Crain's Chicago Business

MAKEOVERS: Ideas for revitalizing the Mag Mile—and LaSalle Street, too. PAGE 3

CRAIN’S LIST: Money managers rode markets higher in ’21. PAGES 8-9

CHICAGOBUSINESS.COM | MARCH 28, 2022 | $3.50

GHOST KITCHENS ARE FOR REAL

For the aerospace giant to rebound, Elizabeth Lund has to churn out a lot of 737s and 787s

BY JOHN PLETZ

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JOHN R. BOEHM

Surging growth in restaurants without dining rooms shows they’re more than a pandemic phenomenon. Established restaurateurs fear an Uber effect. I BY ALLY MAROTTI

irtual restaurants opened at twice the rate of traditional eateries in Chicago last year, as new technology and COVID-19 combined to reshape the city’s dining scene.

Chicago got 700 new virtual restaurant brands in 2021, compared with only 350 brick-and-mortar ones, according to market research firm Datassential. Only Los Angeles added more, with over 1,000 new

Boeing’s comeback is in her hands

Jasiman Griffin-Green launched the Jars by Jasiman dessert shop at CloudKitchens in Bronzeville last year.

virtual restaurant brands. Often called “ghost kitchens,” virtual restaurants operate without dining rooms, reaching customers via online ordering and delivery services.

Some, like Uber founder Travis Kalanick’s CloudKitchens, provide kitchens to dozens of restaurants under one roof. Others, like Lettuce Entertain You’s Ben Pao, operate See KITCHENS on Page 15

MOST GHOST KITCHENS TOUT THEIR ABILITY TO REDUCE BARRIERS FOR ENTREPRENEURS WHO DON’T HAVE THE CAPITAL TO OPEN A TRADITIONAL RESTAURANT.

When Elizabeth Lund was growing up in Tulsa, Okla., she tagged along with her older brother, begging to play tackle football against the boys in their neighborhood.

“He said: ‘If you don’t catch the ball, you don’t get to play,’ ” she says. “You rise to the level. It was tough love from an early age. That’s helpful in life.”

So she wasn’t intimidated years later, when she moved from an engineering office to the factory floor at Boeing. Today she’s responsible for production of all the company’s commercial jets and is the highest-ranking woman in Boeing’s commercial aircraft business.

Lund’s new role as senior vice president and general manager of airplane programs is crucial to Boeing’s effort to pull See BOEING on Page 21

Don’t demolish that house.

Deconstruction offers an eco-friendly twist on teardowns

BY DENNIS RODKIN The two men working among the uncovered rafters of a single-story structure on Hibbard Road in Winnetka on a recent afternoon weren’t building a house. They were unbuilding one.

A family paid just under $2.8 million last May for the 5,700-square-foot house, intending to replace it with a new one that’s three times as big. They could have had a conventional demolition crew knock down

“Building houses must be fun,” says Steve Filyo, head of BlueEarth Deconstruction, the St. Charles firm that’s taking apart the house, “but unbuilding them is much cooler.”

JOHN R. BOEHM

Dismantle it.

See DECONSTRUCTION on Page 18

NEWSPAPER l VOL. 45, NO. 13 l COPYRIGHT 2022 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED

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GREG HINZ

YOUR VIEW

Making odds on who will win the city’s casino horse race. PAGE 2

The mayor’s office on Chicago, two years after COVID. PAGE 10

3/25/22 3:03 PM

2 MARCH 28, 2022 • CRAIN’S CHICAGO BUSINESS

Playing oddsmaker on the casino sweepstakes

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ith Mayor Lori Lightfoot having narrowed the list of competitors in Chicago’s casino derby to three, the great game of Chicago politics and government now is fully underway. That’s who can wiggle, wrangle or otherwise wile their way into Lightfoot’s heart. Chocolates, maybe?

A veritable flood of rumors over who’s doing what—and to whom—is flowing out of City Hall.

I’m not sure which to believe, so I won’t go there. Let’s just say that, ultimately, this is the mayor’s call, and even in this town and under this mayor, the occupant of the fifth floor of City Hall still almost always gets his or her way.

Even Lightfoot, though, will have to deal with a series of factors if this casino is to be the jackpot for city coffers that she hopes. In other words, there are hurdles for each of the finalists.

Finalist No. 1 wants to go in the

One Central project that developer Bob Dunn wants to build on air rights over Metra Electric tracks across from Soldier Field. That’s both the promise and the hurdle.

Chicago has had big decked projects before. The result can be spectacular. Think Millennium Park, built over Metra Electric tracks a mile to the north. There really is nothing quite like it in this country, save only Park Avenue in Manhattan—built on, guess what, a deck over New York Central tracks.

But decking is expensive. Very expensive. That’s why Dunn wants $6.5 billion in financial help from Springfield. Gov. J.B. Pritzker has cooled to the idea. Which means Dunn needs Lightfoot. Or, perhaps, it’s she who needs him if Dunn indeed is working on a domed stadium idea to keep the Chicago Bears at Soldier Field, as some think. Farfetched? Perhaps. But no more farfetched than Hard Rock’s assertion that it will build its own little deck

for its own project on part of Dunn’s property and wait for the rest of One Central or something else to come along later. That’s a hard sell.

Finalist No. 2 is Bally’s. Whoever wrote the report analyzing the bidders seemed in my opinion to pull a few punches in its favor. But even Bally’s can’t squeeze a ton of cars and traffic into an area of the city—the Tribune printing plant property at Halsted Street and Chicago Avenue—poorly equipped to handle it.

Ergo, says Ald. Brian Hopkins, 2nd, whose ward covers part of the site: “I’m trying to keep an open mind. But having said that, my initial impression is the Bally’s site clearly causes the greatest problem in terms of serious impact on the surrounding neighborhood. . . .There’s an obvious challenge.”

Similar throat-clearing comes from the River North Residents Association, which even before formal public hearings indicates it wants

GREG HINZ ON POLITICS

the city to look elsewhere.

Sure Lightfoot could buck that.

But in an election year?

Which leads to the third finalist.

That’s Rivers 78 in the South Loop. I suspect it’s the front-runner. But full disclosure: I thought Rivers McCormick Place was the front-runner, too, until convention officials declared they couldn’t possibly do without the crumbling Lakeside East building Rivers wanted. So officials get to keep the money trap. I wish them luck finding the $400 million-plus needed to repair it without raising taxes, a political nonstarter anymore.

Anyhow, back on point: Rivers 78’s biggest problem may have been solved. The University of Illinois

Discovery Partners Institute, which would go at the other end of The 78, has quietly dropped its opposition to operating near a casino and notified the city thereof. Another problem could get solved, too, if Ald. Byron Sigcho-Lopez, 25th, who appears to oppose a casino, loses the property from his ward in the upcoming remap. That would happen under one of the two maps now pending.

The bigger problem may be if the casino battle gets dragged into the now fast-approaching mayoral re-election race. If I were Lightfoot, I’d go for speed, but the process instead seems to be slowing.

The show now goes to the Illinois Gaming Commission, which could be even more interesting.

How to make Illinois more (small-d) democratic

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here’s a lot of focus nationally these days on the health of our elections and democracy, and while Illinois hasn’t been in the headlines, can we do better?

Of course we can. How? Here are seven ideas.

1. Typically at this time of year, the primary election would be done and we’d be starting to look toward the November matchups.

But one giant change came from the delayed census results last year: moving our primary election in Illinois to June 28.

We’ll see soon enough whether the calendar change to a warmer time of year improves participation, but why not make the change away from March permanent?

What else might we try to improve our elections and access to the ballot?

2. Let’s keep lowering the numbers of voter signatures it takes to qualify to run. Candidates are required to provide voters’ signatures from inside the geography in which they want to run to show they have a certain level of support, but challenges presented by the pandemic and the need to collect signatures during winter ought to compel elected officials to lower the voter signature threshold.

Traditionally, party bosses and many incumbents have wanted higher numbers of voter signatures required in order to keep the competition low or nonexistent. But it really makes no sense whatsoever that it takes 12,500 voters’ signatures to run for Chicago mayor and more than 5,800 signatures to run as a Democrat countywide in Cook County when it takes only 3,250 signatures to run for statewide office as a major party contender. And should it really take five times that, 25,000 voter signatures, to run statewide as a third-party candidate or independent?

3. Let’s require candidates to share publicly an email address and phone number when they file

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the paperwork to run so reporters can more easily contact them to get their views. That helps us all to be educated so that we can make more informed decisions at the ballot box.

4. You know it’s bad when the Illinois Democratic County Chairs’ Association acknowledges, “Illinois has some of the most complex ballot access laws in the country.”

Let’s put an end to tossing candidates off the ballot for nonsense like papers being fastened improperly. Instead, let’s make it easier for people to get involved in our democracies.

5. How about we allow voters to sign candidates’ petitions online, and allow candidates and their helpers to use a digital tablet with internet access to check in real time whether a voter actually is registered at the address they’re about to use to help a candidate before they sign a candidate’s petition papers? They’ve done this for some time in Colorado and Arizona. HB 4966 in the Illinois House would do just that, but it’s stalled in Springfield with just a few weeks left in session.

6. Let’s open up our primaries and stop making people ask for a Democratic or Republican ballot before they vote. More voters are independent, and that trend isn’t shrinking. Opening up the primaries likely would improve participation and end a significant problem: Very few voters are doing the winnowing and picking of our general election contenders.

Those primary voters tend to be from their parties’ extreme wings, and their choices do not tend to reflect the population as a whole.

That is one of the big drivers of the hyper-polarization we’re experiencing in our politics and government.

7. Of course, drawing political district boundaries to secure a certain partisan outcome also discourages competition and vests

too much power in the parties’ establishments. That needs to stop. When party leaders draw the districts and pick both the voters and the candidates, help those candidates collect signatures to get on the ballot, fund their campaigns, create their literature and tell them what to say, we end up with little competition, closed systems and party machines that discourage new ideas and independent thought.

We’ve seen that at play in Illinois for years with decreasing numbers of state House and Senate races that are contested or truly competitive.

The Daily Line recently reported

MADELEINE DOUBEK ON GOVERNMENT

75 out of the 177 state House and Senate races are over before they’ve begun because only one candidate is running now in those districts. That’s more than 42% of the contests with zero competition.

After the last redistricting cycle, 68 districts had only one candidate after the primary election filing deadline, the government news outlet reported, so the problem is

worsening.

Illinois isn’t getting the national attention, but there is much more we can do to boost the health of our democracies and elections. It’s vital we do just that.

Madeleine Doubek is executive director of Change Illinois, a nonpartisan nonprofit that advocates for ethical and efficient government.

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CRAIN’S CHICAGO BUSINESS • MARCH 28, 2022 3

JOE CAHILL ON BUSINESS

Time for change on the Mag Mile

URBAN LAND INSTITUTE

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Rendering of a pedestrian bridge linking the north end of the Magnificent Mile with Oak Street Beach.

Will these ideas fix the Mag Mile?

Reducing crime is job one, but it will take multiple solutions to revive North Michigan Avenue. A new report explores some of them. I BY ALBY GALLUN

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t’s time to de-mall the Mag Mile.

That’s one big takeaway from a report with ideas on how to turn around North Michigan Avenue, which has been walloped by e-commerce competition, COVID-19 and a surge in violent crime. The famous shopping strip, one of the city’s biggest tourist destinations, is crying out for a major makeover after losing multiple big retailers, including Macy’s, Uniqlo and Gap, over the past two years.

The 31-page report, prepared by a panel formed by the Urban Land Institute and released March 21, offers a variety of solutions, from crime-control measures to new physical features, like a striking new bridge over Lake Shore Drive at the north end of the boulevard.

“MOST RETAILERS ON NORTH MICHIGAN AVENUE CAN BE FOUND IN ANY SIZABLE SUBURBAN MALL.” Urban Land Institute

See MAG MILE on Page 20

LaSalle Street gets its own set of concepts for a makeover Narrowing the street, closing off a couple of blocks and unfreezing TIF money for redevelopment are among recommendations from a city-commissioned panel

BY DANNY ECKER Giving LaSalle Street a badly needed jolt of new life coming out of the COVID-19 pandemic calls for public subsidies, a new taxing district and a radical makeover to break from its past as a domain of financial giants.

That’s the recommendation from a panel convened in recent months by the Urban Land Institute, which set out to provide guidance to city officials and Loop stakeholders about ways

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to revitalize the historic but vacancy-ridden thoroughfare.

The panel, which presented its findings last week, focused on a stretch of LaSalle between the Chicago River and Jackson Boulevard that was burnished over the past century as the city’s financial district, but which big banks and traders are abandoning for newer buildings elsewhere downtown.

Among the ideas for the corridor’s future: Narrowing the street and widening sidewalks

to create space for more greenery and places to sit; projecting light displays on buildings or spanning multiple blocks; and more drastic changes to the use of the street, such as closing off one or two blocks north of Jackson to vehicular traffic to bring in pop-up retailers and street festivals that would draw both locals and tourists. And making it all happen will require investment from both public coffers See LASALLE on Page 22

s COVID-19 finally (hopefully?) recedes, there’s a natural tendency to revert to old ways and ingrained expectations.

A better approach is to regard this moment as an opportunity to re-evaluate old assumptions and adapt to the new realities that were caused, or perhaps merely illuminated by, a pandemic that upended nearly every aspect of life for two years.

For Chicago, COVID-19 brought into sharp relief some trends and changes that were taking shape even before the virus struck. Now is the time to face these challenges and position the city to capture the opportunities they present.

That’s why I’m glad the city is taking a hard look at one of its most important economic drivers: North Michigan Avenue.

The struggling thoroughfare is essential to Chicago’s future as a thriving urban center.

As my colleague Alby Gallun reports, a city-commissioned study by the Urban Land Institute examines the damage the area has suffered as forces gathering for years accelerated during the pandemic, and offers ideas for redefining it for changing times.

The stretch of Michigan Avenue from Oak Street to the Chicago River has long been Chicago’s showplace, a glittering esplanade lined with famed retailers and great architecture. It has also been a critical economic engine, generating an outsize share of jobs and tax dollars for the city.

Yet the Magnificent Mile lost momentum in recent years as online shopping grew and its assortment of retailers became more commonplace around the country. COVID turbocharged the downturn, prompting more consumers to hole up at home and buy merchandise online.

A crime surge during the pandemic compounded the street’s woes, with a wave of carjackings and smash-andgrab robberies that convinced many people that Michigan Avenue is no longer safe.

A couple of key numbers show the depth and impact of Michigan Avenue’s troubles.

Store vacancies on a street that once had retailers lining up for space have doubled to nearly 25% since 2018, according to Cushman & Wakefield. The Urban Land Institute reports declining sales taxes in the area triggered a 23% drop in Chicago’s total collections in 2020.

The institute also laments the homogeneity of Michigan Avenue’s retail mix, noting that names along the street “can be

found in any sizable suburban mall.” Ouch.

But the report makes clear that the Mag Mile’s problem is more than a matter of merchandising.

Gone are the days when hordes of tourists and locals would descend on Michigan Avenue just to buy stuff. Nowadays, they can get pretty much all the stuff they need without leaving home.

What they can’t get at home are experiences—unique experiences. That’s where the Urban Land Institute sees opportunity for Michigan Avenue.

Accordingly, the report recommends creating an “experiential zone” between Delaware Place and Chicago Avenue, with virtual-reality theme parks, immersive exhibits and other attractions. It also recommends clustering high-end shops near Oak Street at the north end of the avenue, with larger-scale retailers farther south.

To create vibrant street life, the report suggests adding more sidewalk dining, “pocket plazas” and a “public common” stretching from Water Tower Place to Lake Shore Drive.

The signature proposal is an eye-catching pedestrian bridge that would sweep northeastward from Michigan Avenue to the lakefront.

The report emphasizes, rightly, that getting crime under control is a prerequisite to any reinvention of Michigan Avenue. People won’t come if they’re afraid of getting mugged, no matter how compelling the attractions might be.

The Urban Land Institute has given us plenty to think about.

Some of the recommendations are intriguing, others less than original. And there are some gaps, such as what to do about all that upper-floor retail space in Michigan Avenue’s vertical malls.

Here’s a thought: Why not turn the space into low-rent venues where local artisans can make and sell furniture, jewelry, pottery and other items, providing a unique experience for shoppers?

Or small galleries for up-andcoming painters and sculptors?

As for street life, perhaps some of Chicago’s renowned local theater companies could be persuaded to give regular pop-up performances along the avenue.

What’s important right now is not so much any one idea as building consensus around the undeniable reality that Michigan Avenue needs to change, and quickly. Hopefully, the Urban Land Institute report will galvanize energy, attention and resources around finding the right path forward for this essential economic asset.

3/25/22 3:03 PM

4 MARCH 28, 2022 • CRAIN’S CHICAGO BUSINESS

NBC 5

Leila Rahimi

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his hometown teams shines through in his storytelling in a way that connects with local fans.”

After crisscrossing the country, the Texas-born Rahimi came to Chicago in 2015 when she joined Comcast SportsNet Chicago (forerunner of NBC Sports Chicago) as an anchor, host and reporter.

In a twist of fate, she was laid off from NBC Sports Chicago as part of company-wide cutbacks in 2020 by Kevin Cross, then senior vice president and general manager of NBC Sports Chicago.

Now as president and general manager of NBC 5, Cross is responsible for bringing her back into the NBCUniversal Owned Television Stations fold.

NBC 5’s gain may be seen as The Score’s loss, with Rahimi relinquishing her full-time hosting role at the station. Bernstein is expected to continue as solo host, with Rahimi making weekly guest apNBC 5’S GAIN MAY BE SEEN AS pearances on the show.

THE SCORE’S LOSS, WITH RAHIMI midday “Leila will be in RELINQUISHING HER FULL-TIME studio each and every Wednesday HOSTING ROLE AT THE STATION. (from 9 a.m. to noon), co-hosting with Dan and adding great newscasts Monday through commentary and her unique Thursday. perspective on the world of Coinciding with Rahimi’s sports,” Mitch Rosen, operpromotion, Northbrook ations director and brand native Berman will become manager of The Score, told weekend sports anchor and staffers in an email. work three days a week as “Leila is a tremendous sports reporter. Jeff Blanzy asset to The Score, and we will continue part time, anare grateful she remains a choring sports at 5, 6 and 10 big part of our team and that p.m. Fridays.

Score listeners will continue “Chicago is a huge sports to hear Leila across all of our town and we’re dedicated to platforms.” delivering the best sports coverage to our viewers,” Frank Robert Feder has been Whittaker, station manager covering the media beat in and vice president of news at his hometown since 1980. His NBC 5, said in a statement. column is published in Crain’s “Leila adds great experience under an agreement with the and unique perspective to our Daily Herald. newsroom. Mike’s passion for eila Rahimi is about to make history again.

Last year the Chicago sportscaster broke a 29-year gender barrier when she became the first woman to host a Monday-through-Friday daytime shift on Robert Feder WSCR 670-AM, the Audacy sports/talk station.

Now Rahimi, 38, is about to become the first woman to be named main sports anchor at NBC-owned WMAQ-Channel 5. She’s been working part time for NBC 5 since last fall while co-hosting middays on The Score with Dan Bernstein.

On March 22, NBC 5 announced Rahimi will move up to full time at NBC 5, starting April 4, essentially filling the role last held by Siafa Lewis, who left in November to become a news anchor in Philadelphia.

In addition to co-anchoring “Sports Sunday” with Mike Berman, Rahimi will anchor sports on the 5, 6 and 10 p.m.

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AFP VIA GETTY IMAGES

NBC 5 names Leila Rahimi main sports anchor Cresco’s Sunnyside cannabis dispensary in Lakeview

Cresco buying rival to become largest U.S. cannabis company The $2 billion purchase of Columbia Care will give Cresco access to new markets and cement Chicago’s place at the center of the legal-marijuana industry

BY JOHN PLETZ Cresco Labs is buying New Yorkbased Columbia Care in a $2 billion deal that will make it the largest marijuana company in the U.S. The all-stock purchase would give Cresco a presence in new recreational marijuana markets, such as New Jersey and Virginia.

It’s the largest merger in the marijuana business since Trulieve, based in Quincy, Fla., bought Harvest Health & Recreation for $2.1 billion last year. The deal is the biggest involving a Chicago-based marijuana company since Grassroots was bought by Curaleaf, headquartered in Wakefield, Mass., for $715 million in 2020.

The acquisition reinforces Chicago’s place at the center of the legal-marijuana industry. Cresco is one of three large publicly traded cannabis companies headquartered in Chicago, along with Green Thumb Industries and Verano Holdings.

Cresco had $822 million in sales last year, according to figures announced March 23, and Columbia Care had about $460 million.

The combined companies would nominally be larger than Curaleaf, which had $1.2 billion in revenue.

Cresco has 50 dispensaries and 21 cultivation facilities in 10 states.

Columbia Care has 99 dispensaries and 32 cultivation facilities in 18 states. The combined companies have about 6,100 employees.

The deal puts Cresco in the 10 fastest-growing U.S. markets, including access to New Jersey, which is expected to begin recreational sales soon and become a $2 billion-a-year market, approaching the size of the Illinois

market. The combined company will be the largest in Illinois, Pennsylvania, Colorado and Virginia.

“The combination is highly complementary and provides unmatched scale, depth, diversification and long-term growth,” Cresco CEO Charlie Bachtell said in a news release. “On a pro-forma basis, the combined Company will be the largest cannabis company by revenue, the number one wholesaler of branded cannabis products, and the largest nationwide retail footprint outside of Florida.”

OPENING DOORS

Getting a foothold in New Jersey will allow Cresco to remain in step with the largest multistate cannabis companies, most of which have a presence in New Jersey. Acquiring Columbia Care also would provide Cresco an entry into Virginia, which will allow recreational sales.

But Cresco and Columbia Care have overlapping operations in several states, including Illinois, where they might be forced to divest some operations. Cresco already has the maximum 10 dispensaries allowed

by Illinois law, and Columbia Care has two dispensaries.

Both operate in the New York market, which also has approved recreational cannabis sales, but has created limits on allowing “vertically integrated” companies that can grow and sell marijuana. Companies which already had medical marijuana licenses, such as Cresco and Columbia Care, were allowed to remain vertically integrated under the law. But it’s unclear whether regulators will allow two grandfathered entities to combine.

Florida, which only allows sales of medical marijuana, also doesn’t

allow a company to own more than one license.

The deal would dramatically increase Cresco’s retail base. It’s the largest wholesale cannabis provider, getting roughly half its revenue from selling marijuana to retailers.

After the Columbia Care acquisition, it would get two-thirds of revenue from retail.

Cresco said the deal provides a 16% premium to Columbia Care shareholders. Cresco, whose shares closed March 22 at $6.53, had a market capitalization of about $2.5 billion. Columbia Care was valued at about $1 billion. The transaction is expected to close by the end of the year.

“We believe the acquisition may have considerable risk to close, given the significant footprint overlap and Cresco Labs having a spotty track record with three terminated acquisitions,” analyst Andrew Partheniou at Stifel GMP wrote in a note to clients.

Marijuana stocks have taken a beating in the past year, getting pummeled as hopes evaporated for federal marijuana legalization before inflation worries and the war in Ukraine tanked the broader market.

Before their deal was announced, shares of Cresco and Columbia Care were down by half over the past year.

Columbia Care is the largest of several recent acquisitions by Cresco. It bought Laurel Harvest Labs and Bay, which added dispensary and cultivation operations in Pennsylvania. Cresco also said it would expand in Massachusetts with the acquisition of Cultivate for as much as $158 million if certain targets are met.

3/25/22 2:44 PM

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6 MARCH 28, 2022 • CRAIN’S CHICAGO BUSINESS

LUXURY HOME OF THE WEEK Advertising Section

live

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522 W Deming

New construction in Pilsen

City surcharge on demolitions extended through April 2024 The program is meant to slow gentrification in hot spots like Pilsen and around the western end of the 606 trail, and data shows it’s been ‘very successful’ after one year

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Demolitions of residential property in two gentrification hot spots will be subject to a $15,000 surcharge for two more years after the Chicago City Council voted March 23 to extend the oneyear pilot program.

The surcharge, initially adopted in March 2021 as an attempt to slow gentrification in Pilsen and around the western end of the 606 trail, was set to expire April 1.

It will now continue through April 2024, as the result of a 47-1 vote by the council. There was no discussion.

In the coming years, the surcharge might be put to a more qualified test as the housing and construction markets turn back toward normalcy after the pandemic.

Earlier last week, the city’s Department of Housing provided data that indicates the surcharge has been very successful at reducing demolitions near the 606, but less so in Pilsen.

CONSIDERABLE DECLINES

Demolitions declined everywhere during the pilot year of the program, in large part because of the pandemic’s impact on construction. The Housing Department measured the declines in each of the two hot spots against its nearby neighborhoods.

In the 606 west area, the target area on the North Side, demolitions dropped from an average of 25 per calendar year in three years prior to the pandemic to three in the year since the surcharge was imposed, an 88% drop. The drop was considerably steeper than in neighboring neighborhoods.

In Pilsen, the target area on the South Side, demolitions dropped from an average of eight per year to five, a 37% drop. That’s roughly equal to the declines in nearby neighborhoods Little Village and Bridgeport, and less than the decline in McKinley Park.

PROCEEDS

Housing Commissioner Marisa Novara also reported that in its first year, the surcharge on properties that were demolished deposited a total of $120,000 into the Chicago Community Land Trust, which helps low- and moderate-income people toward homeownership.

Of the $120,000, the greater share came from Pilsen, where five demolitions generated $75,000. In the western 606 area, three demolitions generated $45,000 in fees.

The amount raised “is not a lot,” Novara said, but the land trust typically grants people about $30,000, which means the surcharge paid on eight properties will help four households.

Ald. Raymond Lopez, 15th, was the only council member to vote against the extension on March 23. One other alderman was absent, and one seat is vacant.

At a March 21 discussion by the council’s Finance Committee, Lopez said “fees like this steal that equity from underneath individuals who have been in the community for years, who have been in the neighborhood, good, bad and ugly, for decades.”

He and others have said developers simply reduce what they’re willing to pay for a property by $15,000 to offset the surcharge.

The result is that low- and moderate-income sellers who’ve hung on to their properties for a long time pocket less proceeds.

3/25/22 2:40 PM

CRAIN’S CHICAGO BUSINESS • MARCH 28, 2022 7

White House unveiling tools to reduce racial bias in appraisals The effort is part of a push President Biden launched at a centennial commemoration of the Tulsa Race Massacre last year to narrow the wealth gap

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hoods and Black-owned properties contribute significantly to Black households’ lower household wealth.

Racial bias in appraisals have cost the typical Black-owned home $48,000 in value, according to the Brookings Institution, and a cumulative total of $156 billion nationwide.

MIRRORED IN ILLINOIS

The PAVE report cites a study that indicates eliminating racial disparities in home equity’s piece of household wealth would narrow the wealth gap between Black and white households by 16%, and between Latino and white households by 41%.

Another piece of the PAVE action plan is correcting for past racial bias in appraisal data to ensure that future automated valuations of homes do not perpetuate racial bias by relying on data with bias built in. The specifics of how to do this are being explored, officials said in a conference call on March 22.

GETTY IMAGES

Biden’s domestic policy adviser, will announce a five-part plan, Vice President Kamala Har- the results of a six-month study ris and other administration by the Interagency Task Force on officials are unveiling measures Property Appraisal & Valuation designed to reduce racial bias Equity, or PAVE. In a report issued ahead of the in home appraisals as part of an effort to narrow the persistent event, administration officials wealth gap between racial wrote that “bias in home valuations limits the ability of Black groups.

Among the measures are a leg- and Brown families to enjoy the islative attempt to induce the ap- financial returns associated with praisal industry to identify and homeownership, thereby conreduce inequities in apprais- tributing to the already sprawling racial wealth gap.”

Biden launched the RACIAL BIAS IN APPRAISALS HAVE effort in June during a commemoCOST THE TYPICAL BLACK-OWNED centennial ration of the Tulsa Race Massacre. At the event, HOME $48,000 IN VALUE. he noted that the rate of Black homeownership als and providing consumers a today is lower than it was half a clearer path to having a suspect century ago.

“That’s wrong, and we’re comappraisal reconsidered.

At a White House event on mitted to changing that,” Biden March 23, Harris, U.S. Depart- said then.

The intertwined issues of obment of Housing & Urban Development Secretary Marcia stacles to homeownership and Fudge and Susan Rice, President devaluation of Black neighbor-

BY DENNIS RODKIN

The federal effort, mirrored in Illinois by a statewide task force proposal that is making its way through Springfield, comes in response to many media reports over the past few years of a pattern of racial bias in home appraisals.

Some reports have shown that when Black homeowners remove personal photos and Black memorabilia to eliminate hints that the homeowners aren’t white, the appraised value goes up.

In October, Illinois Realtors, a statewide business group, released results of its own study that found “there’s a significant relationship between race and wheth-

er the homeowner gets a low appraisal.”

Representatives of the appraisal industry have been supportive of the effort to weed out racial bias.

“We have all read stories where people of color felt as though their race played a role in how their property was appraised. This is simply unacceptable,” Rodman Schley, past president of the Chicago-based Appraisal Institute told Crain’s in October. “Appraisers take pride in being an objective source of real estate value information, and unfairly treating any individual goes against everything we stand for as a profession.”

3/25/22 2:36 PM

8 MARCH 28, 2022 • CRAIN’S CHICAGO BUSINESS

CRAIN’S LIST

Stocks’ rise lifted top money managers With the S&P 500 rising 27% last year, assets under management jumped

ELIJAH NOUVELAGE/BLOOMBERG

BY SOPHIE RODGERS

With customers defecting, Geico imposes another rate hike The fourth-largest auto insurer in Illinois has filed for its second 6% average rate increase in less than six months. It’s losing market share rapidly, state regulatory filings show.

BY STEVE DANIELS Geico is hiking average auto insurance rates in Illinois by 6%, just five months after imposing a separate 6% increase.

The Chevy Chase, Md.-based company, whose frequent advertisements focus heavily on savings for those who switch from rivals, is trying to keep up with inflation in replacing and repairing damaged vehicles.

But the steady diet of price hikes is rapidly eroding Geico’s market share in Illinois.

The number of policies written by its primary auto unit serving drivers in this state dropped a remarkable 9% in just the last six months, according to filings with the Illinois Department of Insurance.

In a little over three years, the number of policies Geico Casualty has on the books in Illinois has fallen 20%, according to fil-

to the filing. It goes into effect for existing customers on May 30.

The previous increase, which took effect in early December, also added a little over $100 to the average yearly insurance bill.

Between the two actions, Geico customers will be paying over $17 more a month to insure their cars.

Since early 2018, the average Geico driver in Illinois will have seen their annual premium jump by $480, or $40 per month, once this new increase takes effect, according to filings.

ADDING TO INFLATION

Rapidly increasing car insurance costs are exacerbating the inflation drivers already see at the gas pump. Gasoline costs are at their highest level in decades, prompting local government officials like Chicago Mayor Lori Lightfoot to consider gasGEICO MAY BE SUFFERING MORE DEFECTIONS taxInholidays.

Illinois, unlike many othTHAN COMPETITORS BECAUSE ITS MARKETING er states, insurance regulators have little to no say over how MESSAGE HAS EMPHASIZED LOW COST. companies charge for coverage.

But the Insurance Department ings. Geico Casualty, which insures about recently demanded that auto insurers here three-quarters of the drivers in Illinois provide and make public their profits in the served by Geico overall, now has about as state from 2019 through 2021. The informamany auto policies in Illinois as it did in ear- tion is supposed to be available to the publy 2018. lic by the end of June.

Geico was the fourth-largest auto insurer The department’s action was in rehere by premiums in 2020, according to In- sponse to 16 state senators and consumer surance Department data, the most recent advocates, who believe auto insurers colavailable. It was the second-largest in the lected windfall profits in 2020 and early U.S. 2021, when pandemic restrictions kept This new rate hike, filed March 11 and most commuters at home. The idea is to made public March 22, will increase the av- pressure insurers, most of which are raperage annual premium by $103, according idly hiking rates just as Geico is, to rebate

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more than the refunds most of them provided in 2020.

Geico may be suffering more customer defections than competitors because its marketing message over decades consistently has emphasized low cost rather than value. The familiar refrain pounded into the heads of TV viewers, particularly sports fans, is that 15 minutes could save you 15% or more on car insurance. The company operates almost entirely over the internet or via call centers.

Times like this, with rates rising noticeably, prompting more customers than normal to test the market, are when agents prove their worth. Agents focus on retaining customers when they call to complain about higher costs.

Bloomington-based State Farm and Northbrook-based Allstate, the No. 1 and No. 2 auto insurers in Illinois, have their own army of agents. Even Progressive, Illinois’ third-largest auto insurer and a major online player like Geico, sells about half its policies through independent agents.

State Farm, by far the largest auto insurer in Illinois and also the biggest in the U.S., is hiking rates here by 5% on average. But its rates, unlike Geico and most others, will remain below where they were pre-pandemic, thanks to dramatic decreases across the country in 2020.

Both Allstate and Progressive dramatically increased rates in February.

Unusually, Geico doesn’t provide information on how the media can reach out with questions. A call to a media relations representative at Omaha, Neb.-based Berkshire Hathaway, Geico’s parent, wasn’t returned.

Last year was a good one for Chicago’s largest money managers. The top 25 firms on Crain’s latest list, ranked by total assets under management as of Dec. 31, saw a 17.9% increase in that metric from 2020. Though this isn’t a huge surprise, at least one of the primary asset classes managed by companies on the list—public company stock—rose in value significantly last year. The S&P 500 rose approximately 26.9% in 2021.

Cresset Asset Management, founded in 2017, is new to Crain’s list. The fast-growing firm comes in at No. 21 with nearly $22.8 billion in total assets managed.

Among its clients are corporations, educational institutions, foundations and high-net-worth individuals. Cresset saw a whopping 87.7% increase in assets under management from the previous year, largely attributable to two acquisitions in 2021. The firm acquired Houston-based Asset Management Advisors in July and Atlanta-based Berman Capital Advisors in September.

Meanwhile, PPM America fell from last year’s No. 6 to this year’s No. 10 with a 25.3% decrease in assets under management. The decrease was primarily due to withdrawals from a former U.K. affiliate, according to Julie Bruzek, senior managing director and head of marketing and communications at PPM America. The firm reported $79.2 billion in total assets under management as of Dec. 31.

Northern Trust Asset Management takes the No. 1 spot with total assets under management of $1.35 trillion, a 15.6% increase from 2020. Atlanta-based Invesco ranks No. 2 on our list, with assets under management of $445.75 billion—which reflects the firm’s assets managed only in Chicago.

And Envestnet worked its way up to our No. 3 position with a 37.6% increase in assets managed from 2020, reporting assets under management of $362 billion.

The full Excel version of the list features 34 money manager firms.

The list includes 2021 assets under management, types of investment clients and other exclusive data. To download the full list, become a Crain’s Data Member and head over to our Data Center at ChicagoBusiness.com/data-lists.

3/25/22 2:34 PM

CRAIN’S CHICAGO BUSINESS • MARCH 28, 2022 9

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10 MARCH 28, 2022 • CRAIN’S CHICAGO BUSINESS

LETTER FROM THE PUBLISHER

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The view of Chicago from Crain’s new offices is bright and inspiring

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office workers in this city and here’s a lot that goes elsewhere being isolated away into moving your offrom each other, we are indeed fice, even if most of committed to the city, this inyour staff hasn’t been credible downtown and the fuin one consistently for the past ture it holds both as a place to couple of years. do business and as the center Media people tend to resemof something potentially bigger. ble pack rats. Journalists are We are committed as a news savers—always afraid to let go organization not only to provide of a note or a document that the most accurate and actionmay elicit some nugget someable news and business inforwhere down the line.

Jim Kirk is publisher It’s a thing. and executive editor mation, but to go broader and raise the level of discourse on And despite having most of of Crain’s Chicago what needs to be fixed to make our content digitized, including Business. this an even better place to live, our print editions, we still hung on to volumes of our print work over the work and play. Racial and wealth equity are key. They are constant themes running years on dusty shelves.

So when we undertook the great purge through our excellent, ongoing Equity series.

Finding ways to solve such issues as in anticipation of our move from our offices last week to the Prudential Building, lit- crime, education funding, neighborhood erally the next office building to the east on investment, political corruption and penRandolph Street, it allowed us to take stock sion liabilities, among others, have been, of where we are at this moment as a news and will continue to be, the foundation of our award-winning Forum work. brand and where we are headed.

When these issues get addressed intelliFrom our new perch, we like what we see. And not just because of a fabulous gently, we become a much more attractive city to do business in. So many of our readview over Millennium Park.

Our move to new digs in open, collab- ers and partners understand that and want orative space more fit for a modern news to solve these issues, and we will continue organization is symbolic of what we intend to be the conduit through which these isto do going forward for our readers and sues, along with potential solutions, will be covered. our business partners alike.

We will continue to get smarter about First, it’s a sign that after two years of

how we convey this information to you.

Our goal is to deliver content via multiple platforms, putting our audience at the forefront in everything we do, so that we are easier to access when you want us and however you want us.

This all starts with our fabulous journalists. As I tell our team, nothing is more important than delivering the best, most accurate and fairest journalism possible.

At a moment when trust in the media is at a low point, I am proud that the journalism from Crain’s Chicago Business, and our sister brands both here in Chicago and elsewhere, is among the best anywhere in the country.

I’m biased, you might murmur.

So don’t ask me. Ask NewsGuard, which painstakingly reviews and investigates thousands of news sites to give readers a full, unbiased assessment of the validity of the information and news these sites deliver. This includes, very importantly, things like being transparent about correcting wrong information and how well news sites convey who is writing what on the site and how easy it is to access our journalists and more. (You can read more about their process at NewsGuardTech.com/about.)

We are committed to getting it right as well as correcting it when we don’t. It is why NewsGuard gives Crain’s Chicago Business, and sister brands in Detroit, Cleveland and New York, its highest rat-

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ing—a rare feat for multiple news brands under the same owner.

We may not make everyone happy in our ongoing coverage. But as a reader and a partner, you should know the level of care that goes into making sure what you’re consuming is accurate, comprehensive and fair.

This has been, and will continue to be, our commitment to you. I welcome your thoughts and ideas at jkirk@crain.com.

Thank you for reading.

YOUR VIEW

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delta variant wave of the pandemic.

To bolster the economic resiliency of our communities, we also deepened our work through Mayor Lightfoot’s signature neighborhood investment initiative, Invest South/West. Over the past two years, we’ve secured $1.4 billion in public and private investment across Invest South/West communities—giving historically underserved and underrepresented residents, community leaders and entrepreneurs the opportunity they deserve to improve their neighborhoods from the inside out.

Chicago’s business environment has also changed in a positive way thanks to the work we’ve done and Lightfoot’s leadership over the past two years. One of the first major efforts we undertook was creating the COVID-19 Recovery Task Force, which released the first-in-the-nation plan in July 2020 detailing our pathway out of the pandemic. The task force, which convened over 100 leaders from the business, government and nonprofit sectors, worked diligently to expand economic opportunities within our city. Their collaboration has led to several corporate relocations to Chicago in key growth sectors, the launch

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Chicago Business, 130 E. Randolph St., Suite 3200, Chicago, IL 60601, or email us at letters@chicagobusiness.com.

Please include your full name, the city from which you’re writing and a phone number for fact-checking purposes.

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Two years after COVID: The city’s view small-business loan fund in the ver the past two years, country. The fund allowed us to Chicago — like cities provide a lifeline to over 1,700 across the world — has small businesses and save 9,000 transformed in unimaginable jobs. Importantly, this fund also ways. We encountered and supported businesses that were fought an unknown virus, we not served by federal programs, watched in horror as the panincluding cash businesses, busidemic surged through our nesses owned by immigrants communities and shuttered and those that were less wellbusinesses, and we adjusted to banked. new ways of learning, working The mayor didn’t stop there. and socializing with others.

Under her direction, we also Despite these challenges, Samir Mayekar is the established the $10 million there are undeniable opportu- city of Chicago’s nities that have come from two deputy mayor for eco- Hospitality Relief Fund to years of the pandemic—many of nomic and neighbor- bring $10,000 grants to restaurants and bars. Our $5 milwhich pertain to our local econ- hood development. lion Microbusiness Recovery omy and business environment.

COVID-19, as we predicted, took a dis- Grant provided much-needed support to proportionate toll on our small businesses, businesses with four or fewer employees. which make up the backbone of our local Launching the $10 million Together Now economy and provide essential goods and grant program provided essential relief to services for our communities. As a result, small businesses working to recover from Mayor Lori Lightfoot acted quickly and bold- both the pandemic and damage sustained ly to address the challenges they were fac- during nationwide protests and unrest. ing. This effort includes the establishment We also introduced the $20 million Chi of the $100 million Chicago Small Business Biz Strong grant program to provide direct Resiliency Loan Fund, the largest city-run support to small businesses during the

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of large mental health-related support initiatives, regulatory streamlining for small businesses in the Chi Biz Strong package and regional efforts to promote tourism.

Speaking of corporate relocations, we’ve also championed a number of pro-Chicago decisions: 173 pro-Chicago decisions were made in 2021 alone, meaning 173 companies chose to set up shop or expand their business in our city. That momentum is showing no signs of slowing down anytime soon, given 31 new pro-Chicago decisions that have been made as of early March this year. In 2021, we minted 12 unicorns, or companies valued at $1 billion.

This brought our total up to 23, and our entrepreneurship community secured nearly $7 billion in venture capital—double what was secured in 2020.

For all the challenges we faced during the pandemic, the last two years have given us once-in-a-lifetime opportunities to invest in the people and businesses that make Chicago a global economic powerhouse.

As we look ahead to what’s next, we will continue to do everything in our power to ensure Chicago will be at the forefront of post-pandemic recovery.

Sound off: Send a column for the Opinion page to editor@ chicagobusiness.com. Please include a phone number for verification purposes, and limit submissions to 425 words or fewer.

3/25/22 2:38 PM

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CRAIN’S CHICAGO BUSINESS • MARCH 28, 2022 11

LETTER TO THE EDITOR

We must take back our city

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hicago, one of the greatest cities in the world, has a huge challenge to overcome. The crime in the city is out of control. It has been so bad for so long, our citizens have grown numb to it.

Fellow retailers tell me: “We lock our doors. We do not put merchandise into the showcases. We have gone appointment only.”

Customers tell me: “We don’t want to come downtown any longer. Please ship my order. I don’t feel safe walking the streets in Chicago.”

Who can blame them? Between the

carjackings and robberies, why take the risk of becoming a victim?

We have to take our city back. Our city, once one of the premier shopping destinations in the world, is losing its luster. The vacancy rate for retail shops on Michigan Avenue is the highest in decades. Why would any entrepreneur or large company risk a huge investment to open a store on a crime-ridden street?

Tourists and conventions are choosing to go to other cities. This is outrageous and we need to push back. Not only do the retailers need this revenue, the city does

as well. Above all, our citizens must feel safe and protected.

We all know the problem is very complicated and the solution is not a quick fix. But first, we have to start with consequences for these thugs looting our city. We have to get tough on crime. We have to support our police and let them do their jobs. Once they do, we have to prosecute to the fullest extent and not be lenient. What is to deter criminals without consequence? A civilized society needs laws and rules. The rules must be enforced.

This is Chicago, the largest “can do” city in the world. Chicago is an international business city with world-class companies, sport teams, restaurants and retailers. We need leadership. Also, I am asking our citizens to be vigilant. Vote for the politicians who are hard on crime and will stop this violence and chaos.

We must take our city back. Eight hundred murders and nearly 2,000 carjackings in 2021 is disgusting and unacceptable.

JERRY BERN JR. President & owner, Marshall Pierce & Co.

CRAIN’S CHICAGO BUSINESS

Chief executive officer KC Crain Group publisher/executive editor Jim Kirk Editor Ann Dwyer Creative director Thomas J. Linden Director of audience and engagement Elizabeth Couch Assistant managing editor/columnist Joe Cahill Assistant managing editor/digital Ann R. Weiler Assistant managing editor/news features Cassandra West Deputy digital editor Todd J. Behme Deputy digital editor/audience and social media Robert Garcia Digital design editor Jason McGregor

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For forty years, clients have trusted our skilled professionals to protect what matters most.

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3/25/22 2:38 PM

12 MARCH 28, 2022 • CRAIN’S CHICAGO BUSINESS

YOUR VIEW

When it comes to repairs, John Deere may reap what it has sown A new FTC complaint alleges that the Illinois farm equipment manufacturer is monopolizing the repair process

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software codes necessary for hen Missouri farmrepairing tractors and other er Jared Wilson’s farming equipment. By forcing equipment system Deere equipment owners to malfunctioned, he only use Deere repair services, was unable to test the hydrauDeere is using its market domlic pressure himself because inance to create an unfair mohe didn’t have access to John nopoly on repair.

Deere’s software diagnostic tool.

Deere’s dealership consoliHe had no other choice but to dation practices further reduce turn to a Deere “authorized techrepair choices for farmers. In nician.” He says that his machine Illinois, dealership mergers resat there for 32 days—32 days sult in approximately one Deere that Wilson could not prepare his David J. Lee is an chain for every 6,000 Illinois land for planting. associate at Illinois farms. Dealership consolidation The increasing integration of Public Interest Releads to almost no competition software into farm equipment search Group. between dealership networks has allowed manufacturers to take greater control over the repair pro- within the same county, which leaves few cess, locking farmers out of making certain or no choices when farmers need to repair repairs on their own tractors. To empower their tractors.

The FTC could bring immediate relief farmers, like Jared, with the repair tools they need to operate their farms, Illinois to Illinois farmers. The FTC’s enforcement Public Interest Research Group and farm- power means that it can force Deere to er advocates filed a complaint with the make needed tools available. The FTC also Federal Trade Commission against John has the subpoena power to leave no stone Deere recently over repair restrictions that unturned in investigating the extent of make it hard to obtain software and data Deere’s anticompetitive practices.

Shareholder advocates have tried warnnecessary to repair Deere equipment.

The complaint alleges that Deere is ing Deere of the potential for FTC actions violating antitrust laws by withholding and have called for Deere to give an account

of their anticompetitive repair policies.

“There is now a tsunami of right-to-repair legislation, potential action by the Federal Trade Commission on restrictive repair practices, a presidential order that specifically calls out concerns about tractor repair and mounting bad press facing Deere,” said shareholder advocate Andrea

Ranger. “As investors, that’s a great deal of risk for us to take on.”

Deere has the opportunity to address its Right to Repair issue before legislation, lawsuits and FTC enforcement come crashing down on them. Deere should take a proactive action to pre-emptively lift repair restrictions.

This bill gives consumers a leg up when battling insurance giants

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SB 1099 is legislation that levels the playing field between injury victims and multibillion-dollar insurance companies that would prey on them otherwise

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their valuable claims for penecently in a piece tinies on the dollar because they tled “Lawsuit sweepwere worn down by the insurstakes,” the American ance company starving them for Property Casualty years and dragging cases out as Insurance Association atlong as possible. Guess what— tacked SB 1099 and the conthe practice worked, and insursumer legal funding industry by ance company profits soared claiming they are suddenly to record levels. concerned about protectAfter seeing so many harding consumers. As a former working people fall victim to partner at a large insurance these practices, I decided to leave defense firm and one of the my partnership at that large defounding fathers of the con- Brian Garelli is presfense firm and level the playing sumer legal funding industry, ident of Preferred let me explain what is really be- Capital in Elmhurst. field for injury victims against the well-heeled insurance comhind the false attacks.

Over 30 years ago, I accepted a position panies. In the late 1990s, I started a compaas a young lawyer at one of the largest in- ny to provide small amounts of money to insurance defense firms in Chicago. Back jury victims so they could cover basic living then, insurance companies were more expenses like rent, utilities and food while reasonable, and I was regularly given au- their claims were pending so they could forthority to settle claims early on in litiga- go those low-ball settlement offers.

The money we provide consumers is not tion. However, insurance companies were unhappy with the billions in profits they used to finance the litigation, as was stated were earning and decided they could make in the article. It is used to ensure that they even more billions by denying every claim have a roof over their heads and can keep and then dragging out every case as long as the lights on while their case is making its way through the legal system. Consumer lepossible in the court system.

This change in claims-handling by in- gal funding is not financing the litigation. It surers was done solely to increase profits is allowing the typical consumer a little help at the sole expense of their insureds who so that they can get a fair and just settlement. faithfully pay premiums to them. As a re- It is a lifeline they can use to get what they sult, I saw injury victim after victim settle deserve, rather than what the insurance

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company thinks they are worth.

When the insurance companies saw that consumers now have a life preserver, they went on a smear campaign to discredit the industry. They want consumers as desperate as possible so they can prey on their anguish.

SB 1099 would specifically regulate the consumer legal funding industry in Illinois with some of the most comprehensive and consumer-friendly protections in the country. The legislation contains the lowest rate caps in the country that companies would operate under and makes the transactions fully non-recourse, which

means injury victims who lose their case owe the funding company nothing. That is why organizations like the Woodstock Institute, Illinois Trial Lawyers Association and the Illinois Bar Association support the bill.

SB 1099 is a bill that levels the playing field between injury victims and multibilliondollar insurance companies that would prey on them otherwise. Don’t believe for a second that the insurance industry suddenly became consumer advocates. They want this bill to fail for one reason: to fatten their bottom line by billions more.

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CRAIN’S CHICAGO BUSINESS • MARCH 28, 2022 13

YOUR VIEW

Are we celebrating progress too early?

Women’s rights are at a crisis point. After decades of progress toward gender rights and equality, the movement forward has stopped, and in fact, it has reversed. Where is the outrage?

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idential administration. Women must rom companies offering spebe able to control their own bodies. cial promotions and social This is just the tip of the iceberg. Fifty media posts thanking women, years ago, Title IX was a historic move to billboards honoring “hertoward equity in education. It is now story,” you can’t miss that March is threatened. Equal access to education Women’s History Month. However, as at every level is critical to the advancean activist and feminist for more than ment of women. And education, with60 years, I am less concerned about out fear of sexual harassment, is the recognizing women’s history and bare minimum that our children, no more concerned that we are at risk of matter their race or gender, deserve. repeating a history of inequality and Furthermore, COVID has revealed discrimination.

Why am I concerned?

Hedy Ratner is co-found- other areas of inequity, such as access to child care. One out of four women Women’s rights are at a crisis point. er of the Women’s who reported becoming unemployed After decades of progress in the march Business Development during the pandemic said it was betoward gender rights and equality, the Center in Chicago. cause of a lack of child care—twice the movement forward has stopped, and in fact, it has reversed. From health care to educa- rate among men.

A common thread to these threats is that they are tion to economics and business, gender equity has not just been eroded, there is an avalanche of lost all critical to women’s economic independence.

When I co-founded the Women’s Business Deground. velopment Center, it was because I was an advocate for social justice and parity, for civil, human and Consider these two moments in women’s history: women’s rights and for economic empowerment.

It was because we knew that in order for women to The Equal Pay Act of 1963: While there was initial progress in eliminating the pay gap between truly achieve equity, they needed to be able to supmen and women, progress has stalled. The gap port themselves and their families as well as change between men’s and women’s wages has barely the face of business and our economy. For years, we changed in the last 15 years, and progress toward fought to change public policies to ensure that female eliminating this gap through publicly reported data business owners had a level playing field to compete. had been halted by the Equal Employment Oppor- We worked tirelessly to change perceptions in the private and public sectors to help women win contunity Commission.

Even more troubling is that women of color have tracts and find investors. And, here we are more than an even greater pay gap. A 2021 report from the 35 years later, and female business owners are still at Economic Policy Institute found the median hourly a disadvantage in many areas—especially access to wage for white men was $25.09. The median hourly debt, equity capital and access to opportunities.

Where is the outrage? wage for white women is $20.59, for Black women As a lifelong advocate for racial and gender equi$17.04, and for Latina women it is only $15.53. This disparity persists across industries and education ty, I am horrified to see the progress that we fought levels. For example, a white male surgeon’s average for in the 1960s and 1970s fade away. At the same hourly pay is $63.41, a female Black surgeon earns time, there is more discussion and awareness of $46.59 per hour and a female Latina surgeon makes discrimination than ever before.

But we need to be more than aware. We can’t ne$42.95. It has been almost 60 years since the Equal Pay Act was passed, but yet the disparity persists. It glect the rights of women in the demand for diveris women of color struggling with the lowest wages sity, equity and inclusion.

As women, we should be outraged. We should be and the least opportunities. marching in the streets and in the halls of our state capitals and in Washington, D.C. And as a white Roe vs. Wade: It was a historic moment in 1973 when women finally had the ability to make de- woman, I will continue standing up for my brothcisions about their reproductive health. The abil- ers and sisters of color to advocate for racial equity.

We need to stand together to fight for real, tangiity to control your own body, to make decisions about your health, and therefore your future, is a ble changes in policy to eliminate the barriers that fundamental right. But this right is facing a grave are holding back all women and people of color. threat. Twenty-two states passed laws restricting Gender equity without racial equity is not true eqabortion access in 2021 alone. Texas, Florida and uity. As important as it is to remove visual repreArkansas are forging a path to eliminate any access sentations of racism and to change our vocabulary, to abortion with many other states following their it is even more important to dismantle the systemic lead. This month alone, we have seen a state Senate barriers that hold back women and people of color.

Before we celebrate the progress that has been committee in Oklahoma approve a bill that would prohibit abortion starting 30 days after the “prob- made in women’s history, we must make sure that able” start of a woman’s last monthly period. And we do not repeat it.

We must reclaim the ground we lost. By ensuring last week, Idaho passed a bill that would award a minimum of $20,000 to family members who sue, that all women, no matter their color, are able to including “a sibling of the preborn child for expos- have full and complete control over their health, we ing anyone assisting or encouraging an abortion,” are taking a step towards equity for all. By ensuring that every child has access to education free from even from another state.

While I cheer the historic nomination of Judge discrimination, we move toward a more equitable Ketanji Brown Jackson to the Supreme Court, her future. Access to opportunities must be inclusive of appointment is not enough to stop this march back women as well as people of color.

We must be relentless in our march forward. We to pre-Roe days. And the threat goes beyond abortion. While the Affordable Care Act, another historic cannot settle for small improvements in pay equity moment, mandated coverage for birth control, that followed by years with no progress. We must advoprogress has been eroded. Even the Title X family cate for change. And we must do this together. We planning network was under attack in the last pres- must do this today.

P012-P013_CCB_20220328.indd 13

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3/25/22 2:36 PM

14 MARCH 28, 2022 • CRAIN’S CHICAGO BUSINESS

Amalgamated Bank dispute could go to court

Citing regulatory roadblocks, the New York-based namesake last month pulled out of a $98 million deal to acquire the unaffiliated Chicago bank

to “materially and adversely affect our business” due to costly litigation, bad press, and negative reaction from investors and customers.

The combination appeared a natural fit when the two banks announced it in September.

Both banks were established in the early 1920s by the same clothing workers’ union. They were created to serve workers and unions. The New York bank is publicly traded, while the Chicago bank is majorityowned by the family of CEO Robert Wrobel.

IRONY

The Chicago bank serves about 900 unions and many municipal governments. Unions make up well over half its deposits and 13% of its loan portfolio, according to investor disclosures last year by the New York bank.

Amalgamated of Chicago had more than $1 billion in assets as of Dec. 31.

Amalgamated of New York touted the combination last year as a solidification of its self-described status as America’s “largest socially responsi-

STONE REAL ESTATE

lion in cash, crumbled abruptly last month. Unusually, there A dispute over the scotched was no provision in the merger combination of Chicago’s Amal- agreement for a break-up fee gamated Bank with its unaffil- to be paid to the Chicago bank iated New York namesake ap- if the New York buyer walked pears destined for a court battle. away.

The agreement does, as most New York-based Amalgamated Financial on March 15 re- such deals do, require both ceived a letter from the Chicago parties to use “commercially bank declaring the deal dead reasonable efforts” to secure after the New York bank an- regulatory and shareholder apnounced last month it would no provals. Any court battle is likelonger proceed due to regula- ly to assess whether the New tory roadblocks, according to a York-based bank made its best Securities & Exchange Commis- attempt to win approval from sion filing March 21 by Amal- the Federal Deposit Insurance Corp., which sources say raised gamated Financial. concerns about compliance with AMALGAMATED OF NEW YORK SAID IN the Community THE FILING THAT IT “DENIES THAT IT Reinvestment Act. BREACHED THE MERGER AGREEMENT.” Amalgamated of New York said The New York bank said in in the filing that it “denies that it the filing that it “has been ad- breached the merger agreement vised by (Amalgamated Chica- and would intend to vigorously go’s) counsel that AIC may seek defend any such claims.”

But in another SEC filing earcompensatory damages for an alleged breach of the merger lier this month, the New York bank made clear that its deciagreement.”

The deal, struck last year for sion to kill the deal isn’t without what would have been $98 mil- risk. It warned of the potential

BY STEVE DANIELS

Amalgamated Bank of Chicago’s headquarters at 30 N. LaSalle St. ble bank.” So there’s some irony that the deal died due to apparent demands by regulators for concessions tied to the Community Reinvestment Act, which is aimed at improving access to bank services in low-income areas.

A spokeswoman declined to confirm whether the Chicago bank had sent a letter and provided no other comment.

For Wrobel, who has worked for the Chicago bank for 50

years and is in his early 70s, the deal’s demise is a major financial blow. Through a series of unusual dealings, he and his family were set to earn a profit of about $50 million on a $4 million investment in taking over ownership of Amalgamated of Chicago just 14 years ago.

Observers don’t believe any other buyer is likely to match or even come close to the sale price Amalgamated of New York offered.

River North hotels sold for $130 million The sale comes just more than a month after Sunstone sold off An East Coast hotel investor the Hyatt Centric Chicago Magis raising its bet on the recovery nificent Mile in Streeterville, its of the downtown Chicago hotel only other Chicago hotel. The market, buying a pair of River River North deal makes SunNorth hotels from a West Coast stone the second real estate infirm that has now jumped ship vestment trust in recent months to cash out of the Chicago hofrom the local hospitality scene.

A venture of Warwick, R.I.- tel market entirely and cite the based Magna Hospitality Group city’s slow recovery from the recently paid $129.5 million for public health crisis. Orlando, the 368-room Embassy Suites Fla.-based Xenia Hotels & ReChicago Downtown at 600 N. sorts in January sold the former State St. and the 361-room Hil- Kimpton Hotel Monaco at 225 ton Garden Inn Magnificent Mile N. Wabash Ave. to a South Koreat 10 E. Grand Ave., according to an conglomerate and said it sees the downtown Chicago market strugTHE CHICAGO MARKET “HAS BEEN gling to bounce back from the pandemic.

HINDERED BY EXCESS SUPPLY AND The cash-outs illusAN INABILITY TO DRIVE MEANINGFUL trate the struggle that traded hotel RATE AND PROFITABILITY GROWTH.” publicly investors foresee in Chicago, where the Bryan Giglia, Sunstone CEO recovery of hotel persources familiar with the trans- formance has lagged that of other action. The company bought the major cities. Chicago’s heavy reliproperties from Sunstone Hotel ance on business travel and visiInvestors, an Irvine, Calif.-based tors tied to conventions and trade real estate investment trust that shows—both of which have yet to come back in a meaningful way— put them up for sale last fall.

BY DANNY ECKER

P014_CCB_20220328.indd 14

has weighed down local hoteliers’ bottom lines.

Sunstone CEO Bryan Giglia, who took the role earlier this month, said in a statement announcing the River North property sales that the Chicago market “has been hindered by excess supply and an inability to drive meaningful rate and profitability growth.” Sunstone executives signaled that loss of confidence in the market last month during a conference call with analysts, adding that rising local property taxes were another concern.

COSTAR GROUP

Sunstone Hotel Investors becomes the second REIT to exit the Chicago market in recent months

BRIGHTER DAYS AHEAD

Magna, meanwhile, is wagering on brighter days ahead for downtown hotels, especially those it can pick up for relatively low prices. The River North acquisitions come just eight months after Magna bought the 208-room St. Clair Hotel Magnificent Mile at 162 E. Ontario St., a property whose previous owner was staring down a deadline to pay off its loan.

Magna has now paid less for the Embassy Suites and Hilton Garden Inn hotels than the $142 million that Sunstone paid for the properties in separate deals in 2002 and 2012. That is partly a product of the losses it may have

The Embassy Suites at 600 N. State St. to endure while the market recovers—Sunstone said the hotels would generate a first-quarter net loss of $3.1 million to $3.6 million before the sale—and the fact that both properties need renovation work to be able to compete with downtown peers, sources said.

Average revenue per available room at downtown hotels last year was 40% below 2019 levels, according to hospitality data and analytics firm STR. That underperformed the average among the nation’s 25 larg-

est markets, which were down by an average of 33%, as well as the national average, which was down 17%, STR data shows.

A Magna spokesman did not respond to a request for comment.

Magna has stormed back into the downtown hotel market more than four years after its own exit. The firm developed the 191room Hilton Garden Inn at 66 E. Wacker Place and sold it in 2017 for nearly $58 million.

CoStar News first reported Magna’s purchase of the River North hotels.

3/25/22 2:30 PM

CRAIN’S CHICAGO BUSINESS • MARCH 28, 2022 15

Ghost kitchens’ rapid growth suggests they have a future beyond the pandemic Chief Business Officer Atul Sood.

But ghost kitchens aren’t without controversy. Some tradiout of established restaurants.

The continued rapid growth of tional restaurant owners worry virtual restaurants suggests they that they could do to restaurants have a future beyond the pan- what Uber did to the taxi indusdemic, which spurred a surge try. Virtual operators don’t need in carryout and delivery orders. costly prime locations and don’t It also shows how restaurant have reputations forged in bricktechnology, which started with and-mortar sites to uphold, online ordering platforms, con- some say. It’s another gripe for tinues to upend the industry. traditional restaurateurs who Digital ordering and delivery al- are also fed up with third-party low restaurants to operate with- delivery apps, which have faced out dining rooms and waitstaffs, allegations from the city over eliminating major expenses in a gouging restaurants, which they low-margin business. Now some deny.

“It doesn’t seem or feel right, restaurateurs are going even further, using artificial intelligence and I think it’s unfair to brickand-mortar,” says Scott Weiner, and robotics to replace chefs.

For now, the action is in virtu- co-owner of Fifty/50 Restaual restaurants. Even as COVID- rant Group. “These sort of fake brands that have a much lower over“THE PANDEMIC WAS A BOOST, BUT AS head than the rest us . . . the word WE HOPEFULLY COME TO THE END OF IT, of to describe them is parasite.”

IT’S NOT A DRAG.” Most ghost kitchAtul Sood, chief business officer, Kitchen United ens tout their ability to reduce barrirelated restrictions ebb, sales ers for entrepreneurs who don’t continue to rise at places like have the capital to open a tradiKitchen United, a California- tional restaurant.

CloudKitchens adviser Bradbased company with ghost kitchley Tusk responds that his comens in the Loop and River North.

“The pandemic was a boost, pany’s “low-risk kitchen space” but as we hopefully come to the helps restaurateurs who “strugend of it, it’s not a drag,” says gled during the pandemic and KITCHENS from Page 1

that don’t have the ability to afford a brick-and-mortar location.”

COMPLAINTS

Traditional restaurant owners aren’t the only critics of ghost kitchens. Neighbors of a CloudKitchens location on the North Side complained last year about double-parking delivery drivers, trucks blocking alleys and cooking odors wafting over the neighborhood, says Ald. Matt Martin, 47th.

CloudKitchens made changes to quell the anger, hiring people to direct traffic and leasing a nearby parking lot for delivery drivers. Martin says complaints have “gone down significantly.” Still, he introduced an ordinance last July that would restrict shared kitchen locations.

The measure remains in the City Council’s License Committee.

The city licenses shared kitchens and the Health Department inspects them, says a Business Affairs & Consumer Protection Department spokeswoman. The city also offers a Shared Kitchen User license, which allows an individual to use, lease or rent space at a shared kitchen.

Some brick-and-mortar restaurants are adding ghost kitchens as they work to recoup losses from the past two years.

Pescadero Seafood & Oyster Bar started selling two virtual brands out of its Lakeview restaurant last fall, says owner Nick Hynes. It’s one of about 30 restaurants working with Foodhaul, a ghost kitchen that was founded pre-pandemic by North Shore restaurant veteran Bill Stavrou. Foodhaul offers a handful of celebrity chef-developed virtual restaurant brands to its partners, who then get trained on how to cook the food and pay a licensing fee. The idea is to use excess kitchen capacity to bring in extra money for the restaurants, Stavrou says.

The partnership has paid off for Pescadero, which sells Smokeheads by Rick Tramonto and Pluck’d Wings by Dirk Flanigan. Hynes says the virtual brands boosted revenue 4% during a recent period “without adding additional overhead.”

“It’s basically just an added revenue stream without having to do much,” Hynes says.

“The omicron variant coming through, that really put a stress on everybody, and any added revenue’s going to help.”

OPPORTUNITY

Similarly, ghost kitchens that house many restaurant brands can serve as lower-barrier launching pads for aspiring

restaurateurs. West Pullman resident Jasiman Griffin-Green says she turned her baking hobby into a full-time gig after launching the Jars by Jasiman dessert shop in CloudKitchens’ Bronzeville location last year. She went from selling about 100 jars of dessert a week to 250 a day.

“Without being there, I don’t know if we would’ve been able to do it,” she says.

Still, Griffin-Green plans to open a brick-and-mortar location in Chicago’s South Shore neighborhood. She says she was getting several calls a day from customers wanting to meet her in person. That’s a nod to another growing pain facing new virtual brands: Most consumers still want transparency from the restaurants they patronize, virtual or not.

Ultimately, the restaurant world is changing, and operators must decide where they want to compete, says David Henkes, senior principal at industry consultancy Technomic.

“The competitive landscape has switched from brick-andmortar locations to the apps, or to cyberspace,” he says. “At the end of the day, they’re still competing essentially for that delivery, off-premise consumer. That part of the business has gotten a lot more competitive.”

Latinas Making Their Mark 2022 Congratulations to this year's honorees!

These Latinas are breaking barriers, leading, carving their own path to success – all while making sure they give back by providing a voice and platforms for others to follow in their footsteps.

Celia Meza

Rosa Botello

Corporation Counsel City of Chicago

Global Head of Supplier Diversity Motorola Solutions

Ángeles Martinez Valenciano

CEO National Diversity Council

P015_CCB_20220328.indd 15

3/25/22 3:04 PM

16 MARCH 28, 2022 • CRAIN’S CHICAGO BUSINESS

Blue Cross & Blue Shield’s parent shrinking, moving Downers Grove office Health Care Service Corp. is cutting its office footprint in the west suburb by about 25% as it embraces hybrid work The parent company of Blue Cross & Blue Shield of Illinois has signed the largest new suburban office lease since the start of the COVID-19 pandemic, a move that notches a crucial win for one Downers Grove landlord and creates a big headache for another.

In a deal that will shrink its office footprint in the western suburb by nearly 25%, Chicago-based Health Care Service Corp. signed on for more than 133,077 square feet at 3500 Lacey Road, the company confirmed.

HCSC’s Blue Cross & Blue Shield office will relocate to the building along with hundreds of employees from its longtime Downers Grove home at 1020 31st St., where its lease for roughly 177,000 square feet expires at the end of this year.

The move is in line with the COVID-era trend of companies recommitting to offices but cutting back on space as they adapt to the rise of remote work. HCSC is also upgrading to a newer and more recently renovated building, another common theme during the public health crisis as companies seek to compel employees to show up to the office rather than work from home.

A spokesman for HCSC said in a statement that the company “embraces a hybrid approach

to remote work” and that it will have shared seating—commonly known as “hoteling”—in the new office to “provide increased flexibility for collaboration among teams located in Downers Grove.”

Blue Cross & Blue Shield has about 625 employees working a flexible in-office and remote schedule at the Downers Grove office, plus another 400 workers affiliated with the office that will primarily work remotely, the statement said.

GAP WIDENS

The softer overall demand and flight to higher-quality buildings has widened the gap between the haves and have-nots in the suburban office market, where vacancy reached an all-time high of 26.9% at the end of 2021, according to data from brokerage Jones Lang LaSalle. With many tenants like HCSC shedding space, the suburbs endured a net loss of 2.8 million square feet of tenants in 2020 and 2021 combined, JLL data shows.

It’s been a problem for any landlord with lots of available space to fill. But buildings like 3500 Lacey—also known as Esplanade II— that have been spruced up with tenant amenities have had more success leasing up their vacant space.

HCSC’s lease is a big one for 3500 Lacey owner Kore Investments, the Denver-based firm that bought the 13-story building

COMPANIES ON THE MOVE

ADVERTISING SECTION

To place your listing, visit www.chicagobusiness.com/companymoves or contact Debora Stein at 917.226.5470 / dstein@crain.com MERGERS & ACQUISITIONS

SHARE YOUR C O M PA N Y ’ S JOURNEY FGM Architects Chicago, IL 312-948-8461 www.fgmarchitects.com LeMay Erickson Willcox, based in Reston, Virginia has joined FGM Architects (FGMA). FGMA now comprises 165 professionals with offices in IL, MO, TX, VA, & WI. FGMA’s practice includes public safety & municipal design; PK-12/ higher education; recreation, faithbased & multifamily/mixed-use facilities; and federal projects. CEO John Dzarnowski says, “We can now demonstrate and provide a wider array of quality design solutions to clients in all regions, helping to build better communities in the process.”

Christopher Kehde an LEWA partner and Managing Director of the FGMA Reston office notes “we are excited to join the FGMA team, expanding our collective opportunities to build communities and provide exceptional places to live, work and play.”

P016_CCB_20220328.indd 16

For more information, contact Debora Stein at dstein@crain.com or submit directly to

CHICAGOBUSINESS.COM/ COMPANYMOVES

COSTAR GROUP

BY DANNY ECKER

3500 Lacey Road in Downers Grove in late 2019 for $129 million. The property, which sits on 20 acres next to Morton Arboretum, was 97% leased at the time.

But Kore took a hit at the property late last year when its largest tenant, supply-chain management company Havi Group, inked a deal to move its headquarters from Downers Grove to the Fulton Market District downtown. Havi executed an option to terminate its lease for 27% of the Downers Grove office building at the end of August 2022, sending Kore on a hunt to backfill the space amid weak demand.

Without Havi, the 584,000-squarefoot building was just 62% leased, according to a Bloomberg report tied to Kore’s nearly $86 million loan on the property. The mortgage was packaged with other loans and sold off to commercial mortgage-backed securities investors, making much of the building’s finances public.

But it only took a few months for Kore to snag HCSC to fill the majority of Havi’s space, which now brings the building back to 95% leased, according to real estate services company Cushman & Wakefield, whose brokers represented both the company and Kore in negotiating the deal.

“We are seeing businesses welcome employees back to the office with a focus on providing high-quality dynamic workplaces that cannot be replicated at home,” Cushman leasing agent Dan Svachula said in a statement, adding that Kore “has done an exemplary job in setting the scene for corporate occupiers like Health Care

Service Corporation and its employees.”

Esplanade II has proven to be resilient after losing tenants. The building was previously home to Sara Lee before the consumer goods company uprooted and relocated its Hillshire Brands spinoff to the West Loop in 2012. But the building was back to 86% leased two years later after landing new leases with Havi Group, investment manager Invesco and sports nutrition company Glanbia Performance Nutrition.

CHALLENGE

The latest leasing musical chairs now creates a challenge for Blue Cross & Blue Shield’s current landlord, a venture of Hallandale Beach, Fla.-based Accesso Partners. The insurance company currently occupies almost 82% of the 218,000-square-foot property, which is one of two buildings in the Highland Oaks office park that Accesso bought in 2014 for $46 million. Accesso financed that acquisition with a nearly $35 million loan that was also sold off to CMBS investors.

Accesso is “working aggressively with leasing (agents) to identify new tenants” and is considering renovation work to try to appeal to new users amid weak demand, according to a Bloomberg report tied to the mortgage. The loan is due to mature in November 2024.

An Accesso spokesperson did not provide a comment.

The office market in Downers Grove and its neighboring suburbs is in better shape than the

Chicago suburbs at large, with average vacancy of 22.3% at the end of 2021, according to JLL data.

Vacancy among the highest-quality—or Class A—buildings in the submarket was just 20.3%, the lowest of all suburban submarkets tracked by JLL. Other companies and real estate investors have made recent new commitments to the area, including tech consulting firm BDO Digital signing the first office lease at the revamped former McDonald’s headquarters campus in Oak Brook. New Yorkbased real estate firm Group RMC also paid close to $100 million for four Downers Grove office buildings, including the Highland Landmark III property across the street from Accesso’s Highland Oaks buildings.

HCSC is the nation’s seventh-largest health insurer and owns Blue Cross & Blue Shield plans in Illinois, Texas, Oklahoma, Montana and New Mexico. The company’s net income jumped by 75% in 2020 to nearly $4 billion, driven up by more people enrolling in HCSC health insurance plans.

Blue Cross & Blue Shield of Illinois is based downtown but has 870 workers based in Naperville and 150 based in Waukegan, in addition to the Downers Grove office.

Cushman’s Svachula and Kevin Clifton are part of the team that oversees leasing at 3500 Lacey.

Cushman brokers Dan Maslauski and Michael Sessa negotiated the new lease on behalf of HCSC.

3/25/22 2:32 PM

PEOPLE ON THE MOVE

Advertising Section To place your listing, visit www.chicagobusiness.com/peoplemoves or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com

ACCOUNTING

ARCHITECTURE / DESIGN

CONSTRUCTION

NON-PROFIT

PROFESSIONAL SERVICES

ORBA, Chicago

HKS, Inc., Chicago

Pepper Construction, Chicago

West Monroe, Chicago

ORBA, one of Chicago’s largest public accounting firms, welcomes Jennifer Moore, CPA, MAcc, and Kelli Ono to the firm.

Jennifer Moore joins the firm’s Tax Group as a Senior Manager. She has Moore experience reviewing and preparing individual, corporate, partnership, trust and estate tax returns. She is also highly adept in managing engagements and completing income tax projections and estimates Ono for corporations and high-net-worth individuals.

Kelli Ono joins the firm’s Audit Group.

She has experience analyzing financial data, performing audit procedures, and conducting audits and reviews.

She is currently working on obtaining her CPA certification.

HKS, Inc. is pleased to announce the promotion of Janhvi Jakkal, AIA, ACHA, LEED AP, to Principal and Chicago Health Practice Leader for the global architecture firm. A seasoned healthcare architect, she utilizes lean design tools and an integrated design approach to facilitate interactive workshops on operational, logistical and functional issues.

This process enables the design team and her clients’ stakeholders to make key design decisions that improve clinical outcomes.

Pepper Construction Group is proud to promote Sean Murray to Vice President of Content Strategy. In his new role, Sean will develop strategies and content that showcase Pepper’s thought leadership and activate our mission to improve people’s quality of life through the built environment.

This includes oversight of Pepper’s website and blog. A 25+ year veteran in marketing, communications and creative services, Sean will continue strategically preparing teams as they pursue new opportunities.

Corporation for Supportive Housing (CSH), Chicago

ARCHITECTURE / DESIGN HKS, Inc., Chicago HKS, Inc. is pleased to announce the promotions of Chicago leaders Rand Ekman, FAIA, LEED Fellow, to Shareholder Principal and Dr. Tommy Zakrzewski, PHD, BEMP, Ekman CEM, CMVP, WELL AP, LEED O+M, LEED BD+C, to Principal at the global architecture firm. As HKS’ Chief Sustainability Officer, Rand brings purpose and generosity to the firm’s approach to sustainability and driving Zakrzewski measurable change advancing sustainability in both practice and approach, inside and outside the firm.

As Director of Building Engineering Physics, Tommy leads HKS in the integration of optimizing the physical characteristics of buildings and their systems to balance energy demands, exploit natural energy sources and minimize the reliance on carbonbased energy sources.

PROFESSIONAL SERVICES

ARCHITECTURE / LIGHTING

West Monroe, Chicago

West Monroe, Chicago

AKLD Lighting Design, Wilmette

Calvin Cheng has been promoted to Managing Director, Product & Experience Lab. He delivers customer-centric strategies and digital solutions to improve his clients’ customer experience, operational efficiency, and financial performance. As a leader in the Products & Experience Lab, Calvin is known for his passion for helping clients succeed and has deep expertise in digital strategy, innovation, customer experience, and digital technology. He joined West Monroe in 2018.

Mike Patelski has been promoted to Managing Director, Energy & Utilities. He works with utilities to strategically launch complex modernization initiatives to deliver operational efficiency and performance benefits. He has honed essential skills for managing complex programs that keep all eyes focused on value. This includes seasoned experience and a practical approach to delivering advanced technology programs with an emphasis on strategy, program management, and more. He joined West Monroe in 2010.

AKLD Lighting Design announces Ann Reo as Senior Associate, Design & Business Development. As part of the design team from schematic through owner occupation, Reo will lead projects as a Senior Lighting Designer. Her experience includes corporate office, museums, retail, convention centers, and exterior lighting for public parks & building façades. Reo will also lead business development and marketing.

She has won lighting & product design awards & has received patents for LED luminaire design.

EDUCATION Loyola University, Chicago Loyola University Chicago has named Claire Noonan, D.Min. Vice President for Mission Integration effective July 1, 2022. Noonan is a national leader and published author on spirituality, higher education, and Catholic thought. Since 2008 she has worked at Dominican University–most recently as Vice President for Mission and Planning. She achieved her D.Min. from the Catholic Theological Union, M.Div. at the Jesuit School of Theology at Berkeley, and her BA from The Catholic University of America.

BANKING First Bank Chicago, Northbrook First Bank Chicago, a Division of First Bank of Highland Park, proudly welcomes Ewa Ziarnik to our team as Assistant Vice President, Treasury Solutions Manager.

Ewa is responsible for supporting our growth strategy by enhancing client relationships while maintaining the overall quality of our suite of Treasury Management and Private Banking solutions. Ewa brings over 15 years of banking expertise and comes to us from Fifth Third Bank.

HKS, Inc., Chicago

P017_CCB_20220328_v1.indd 1

Brian Pacula has been promoted to Managing Director, Operations Excellence. He helps organizations problemsolve operational, technology, and logistics issues across the supply chain. By combining substantial operations know-how with technology and engineering expertise, Brian helps his consumer & industrial product, private equity, and other clients achieve productivity gains. He joined West Monroe in 2007.

PROFESSIONAL SERVICES

ARCHITECTURE / DESIGN

HKS, Inc. is pleased to announce the promotions of Karl Gustafson, AIA, LEED AP BD+C to Principal and Prince Ambooken to Vice President at the global architecture firm. Gustafson A proven leader as Senior Project Architect, Karl’s project experience is focused on corporate headquarters and corporate campus work.

He brings design skills, technical knowledge and construction experience Ambooken together to further enhance the design and ensure the design vision is built.

As a Mission Critical Team Leader, Prince provides a high level of expertise and design experience for Mission Critical projects in the U.S. and abroad.

He has always been a strong advocate for his clients, projects, community and will always work towards the success of those key elements.

Angela D. Brooks, Director, Illinois Programs at the Corporation for Supportive Housing (CSH), received notable recognitions for her housing development, policy, and implementation expertise.

Ms. Brooks was recently named president-elect of the National American Planning Association.

Also, Ms. Brooks was inducted into the American Institute of Certified Planners College class of 2022 Fellows for her outstanding achievements in urban planning.

EDUCATION Spertus Institute, Chicago Spertus Institute welcomes Alyssa Dickman as Faculty Chair of its Center for Jewish Leadership. Since 2020, Ms. Dickman has taught students in Spertus Institute’s Executive MA in Jewish Professional Studies and Certificate in Jewish Leadership programs.

She also teaches for Northwestern’s School of Professional Studies. In her new role, she will be helping develop new leadership-based programs to build the adaptive capacity of the people and organizations that serve Jewish communities.

CONSTRUCTION Constru, Chicago

MARKETING

Jessica Herrala is the Chief Revenue Officer at Constru, an AI-based platform changing construction through granular data in an easily accessible platform. Jessica has a deep passion for improving efficiencies through technology and has more than 25 years of experience in sales, communications, marketing, business development, strategy and operational improvement in the commercial construction and development industry. She previously held leadership roles at Clayco, Walsh and Skanska.

BIÂN, Chicago BIÂN appoints marketing veteran Justine Fedak as their new Chief Marketing & Culture Officer (CMCO).

Fedak brings more than 20 years of experience as an executive BMO in leadership where she was known as a “corporate hippie” and passionate advocate for MS. She will lead marketing, culture/innovation and support member initiatives while also being a key member in growing BIÂN’s membership of individuals who value community, health, fitness and social well-being.

PROFESSIONAL SERVICES West Monroe, Chicago Cameron Cross has been promoted to Managing Director, Operations Excellence. He helps clients become datadriven organizations.

Cameron serves as an advisor and partner to help clients define data and analytics strategies and helps guide large-scale implementation of data and analytics solutions. He joined West Monroe in 2011.

PROFESSIONAL SERVICES West Monroe, Chicago Eric Freshour has been promoted to Managing Director, Operations Excellence. He leads the firmwide Organizational Change Management team, advising clients on change management, organizational alignment, and value realization strategies. He is committed to developing the next generation of leaders, mentoring his peers on how to build collaborative relationships, and championing change management and employee experience at West Monroe and with clients. He joined West Monroe in 2010.

PROFESSIONAL SERVICES West Monroe, Chicago Elisabeth Moore has been promoted to Managing Director, Corporate Strategy. She leads the firm’s Strategy function that guides West Monroe through organic and inorganic growth. She has equipped the firm to enter new markets and achieve double-digit annual growth and above-industryaverage profitability. She also leads the Emerging Business group that supports scaling sustainable new business ventures within the firm.

Elisabeth joined West Monroe in 2013.

PROFESSIONAL SERVICES West Monroe, Chicago Amy Sparling has been promoted to Managing Director, Talent Acquisition. She leads the firm’s Talent Acquisition function by bringing the best, brightest, and most diverse talent to the firm. In addition to leading a team of high-caliber talent acquisition professionals, she is also responsible for identifying diversity partner organizations, fostering strategic alliances, and creating effective recruitment campaigns that exemplify the firm’s employer brand.

She joined West Monroe in 2012.

REAL ESTATE Cullinan Properties, Ltd., Burr Ridge Cullinan Properties has appointed Matthew A. Beverly as Chief Executive Officer, succeeding Christopher M. West, who has transitioned to Partner/Sr. Advisor. Matthew Beverly has served in numerous senior leadership roles during his 20-year career in commercial real estate, and joins Cullinan from Retail Properties of America, Inc. (RPAI, currently Kite Realty Group), where he most recently served as RPAI’s President, East Division. He previously served as Vice President, Investments for General Growth Properties (GGP, currently Brookfield Retail Properties). Beverly will help lead Cullinan Properties into new markets and effectively grow the company’s portfolio. Cullinan is a WBENC-certified business headquartered in Illinois.

3/22/22 9:41 AM

18 MARCH 28, 2022 • CRAIN’S CHICAGO BUSINESS

Here’s an eco-friendly alternative to demolishing a house: Deconstruction DECONSTRUCTION from Page 1 the old house quickly and truck the debris away, as the owners of a nearby property did this year.

Instead, these owners, who bought the 1.78-acre property through a trust that conceals their names, are having the old house deconstructed by hand, all the way down to the concrete foundation.

“Building houses must be fun,” says Steve Filyo, head of BlueEarth Deconstruction, the St. Charles firm that’s taking apart the house, “but unbuilding them is much cooler.”

That’s because roughly 80% of the materials in this house, from raw wiring and pipes to finished cabinetry and flooring, can be reused instead of going to a landfill.

NEW SEQUENCE

P018_CCB_20220328.indd 18

Gary Beyerl, from left, Steve Filyo and Ed Twohey at the Hibbard Road property in Winnetka. Beyerl and Twohey are with BBA Architects; Filyo is head of BlueEarth Deconstruction. house and a building permit for the new house have to be issued at the same time.

“We don’t want to end up with a hole in the ground if building doesn’t happen,” says David Schoon, Winnetka’s community development director. That means properties like the one on Hibbard Road sit untouched for months, while architects draw up plans and building officials scrutinize them.

“That whole time, the family’s clock is ticking, ticking, ticking,” says Murphy, who is not involved with the Hibbard Road project. If taking down the old house can’t even start until plans for the new house are approved, the family incurs not only the additional carrying cost, but also the frustration of waiting to start building.

For this property, BlueEarth and the new home’s architects, Gary Beyerl and Ed Twohey of South Loop firm BBA Architects, secured permission from Schoon’s department to uncouple the two permits and get a demo permit ahead of a building permit. That seemingly small bureaucratic change, Twohey and Beyerl both said, may make a big difference for families planning teardowns. The architects could not estimate what the property owners will save in carrying costs.

If success with this pilot results in Winnetka opening up its permit rules, “we’ll see more people saying, ‘Let’s not throw so much (of the old house) away,’ ” Beyerl says.

PHOTOS BY JOHN R. BOEHM

Deconstruction of houses isn’t new, although a Winnetka buildings official says this is likely the first “down to the ground” deconstruction in that town. What’s new is the sequence of events, devised for this pilot effort in Winnetka expressly to make deconstruction more appealing to the families who build new homes on old sites. If it works, several industry sources say, far more people will do it, mitigating a key concern with home teardowns: the environmental impact of throwing most of the old house away.

Deconstructing the Hibbard Road house will take about two months, Filyo said, compared to about a week for conventional demolition.

“A lot of people who tear down a worn-out old house want to do the right thing,” says Jodi Murphy, whose La Grange Park firm, Murco Recycling, does a less-comprehensive version of home deconstruction she calls “soft stripping.”

“They want to see as much of the old house reused as you can do,” Murphy says. “But when it comes down to, ‘Do I pay thousands of dollars in carrying costs for months while it’s deconstructed or (for) weeks while it’s demolished?’ sometimes they can’t afford to do the right thing.”

Filyo says an appraiser estimated that the house on Hibbard Road contains reusable building materials worth at least $225,000.

The property owners will donate the materials to a nonprofit that specializes in reuse. Assuming they’re in a tax bracket of 35% or more, the donation value will get them a tax break worth about $70,000. The cost to deconstruct the house is about $110,000, which makes the net cost of deconstruction $40,000. That’s a savings compared to an estimated $50,000 to $60,000 for conventional demolition.

The sticking point is the slow speed of by-hand deconstruction. In Winnetka and several other high-end suburbs with numerous teardowns, the process is elongated by a single rule: A demolition permit for the old

Schoon says that in Winnetka, about two dozen teardowns typically happen each year, with “maybe two or three more per year” during the white-hot housing market of the pandemic era.

Of the two dozen, Schoon said, two or three use some level of deconstruction, such as Murphy’s “soft-stripping,” where high-end cabinets, mantelpieces, landscape stone and other nice finishes are sold for reuse.

WIN-WIN

If getting a tax deduction for donating materials they’d otherwise have landfilled sounds like a sweet deal for the homeowners, it’s beneficial on the other end, too, where remodelers and oth-

ers buy the donated materials.

Ken Ortiz, head of the Midwest division of The ReUse People, says “there’s more than enough demand” for the materials he’ll get from the Hibbard Road project and others. The nonprofit organization has a 25,000-squarefoot warehouse and lumberyard, the ReUse Depot on Madison Street in Maywood, where it pays market-price rent and sells donated materials, most at about 20% of market prices, he says.

(Highly desirable items like rare, old-growth wood go for full market value.)

The stockpile of some 250,000 items appeals not only to homeowners and contractors trying to cut costs, Ortiz said, but to theater companies looking for

vintage-looking interiors. Little lasts in stock for more than three years, he said.

“Eventually everything does sell,” Ortiz says. “As long as it’s reusable, we can sell it.”

That’s where the appraiser’s role is crucial, Filyo says. He works with several who have expertise in analyzing what materials in a building can and can’t be reused, and at what price. Usually 80% or more can be reused, which Beyerl says is a pleasant surprise for clients who expected to see most of the debris trucked off to landfills.

If the Hibbard Road project brings down the cost of deconstruction a little further, the surprise factor may go up and the amount of landfilled waste down.

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Find your next corporate tenant or leaser.

Panel offers ideas for Mag Mile upgrades MAG MILE from Page 3 The panel also recommends creating “a grand public common” stretching east from the Water Tower all the way to Lake Shore Drive.

For decades, the Magnificent Mile had been one of the top shopping destinations in the country, mentioned in the same sentence as Fifth Avenue in New York and Rodeo Drive in Beverly Hills. But today, the boulevard offers little to differentiate itself from a shopping mall. Its current retail makeup is “too homogenous to sustain tourist draw,” the report says.

“Most retailers on North Michigan Avenue can be found in any sizable suburban mall, and merchandising is largely identical to what shoppers can find elsewhere, including online,” the report says.

“Dining and entertainment options are also limited.”

Led by Alicia Berg, an assistant vice president at the University of Chicago and former Chicago planning commissioner, the 11-member ULI panel met for a two-day brainstorming session in late October and included local professionals in planning, architecture, law and real estate.

The panel’s report highlighted the importance of North Michigan Avenue to the Chicago economy, noting that in 2020, the sales tax drop for the ZIP code that includes the Mag Mile resulted in a 23% loss in the city’s total sales tax revenue that year.

The boulevard’s retail vacancy rate stands at 24.7%, down from 26% last year, but up from 12% in 2018, according to Chicago-based Cushman & Wakefield. Two of its big vertical malls, Water Tower Place and the Shops at North Bridge, are struggling. North Bridge has lost so much value that an investor in the property recently transferred its stake to its partner and recorded a $28 million loss in the transaction.

The ULI panel interviewed 60 people as part of its research.

When asked to identify their top concern about the district, each gave the same answer: crime and public safety. Recent carjackings and smash-and-grab thefts in the area have hurt the Mag Mile’s image.

“Without a more concerted effort to reduce actual crime and the perception of it, any revitalization strategies are not likely to have a significant impact,” the report says.

MORE SECURITY, COMMON AREAS

Connect with Claudia Hippel at claudia.hippel@crain.com for more information.

P020_CCB_20220328.indd 20

The panel recommends that the Chicago Police Department increase its visibility on the avenue to deter crime, with more officers on foot or horseback, and expand its collaborative policing agreement with Northwestern University.

Other ideas: Install more security cameras and launch a branding campaign, including a media strategy to counter the narrative that Michigan Avenue is unsafe.

The panel also took a hard look

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Aerial view, looking east from the historic Chicago Water Tower toward the lakefront: Relocating public service facilities can help transform this block into a grand “public commons” for Chicago. at Mag Mile’s streetscape. One problem: its sidewalks.

“They’re beautifully wide, but sadly there’s not much activity happening on them,” says Kimberly Bares, president and CEO of the Magnificent Mile Association, which promotes businesses on the avenue. “We just move people right along, like the moving walkway at O’Hare. We really want people to linger on the avenue.”

There are multiple solutions to that problem. The report recommends creating new seating and other sidewalk furniture, along with “pocket plazas,” to encourage people to stop, relax and eat. Landlords could modify their buildings to allow retailers and restaurants to open up to the street with floorto-ceiling windows and indoor/ outdoor spaces.

“Doing so would ‘erode the wall’ at the street level, visually connecting the street to the buildings along it and creating a lively, inviting environment for customers and passers-by,” the report says.

The city also should consider a new space for performances and programs within a “public common,” by relocating the Department of Water Management’s service yard and redeveloping a firehouse south of Water Tower Place, according to the panel. The moves would create space for a public plaza west of the Museum of Contemporary Art. Over the years, the Mag Mile’s center of gravity has shifted to its south end at the Chicago River, where Apple opened its glassy flagship store. To enliven the north end, the city could sponsor an international design competition for a bridge connecting the boulevard directly to the lakefront. The panel drew its inspiration for the idea from the “floating bridge” in Moscow, a

V-shaped pedestrian structure that juts out over the Moskva River.

“A bridge that cantilevered over the top of the Magnificent Mile before turning toward the lake would offer a stunning view of the avenue and its historic architecture,” the ULI report says.

Mag Mile landlords could also coordinate their efforts to create distinct retail zones along the boulevard. Small-format luxury retailers could congregate on the north end, connecting to Oak Street.

EXPERIENTIAL ATTRACTIONS

The next zone south, from Delaware Place to Chicago Avenue, could become home to experiential attractions, like virtual-reality theme parks, immersive exhibits and other ticketed experiences.

Mag Mile landlords have already taken baby steps in that direction, leasing space to concepts like the Dr. Seuss Experience, The Office Experience and the Museum of Ice Cream. Recruiting experiential tenants is one way the boulevard can become less like a shopping mall.

Large-format retailers could gather to the south, between Chicago Avenue and Illinois Street, with a “Chicago River Zone” connecting the Mag Mile to architecture boat tours and other attractions along the river.

Fixing the Mag Mile will take money. The City Council has already approved one of the panel’s recommendations: to create a special service area, or special taxing district, that would generate revenue to pay for various Mag Mile initiatives over the next three years. Longer term, the ULI panel is pushing for a business improvement district, a similar funding mechanism that would need state approval.

3/25/22 3:03 PM

CRAIN’S CHICAGO BUSINESS • MARCH 28, 2022 21

Boeing needs to deliver more planes, pronto. This exec has to make them.

BOEING from Page 1

GETTY IMAGES

out of one of its worst crises ever.

Since 2019, manufacturing defects and safety lapses have sidelined the 737 Max and 787 jets, hammering Boeing’s finances, angering customers, alienating regulators and giving archrival Airbus an opening to grab more orders.

Boeing suffered another blow March 21, when an older model of the 737, operated by China Eastern Airlines, crashed in southern China with 132 people aboard. China is a key market for Boeing, and it has yet to restart deliveries of the 737 Max to customers there.

In the past three years, Boeing’s total revenue is down 38%, and it hasn’t made a full-year profit. The company’s stock has been cut in half since regulators grounded the 737 Max in 2019 after two deadly crashes killed 346 people. Just as regulators cleared the 737 Max to fly again in late 2020, they raised questions about quality-control problems with the 787. Deliveries of the 787, a new long-range jet that was a big hit with customers, have been suspended since May.

DELIVERIES

Boeing’s hopes for financial recovery hinge to a large degree on Lund’s ability to accelerate commercial jet deliveries, which have fallen to half their level before the jets crashed and COVID-19 smothered demand for planes. A big jump in deliveries also would position the company to repair customer relationships, regain investor confidence and take the fight to Airbus again.

“She has to fix the problems on the ’87 and ramp up the ’37, and fix relations with the FAA,” says Scott Hamilton, a longtime Boeing watcher who’s managing director of Leeham, an aviation consultant in Bainbridge Island, Wash.

New 737s started rolling off the line again in 2020, but Boeing wants to ramp up production from 26 planes a month to 31. The company wants to gradually get 787 production back to five planes a month, well shy of its peak of about 14. Boeing also plans to increase production of the 777, from two planes a month to three, while delivering an updated version of the jet next year.

“This is our year to really get back on track,” Lund, who was promoted in December, said in an interview before the 737 crash in China. “It’s about delivery being predictable, getting rate increases to happen seamlessly. Our customers are counting on us. Executing flawlessly is difficult, and we need it across all programs.”

There’s also the matter of rebuilding Boeing’s relationship with the FAA, which deteriorated badly as investigations into the initial regulatory approval process for the 737 Max revealed the company didn’t fully disclose design changes that ultimately led to the crashes.

“It’s a lot,” she says of the to-do list, with more optimism than resignation. “We have challenges in front of us, but . . . this is stuff we

P021_CCB_20220328.indd 21

Elizabeth Lund is senior vice president and general manager of airplane programs at Boeing. know how to do: We design great airplanes and build great airplanes. We know how to increase rate and focus on quality. It’s really sort of getting our legs back under us.”

Such a to-do list would be no small feat in normal times, but nothing has been normal at Boeing since the 737 Max was grounded. The company hired a new CEO and replaced half its board of directors. Pandemic-related layoffs reduced headcount by 11,000, including about 2,500 engineers.

“It’s been a long time since resources have fallen to this level,” says Richard Aboulafia, managing director of AeroDynamic Advisory, an aerospace consulting firm based in Ann Arbor, Mich. “And they’re facing tremendous criticism from regulators and customers. It’s about as bad as I’ve ever seen it in terms of challenges. She has a lot of work cut out for her.”

Delivery delays continue to frustrate key customers. American Air-

lines said holdups in getting new 787s are forcing it to put off some international flying. United Airlines also grumbled about delivery delays at a recent investor conference.

If Lund can deliver, it will go a long way toward getting the company back into the good graces of customers and investors. It also would position her to rise higher at Boeing.

BACKGROUND

At 57, Lund is the highestranking female executive in Boeing’s commercial aircraft business.

She’s also one of five women on the 20-member executive council that reports to CEO Dave Calhoun.

She’s only the second woman to lead commercial-aircraft manufacturing at the company.

Lund came to Boeing in 1991 with a master’s degree in mechanical and aerospace engineering from the University of Missouri.

Her first job, as a seating engineer,

“You don’t go in and tell those guys how to do that job,” Corvi says.

“She had to be resilient and be a good listener and a good learner, and be firm. People supported her because they believed in her.”

One of the challenges Lund faces in getting 787 production back on track is doing it under closer FAA scrutiny than Boeing has ever had. The FAA will be doing the final inspections of aircraft, something that Boeing used to do.

Lund has put out fires before.

A decade ago, she succeeded in getting a new model of Boeing’s legendary 747 back on track after it had fallen behind schedule.

“She was competing for resources at a time when the 787 was sucking all the oxygen out of the room,” says Pat Shanahan, who once oversaw the 787 program and previously held the job Lund has now.

“They’ve put her in jobs where the company has had problems. She gets all the hard jobs, and she does them well.”

was to help airlines figure out seating layouts for the planes they were buying.

She moved into management before making the jump to manufacturing, where she had responsibility for production of several key aircraft—including the 777, 767 and 747—en route to overseeing all of Boeing’s supply chain for commercial aviation in 2019.

Along the way, she also was site leader for Boeing’s largest site, in Everett, Wash., and had stints in product development.

“To go from engineering, particularly as a woman, particularly then, to be the manufacturing leader in what’s been traditionally a male-leadership domain—it’s tough,” says Carolyn Corvi, the first woman to be vice president of airplane programs at Boeing, from 2005 to 2009. She promoted Lund from engineering management to lead production of the 777, as Boeing was overhauling how it made airplanes.

w BOEING STRUGGLES TO REGAIN ALTITUDE Sales and profit have been sapped by lower commercial-aircraft deliveries because of production delays with the 737 Max and 787.

TOTAL REVENUE

COMMERCIAL AIRCRAFT SALES

COMMERCIAL AIRCRAFT PROFIT

$125 billion

JETS DELIVERED 800

100

600

$62.29 billion

75

340

400 50

-$6.48 billion $19.49 billion

25 0

200 2019

2018

2019

2020

2021

2018

2019

2020

2021

2018

2020

2021

0

2018

2019

2020

2021

Source: Company filings

3/25/22 3:05 PM

22 MARCH 28, 2022 • CRAIN’S CHICAGO BUSINESS

Urban Land Institute panel offers guidance on how to revitalize LaSalle Street and property owners.

“You’ve got a lot of vacancy to deal with, and there isn’t a ‘there’ there on LaSalle Street anymore.

You’ve got to create a ‘there,’ ” said panel Chair Mary Ludgin, senior managing director and director of global investment research at Chicago-based real estate investment firm Heitman.

The ULI panel included local developers, architects and urban planners, and was tapped for its recommendation by the Chicago Department of Planning & Development and the Chicago Loop Alliance. ULI recently completed a similar exercise to create a new vision for the Magnificent Mile.

The task for the LaSalle Street panel was to devise ways to help it “become a live-work-play location” and assess what role financial incentives might play in bringing that vision to life, Ludgin said.

LACK OF VIBRANCY

At the heart of the problem was the panel’s estimate that 30% of the office inventory on LaSalle is vacant or will be soon as financial behemoths defect for newer buildings. In the two most impactful moves, Bank of America recently vacated its 830,000-square-foot office at 135 S. LaSalle St. when it moved to a new namesake tow-

er on Wacker Drive, while BMO Harris Bank is leaving behind its similarly massive footprint at 115 S. LaSalle St. for its new namesake skyscraper next to Union Station.

The owners of both LaSalle Street properties are poised to hand over the keys to their lenders.

After interviewing 70 LaSalle Street stakeholders, including building owners and officials from a variety of city departments, the panel arrived at two big financial suggestions to help speed up the street’s renaissance.

The first was to unfreeze the LaSalle Central tax-increment financing district, allowing money from that TIF to be spent for its original purpose of reviving a part of the city with severely outmoded buildings. Former Mayor Rahm Emanuel made a strategic political move in 2015 when he effectively blocked new TIF spending in the central area of the city. Downtown was thriving during his administration, and the money was to be directed toward helping resolve unfunded pension costs for the city and Chicago Public Schools.

That has continued thus far under Mayor Lori Lightfoot.

But the heart of the Loop now finds itself grappling with a lack of vibrancy in the wake of the pandemic, and providing TIF money to help “pedestrianize” LaSalle Street, add landscaping and help reim-

burse certain redevelopment costs for big, older buildings could help induce real estate investors to bet on the street’s future, Ludgin said.

“It can make a deal pencil out and cause them to say yes to this opportunity, rather than have them play somewhere else. That’s what we’re playing for,” she said.

BREAKING UP THE MONOTONY

The panel’s second financial recommendation was based on a proposal in Springfield that would allow the formation of business improvement districts, which apply special taxes on property owners to fund street improvements, programming or services like security.

The concept is similar to the commonly used special service area taxing districts in the city, but with building owners having more say over how properties within the district are assessed for purposes of the special tax. Building owners would also initiate the creation of such districts, whereas proposed SSAs are only blocked when enough property owners oppose them.

Bringing new uses to old office buildings will also be key to bringing back LaSalle Street’s vibrancy, the panel concluded, with big opportunities in the residential sector as demand for apartments has already surpassed pre-pandemic levels.

Ludgin pointed to a small example already completed in the

STEPHEN J. SERIO

LASALLE from Page 3

LaSalle Street, looking south, is estimated to have 30% of current or soon-to-be vacant office space.

National Life Building at 29 S. LaSalle St.—now the Millennium on LaSalle apartments—and said student housing, senior housing and a mix of high-end, midrange and affordable housing could help break up the corridor’s monotonous stretch of office buildings with ground-floor retail.

LaSalle “can’t reclaim what it was in the past because you can’t get the office tenant the environment they want. . . .It will cost a lot of money (to renovate buildings) and the owners can’t get it back in rent,” Ludgin said. “But you have tenants that would be excited by a really cool, central area space.”

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CRAIN’S CHICAGO BUSINESS • MARCH 28, 2022 23

In Kenilworth, a George Maher house revitalized The homeowners preserved the architect’s exterior and his art glass, while expanding the house and adding a pool and basketball gym. It’s being listed for $4.85 million. I BY DENNIS RODKIN

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hen Debbie and Jeff Hogan bought a historical Kenilworth house in 2014, they learned that two successive owners before them moved in with the intention of doing a round of renovations but never quite got around to doing it. That meant the house, built in 1914 on Woodstock Avenue, was overdue for some renewal work.

Over the next several years, the Hogans restored the original brick and stucco exterior and art glass windows, all designed by noted architect George W. Maher, as well as adding 8,000 square feet, including a below-ground basketball gym, and building a pool and cabana building.

Now, “the front is an original Maher house, and everything else is new,” says Jeff Hogan, a retired technology executive married to a retired attorney. It’s one of about three dozen in the town that Maher designed.

The house, on a little more than half an acre, is within a few blocks of a Metra station, New Trier High School, Kenilworth’s Lake Michigan beach and Plaza del Lago shopping center.

With their two children grown, the couple are planning to move to something smaller in the Chicago area and sample living in other parts of the country. They’re putting the house—six bedrooms and about 12,000 square feet—on the market this month at $4.85 million, represented by Mary Grant of @properties Christie’s International Real Estate.

Vol. 45, No. 12 – Crain’s Chicago Business (ISSN 0149-6956) is published weekly, except for the first week of July and the last week of December, at 130 E. Randolph St., Suite 3200, Chicago, IL 60601. $3.50 a copy, $169 a year. Outside the United States, add $50 a year for surface mail. Periodicals postage paid at Chicago, Ill. Postmaster: Send address changes to Crain’s Chicago Business, PO Box 433282, Palm Coast, FL 32143-9688. Four weeks’ notice required for change of address. © Entire contents copyright 2022 by Crain Communications Inc. All rights reserved.

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