Now we know what Uber Technologies is planning to do with all that space it’s leasing at the Old Post Office.

It plans to hire 2,000 people over the next three years, primarily for Uber Freight, the logistics unit of the company that's best known for its ride-hailing app. Much like Uber's ride-hailing service, Uber Freight matches shippers who need trucks with truckers who need loads.

Chicago also will be home to Uber Freight’s first engineering hub outside its home base in San Francisco.

“Trucking represents an enormous opportunity for Uber,” said Uber CEO Dara Khosrowshahi. "Chicago is a significant talent hub. It's a business-friendly city and a city with a significant logistics talent base. As a tech talent center, we think Chicago is underrated."

Uber becomes the latest Bay Area tech company to set up engineering operations here, joining Google, Service Now, Glassdoor, Salesforce and Stripe.

Uber recently leased 450,000 square feet at the hulking former downtown Post Office, which straddles the Eisenhower Expressway and has suddenly become one of the city’s hottest corporate addresses. It will become the official headquarters of Uber Freight, although much of the business has been run from Chicago. Uber did not seek incentives from the state, Khosrowshahi said.

Uber could eclipse Salesforce as the Bay Area company with the largest Chicago workforce. Salesforce is leasing 500,000 square feet in a tower to be built on Wolf Point and would add 1,000 jobs to a Chicago workforce of about 1,500.

As salaries soar with the cost of living and demand for talent, West Coast tech companies are searching for alternatives. Chicago has been courting them.

“The fact that Uber is going to have its largest tech office outside San Francisco in Chicago speaks to the depth and quality of the tech community here,” said Mark Tebbe, chairman of ChicagoNEXT, part of World Business Chicago, the city’s economic-recruitment arm.

Uber Freight will have a couple dozen engineers in Chicago by year-end, but the tech team will be in the hundreds in the next couple of years, says Lior Ron, head of Uber Freight, who previously worked for Google and Motorola Mobility. "We think highly of the tech talent in Chicago. It's vastly underutilized."

Uber’s freight operation launched in 2017, quickly setting up shop in Chicago and growing to more than 750 employees.

Uber also has a sizeable ride-hailing operation in Chicago, and the company's overall headcount already tops 1,000, Khosrowshahi said.



FOLLOWING THE TRAFFIC

Chicago has always been a major hub for trucking, a $700 billion-a-year industry, but Uber’s decision to expand here underscores the city’s prominence in logistics technology. Software makers Four Kites and Project44 each has raised at least $100 million. Tech-enabled freight broker Coyote Logistics was acquired for $1.8 billion by UPS in 2015, and Echo Global Logistics, which went public in 2009, is valued at more than a half-billion dollars.

“Chicago has the best logistics and supply-chain talent in the country,” says Robert Nathan, founder of freight broker Load Delivered, which was acquired last year for $100 million. “Uber sees the convergence of tech and people in Chicago. It used to just be a (freight broker) city. Now it's a logistics-tech city, which is a lot different than a decade ago.”

Uber's freight-brokerage business overall has worked with 500,000 drivers at more than 36,000 carriers and more than 1,000 shipping customers, including AB InBev.

The business grew to $359 million in revenue last year, up from about $65 million in 2017. But it’s a fraction of Uber’s main on-demand taxi business, which did $9.2 billion in revenue, and Uber Eats, its food-delivery business, which did $1.5 billion in revenue. By comparison, Chicago-based freight broker Echo Global Logistics did $2.4 billion in revenue last year.

At the scale Uber plans to hire, its presence will be felt across the industry, increasing competition for already-scarce talent.

“Short term, hiring hundreds of engineers will be painful for most Chicago companies, regardless of the industry,” said Jett McCandless, CEO of Project44. “Uber is an attractive employer for many people and has the ability to compensate well. “Mid- and long term, it is good for the Chicago tech ecosystem. The reality is, Uber will be able to attract world-class tech talent that other companies struggle to appeal to. Iron sharpens iron: The imported talent will train the future Chicago tech leaders.”

Uber Freight’s Chicago roots run deep. Its co-founder, Bill Driegert, was a Coyote Logistics veteran who went on to work at Amazon, and Uber acquired a small Chicago freight startup early on. The engineering team in Chicago will be led by Tory Schober, a Midwest native who joined Uber nearly five years ago.

Uber has been expanding outside San Francisco for a while, building up its presence in Toronto and, more recently, bringing back-office jobs to Dallas. "This is one of the biggest bets we’re making in terms of talent," Khosrowshahi said. “We had the choice to expand anywhere, and we looked across the U.S., and just kept coming back to Chicago.”

He announced the move in the lobby of the Old Post Office, under soaring ceilings with vintage brass medallions on the walls that denote the evolution in transportation, from the stage coach and Pony Express through railroads and airplanes. Uber will anchor a building that soon will have thousands of jobs.

“All of us remember decades of driving past this empty, hulking building and wondering if there would ever be any life here,” said Andrea Zopp, CEO of World Business Chicago. “We’re taking something dead and dying, and turning it into something exciting and vibrant.”

This story has been updated to correct that Tory Schober is a native of the Midwest, not Chicago.