United Airlines purchased 113 acres in Denver for $33 million. When news broke last month, a spokesperson offered that they would expand their pilot training facility (doesn’t take 100 acres for that) and then yadda yadda’d the rest of it saying they’d “evaluate additional opportunities in the future.”
At the TD Cowen Global Transportation Conference, airline CFO Gerald Laderman said there are “no imminent plans” to move their headquarters, noting that the airline has “a long-term lease at Willis Tower. We’ve been there for decades in Chicago. Denver is like Houston. We have lots of facilities in Houston.”
They’ve already scaled down their presence in Chicago’s Willis Tower (née Sears Tower). Their lease runes into 2032. They cannot make an ‘imminent’ move because nothing has been built in Denver yet. When Boeing’s tax benefits for locating in Chicago ran out, they decamped for Northern Virginia. United has clashed with city administration in Chicago. And United lacks a corporate campus like Delta and American now have.
From 1937 to 1963, United Airlines corporate predecessor Continental Airlines was headquartered in Denver. While it’s likely that no final decision has been made, all that United is saying is the obvious that no move is ‘imminent.’ That’s not a denial, and 113 acres buys United Airlines a lot of optionality.
(HT: Enilria)
I’m not an expert in all of this, but I do wonder, “Why Denver?” What benefits do they see in Denver over Chicago?
Chicago in the 2020s is the Philadelphia of the 2010s or the Rochester of the 2000s or the Cleveland of the 1990s or the Detroit of the 1980s (and at this rate the San Francisco of the 2030s). We’ve seen the future and it doesn’t look good too good for Chicago.
Almost every country in the world evolves to one or two dominant cities at the expense of the rest which are rendered minor players. The USA can support more major cities because of its size butChicago certainly has no interest in being one of them.
Moving their entire headquarters might not happen for a decade but UAL is undoubtedly looking at adding staff and office space in Colorado which is much more sought after as a place to live and also offers better personal and corporate economics in many respects.
Based on UAL’s stated growth plans – whether they happen as scripted or not – they will need more space and new people. Moving to a lower cost environment is important to be competitive w/ what AA and DL offer their employees and obtain from their local governments.
“What benefits do they see in Denver over Chicago?”
Less crime….murder…more business friendly?
I was hoping it was imminent. By the time this happens Denver wont be a low cost environment.
During the pandemic, UAL split up their NOC operations between Willis Tower and the old L-UAL center in Elk Grove Village. The rumors coming out of UAL have been that the CEO wanted to make a split operations center set up permanent long term. That way the airline would not be putting their operational eggs in one basket. DEN was rumored as the landing spot for the second NOC.
Well, a lease obligation which runs through 2032 should discourage any move. In today’s commerical real estate market, there is pretty much no negotiating an early out.
Not sure why people think Denver is less expensive to live in. Average cost of a single family home in Denver is 640,000. The average cost of a house in Chicago is 340,000. However taxes are lower in Colorado. Denver does not have as bad a crime problem as Chicago but it is trying hard to catch up. Colorado is just California Lite.
Denver is fine enough but it’s just a series of suburbs that are getting more and more expensive by the day. Chicago is a real diverse interesting American city. It’ll do whatever it takes to keep UA. There’s no other city in the US id rather live in than Chicago.
To say a move isn’t likely because their current lease runs until 2023 misses the fact that it would easily take half a decade for them to build-out a new HQ campus.
If they build a headquarters at the Denver site, I’m 99% sure it will have a view of The Rockies unlike the current UC situation at DIA (DEN).
Load up the wagons and head west. . . .
“Average cost of a single family home in Denver is 640,000. The average cost of a house in Chicago is 340,000.”
Averages can be deceptive if you don’t know the variance. You might be happy with an “average” single family home in Denver. But many would not be happy to live in the hypothetical “average” single family home in Chicago . . . homes points south are below average with below average security and homes in points north which many would consider necessary to feel safe in an increasingly dangerous and tumultuous city are far more expensive, without even considering the massive tax differences with Denver and the unfriendly business environment.
If I were CEO I would probably toss my chips in with Houston (of the candidates for UA) which might some day become America’s Second City, but Denver is at worst stable and Chicago is in steep and seemingly permanent decline – there isn’t a city in the USA which has lost more population in the past 50 years, and Chicago lost almost 100K people in just the last 2 years or so.
Should move then hq back to Texas where it belongs.
These blue states need to bleed to death, only way the water heads who keep voting for these bad policies will learn.
I always thought “business friendly” meant low taxes and the ability to exploit people/the environment without government interference.
Not sure Colorado fits these criteria?
Could be they will move some Ops jobs there, but more likely they are putting Chicago on notice so they fix their crime problems and give them whatever tax breaks they ask for during the next decade.
Regarding Boeing it doesn’t appear thst they actually moved a significant number of jobs to Washington, it was largely symbolic.
Chicago as well as the state of Illinois have been giving businesses lots of reasons to leave the city and state. This won’t affect the operation at ORD but corporate functions may well migrate out of state. Pretty sure that Scott Kirby lives in Colorado, too.
Denver has its share of problems and isn’t a low cost state. But Colorado is better run that Illinois and doesn’t have nearly as many problems. Wouldn’t be surprising for UA to make this move but they’ll likely be outside Denver proper, and UA will still have a sizable presence in both Illinois and Texas.
Businesses move because it’s cheaper (for them because of all the tax incentives) but the cost burdens go onto everyday people to help pay for all the infrastructure required for these businesses and the people it brings. Eventually, these cheaper places become so expensive for the average person that the allure to move there as an individual slowly erodes. Chicago could do better in reforming some outdated policy and tax structures but the urban sprawl and lack of any city planning in these newer cities (Salt Lake, Denver, Dallas, etc) is going to bite everybody in the butt in 10-20-30 years as the infrastructure and natural resources can’t meet demand. Everybody building 2,000-3,000+ sq ft homes and the costs of utilities for them and having to pay gas to drive literally everywhere is not a long term economic plan. It’s pushing the burden more and more into future generations on how to get out of these urban sprawl messes. I’m just waiting for the water crises in the southwest to obliterate these economies. There’s only so much water, gasoline, etc. Regarding this article, yeah United probably is moving but the lack of any planning for the people it brings creates once nice cities into car-infested hellholes. Why do you think Europe is so popular now this summer? People want walkability/density/biking, etc. After living abroad with all those amenities, my mental health spiraled when I moved back to car-centered America. It is what it is but it’s just a shame because I can literally imagine what the new HQ and surrounding area will eventually look like (just like most of America which is devoid of any real culture – just endless shopping malls, roads, and chain restaurants)
It is possible that the land in Denver is to be used as a negotiating tool for negotiations in Chicago. Put on a show of building a few buildings and then play hardball at negotiations in Chicago.
Chicago doesn’t have the money to afford to keep United. And it would still be Chicago with all its problems
Dan, the question that is to be answered is “after living abroad with all those amenities,” why are you back since America it is “devoid of any real culture”?
I’ve also been an expat and while America ain’t perfect, it’s still the place where many in the world want to immigrate to. And just in case you haven’t noticed, all those endless shopping malls are going the way of the Dodo bird.
I’m with both of you. European cities have a lot to offer, and so does America.
But after watching the Blue Zone shows, and realizing our obesity epidemic, designing our communities for more walking and biking, and less around cars, is important for our health. Don’t know how we get there. But a capitalist system that still encourages land use for human walking and biking is going to be for the best for us all. Need to push the cars to the periphery and pay for their true full costs. Get schools and shops within walking distance. There are things we can do that don’t hurt quality of life, actually help it and help our health.
I don’t think Chicago’s crime rate has anything to do with anything. No one is being mugged in Willis tower. Also as a lifelong chicagoan I’ve only seen 1 shooting in my life and believe it or not that was in downtown Denver of all places
United isn’t moving anywhere, they just are finishing up refurbishing their offices and are winning recognition for that. Here are some pictures:
https://thepointsguy.com/news/united-airlines-headquarters-tour-chicago/
Those that are talking down Chicago are buying into a narrative that is pushing an agenda that American cities are in decline because they are run by Democrats. Chicago is just one ofvtheir favorite targets.
The reality is that Chicago is a beautiful, vibrant city that is visited by more that 50 million people annually and is recognized as the best big city in America. If you live or visit here you already know that. If you’re chirping from the sidelines, come visit. Our world-class museums and Michelin starred restaurants await.
Other corporations have left Chicago. This is a red flag.
The issue with Houston is its proximity to the Gulf of Mexico. If your house has ever been flooded by a hurricane, you pay attention to the weather app on your phone from August thru September.
Houston native here and we were sad to lose the Continental HQ in the merger, but I completely understood, mainly because United needs to be the “hometown” airline of Chicago vs. the competing AA hub at ORD (they already own IAH). I think that status gives them all sorts of advantages in a very competitive local market, both in terms of customer loyalty as well as local government decision-making bias (both official and under the table), especially when it comes to ORD expansion plans (who gets more gates and where?). In fact, I’d say UA has pulled substantially ahead of AA at ORD over the years, certainly in terms of premium customers. I would be surprised to see the “official” HQ move, but I would not be surprised at all to see it become a token HQ (like Chevron in CA or Exxon had in Dallas) while more and more jobs and departments shift to Denver (quality of life) and Houston (higher standard of living, mainly from more affordable and higher quality housing). Facilities near those cities’ airports can recruit workers more easily, especially without the commute like Willis/Sears Tower. They’ve seen the power of remote work during the pandemic like everyone else, realizing it’s a lot easier to decentralize the HQ functions these days.
I was pleasantly surprised how constructive the comments above have been – for a change!
I agree that a Denver relocation would not be a net benefit for the UA HQ. Better to stay in the heart of a real city (which the US doesn’t really have many of) like Chicago, even with its urban ills.
Otherwise, Houston would be ok, but in a spot that is livable and walkable (not many of those there, but they *can* be found). A free market and low taxes don’t have to mean land-uses that result in endless, inefficient urban sprawl that tears us apart physically and socially.
Tory gets it.
Employers have to be responsive to what employees want.
First on the list is safety and security. As devoid as the CO plains may be, they are secure – other than UA pilots chopping down airport parking lot gates.
and employees have to be compensated high enough to pay the taxes. Right now, CO is a cheaper place to do business than IL. Other states are cheaper still including TX and FL which is why UA has to be looking at moving some functions to IAH – as long as the temperatures of this summer don’t repeat themselves next summer, in which case AA will be looking to move its HDQ north.
I don’t buy this at all. The United situation is completely different from Boeing: it’s true that Boeing’s tax breaks ran out, but it was also desperate to be in the center of defense spending at the time and the move to NoVa made sense.
I also put far less weight on the value of a corporate campus than you seem to, Gary. United could absolutely do that in Chicago if it wanted; just look at what McDonald’s did in the West Loop. Sears Tower is a crappy location, so I can see them wanting to leave, but I just don’t see why they’d so readily give up the geographic advantage of Chicago.
Mak – Bingo! And San Francisco is not far behind, the city has been decimated but the bay area economy is still being propped up by silicon valley, though not for long.
Chicago is a horrible location for an airline HQ with all the weather issues (though I’d imagine companies have improved WFH capacity). Denver is a much better choice and no hurricanes like Houston.
Tory – I know a lot a Californians who moved to Texas. None are really happy there and most leave as soon as they retire or take a new job. The only ones who stay due so for cheap housing, though the prop taxes largely offset income tax savings. Texas is experiencing a golden decade with the influx of CA companies, but it won’t last as non-Texans won’t tolerate the heat or the politics
Boraxo : from what I’ve read 2 out of 3 Californians moving to Texas are Republicans frustrated with the basket case that is CA, so the politics are just fine for them. As far as the heat, Texas is not a state for the soft or irresilient – they should probably go back to California and live in a tiny box for a million dollars. Texas welcomes the tough.
There are some clear right wing narrative pushers in here. Wow.
Chicago area used to have the 2nd most fortune 500 companies in the country. After all of Chicago’s “collapsing spiraling bla bla bla”, chicago region has… wait for it .. the 2nd most fortune 500 companies in the country. STILL.
Oh, amd for the last 10 years in a row, Chicago is 1st in the country for new business startups. 10 years in a row.
A more “friendly business environment” is code word for conservatives for paying employees trash wages, treating them like trash, and reaping absurd corporate profits at the expense of everyone around them.
Any business that wants that can go to any trash red state they want.
Here is what red states have over blue states:
1. Higher crime rates
2. Higher poverty rates
3. Lower life expectency
That isnt even getting into the politics. Those are just strait verifiable facts.
Calling Florida and Texas more affordable is hilarious. I left Florida for Chicago and everything here is cheaper, and way better ran, even with its faults. There is crime everywhere, Chicago is no better or worse.
Politics aside, objectively speaking…
Chicago has higher taxes and higher crime than Denver, with no space by the airport to build a corporate campus.
Denver offers more space next to a major hub airport to build a corporate campus bringing all cogs of the airlines together, like AA, DL, and SW have. Plus, DIA, has more expansion abilities and efficiencies that ORD won’t have thanks to its older design and poor future planning by the city of Chicago.
Maybe Kirby wants to go better than AA’s new corporate campus.
I was disappointed when UA chose Chicago over Denver when they made a decision to leave Seattle. I think Denver is a better fit than Chicago offering a friendlier business environment, a little better weather, a lot less woke-ness, fewer riots, and a nonstop route network to most of the cities they serve