In a shift that marks a significant change for Chicago's tech scene, 1871, the city's premier tech incubator, is set to leave its space in Merchandise Mart, a place it has called home since its inception in 2012. The departure, announced by 1871 CEO Elizabeth Ziegler in a memo to members, is a response to the altered post-pandemic business landscape and the financial pressures that have emerged in its wake. In the words of Ziegler, "As an organization, we have continued to perform, but not at a level that allows us to sustain the real estate commitment that once served 1871 so well in the pre-COVID years," as reported by the Chicago Tribune.
Despite still being a hub for innovation, with its members creating around 15,000 jobs and raising $4 billion in capital over the years, 1871's model has faced challenges in the current climate. The nonprofit has seen a decline in revenue, dropping from $9.1 million in 2018 to $6.2 million in 2023, indicating a deeper financial strain within the organization. One of the major impacts, in a statement obtained by the Chicago Sun-Times, Ziegler noted, was the underuse of its coworking space, with the number of people using the space on a given weekday dwindling. She said, "While overall membership was still steady, some users who rented space in 1871 had given it up," highlighting the shift toward remote work and flexible arrangements following the pandemic.
The news of 1871's move comes amidst a broader trend of fluctuating office real estate dynamics in downtown Chicago. The city's overall office vacancy rate soared to an all-time high of 23.2% in the fourth quarter of 2024, although the Mart itself reported a lower vacancy rate of 80.1% as of December 31, 2024. Nonetheless, adding to the strain on the market, 1871's exit will introduce nearly 120,000 square feet of space back into the market. This exit, as reported by the Chicago Sun-Times, is accompanied by 1871's announcement that it will be seeking a new space, though the organization has yet to divulge potential locations. 1871 currently has plans to continue its suite of programs, including a sold-out event for International Women's Day on Mar. 6.
The narrative of 1871 is one deeply intertwined with Chicago's rise as a tech city. Governor JB Pritzker, who founded 1871, has been among its prominent supporters, once proclaiming at a 2019 celebration that "Chicago is now one of the top tech cities in the country... 1871 and the entrepreneurial drive of our community did that." Derek Eder, co-founder of DataMade and Chi Hack Night, two initiatives that called 1871 home at different points, recalled the incubator being "the center of Chicago's tech universe," according to his account in the Chicago Sun-Times. The Mart, continuing to host several other major companies like PayPal and Motorola Mobility, remains a significant site in the landscape of the city's innovation ecosystem.
Ziegler articulated a vision for the future in her memo: "As we deal with our new economic realities, we are embracing a more flexible model that reflects today’s entrepreneurial landscape."
