,000 each to businesses that sign retail leases to “activate ground-level storefronts, lobbies, and former banking floors” (City of Chicago, 2022).

The LaSalle Corridor (Photo Credit: City of Chicago)

In order to succeed in converting the LaSalle Corridor from vacant office space to a high density residential neighborhood, the City will need to ensure that The Loop’s cultural institutions and hospitality business remain vibrant and fiscally secure. What Roche Shulfer describes as “the greatest concentration of world class cultural institutions within walking distance” will be the primary attraction for potential new residents considering moving to the LaSalle Corridor - just as it enticed service sector workers to stay in the neighborhood after 5pm  in the 1980s, 90s and early 2000s. 

Cultural institutions and businesses in The Loop continue to face a post-COVID existential crisis. The same patterns that have led to office and retail vacancy across The Loop have impacted their earned revenue. The ending of the Federal American Rescue Plan (ARPA) funding that helped our sector survive the pandemic has created a fiscal cliff. Our sector is teetering precariously and we are likely to see many cultural institutions and arts infrastructure shutter in the next few years. 

The end of ARPA funding has also drastically impacted the City’s finances. The city currently faces a $1.1B budget shortfall for FY 2026 (Illinois Policy, 2025). Mayor Johnson and the City Council will continue to have tough choices to make to balance the budget for the coming year(s). As they navigate this storm, they should remember the transformational economic impact of Mayor Richard M. Daley’s investment in cultural infrastructure in The Loop. They need to insist that funding levels for the Department of Cultural Affairs and Special Events (DCASE) remain at current levels. They need to ensure that existing cultural institutions have the financial support necessary to weather their ongoing fiscal crisis. And they should provide robust incentives and investments to encourage new cultural institutions and businesses to activate vacant ground level retail spaces, especially along the LaSalle Street Corridor. 

Arts Alliance Illinois is leading the charge to ensure that funding for the Illinois Arts Council and the Chicago Department of Cultural Affairs and Special Events remain at current levels. Please consider joining as an individual or institutional member of the Arts Alliance if you aren’t already and support their calls for action on these and other advocacy initiatives.

We hope you will join us for this conversation. You can sign up for the newsletter here. Reach out to us at info@bustlingspaces.com if you’d like to contribute to this conversation or if you wish to talk about how Bustling Spaces LLC can support you as you manifest your vision for your community. 

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