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REAL ESTATE: Will downtown crime hamper the condo market rebound? PAGE 3

CRAIN’S LIST: The area’s largest out-of-town employers. PAGES 12-13

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Up next on MSNBC: Lori Lightfoot (again) The mayor grants access to national media for a reason

JOHN R. BOEHM

Gabriel Wiesen, owner of Beavers Coffee + Donuts food truck, is head of the Illinois Food Truck Association.

How COVID flattened food trucks’ tires No segment of the dining scene got hit harder

CHICAGO’S RESTAURANTS are roaring back to life, with COVID-­

weary patrons vying for tables and crowding onto outdoor patios. But for one of the most entrepreneurial segments of Chicago’s dining scene, food trucks, the pandemic-era funk drags on.

That’s because the lifeblood of the food truck business—hungry downtown office workers in search of a quick bite of a chicken tinga taco or an empanada on the go—are still largely working from home. And they’re showing few signs of returning in full force to the gleaming towers of the Loop anytime soon.

See FOOD TRUCKS on Page 16

BY ALLY MAROTTI

“FOOD TRUCKS, IN PARTICULAR, ARE VULNERABLE BECAUSE THEY’RE SUCH A BOOTSTRAPPED BUSINESS. OFTENTIMES IT’S SOMEONE’S LIFE SAVINGS” TIED UP IN THE ENTERPRISE. Gabriel Wiesen, food truck owner

Unlike Joy Reid or the Rev. Al Sharpton, Jonathan Capehart, “Morning Joe” Scarborough or Nicolle Wallace, Lori Lightfoot does not host her own interview show on MSNBC, the left-leaning cable TV network.

But she might as well.

According to official records of the mayor’s schedule obtained via a Freedom of Information Act request, Chicago’s mayor in just over two years in office has given exclusive, one-on-one interviews to the national MSNBC network an eye-popping 40 times. That’s once every 2½ weeks—and nearly twice the 22 sit-down interviews the mayor has granted in the same period combined to Chicago’s two major daily newspapers, the Tribune and the Sun-Times.

MSNBC

BY GREG HINZ AND A.D. QUIG

The same pattern applies to all of Lightfoot’s media relations.

While prominent national outlets from MSNBC to CNN and the New York Times have regular access to Lightfoot for in-depth, sit-down conversations, local outlets generally have to settle for the scrum of the mayor’s two- or three-times a week press availabilities, with limited ability to pursue a subject at length.

See LIGHTFOOT on Page 17

Why the nursing home biz is on life support Rising costs and sinking patient counts amid the pandemic could spark a consolidation wave the threat of coronavirus-related lawsuits. The financial toll threatThe nursing home business, ens to drive some companies unalready rocked by a dispropor- der, push others out of the elder tionate share of the past year and care industry and pave the way a half’s COVID-19 cases, is brac- for deeper-pocketed systems to ing for yet another pandemic-­ snap up struggling rivals.

The expected consolidation induced shake-up.

Many nursing home opera- wave comes amid an outbreak tors are struggling to stay afloat that has sickened about 80,000 in the face of high vacancy rates, rising costs, staff shortages and See NURSING HOMES on Page 21

BY STEPHANIE GOLDBERG

NEWSPAPER l VOL. 44, NO. 28 l COPYRIGHT 2021 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED

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CHICAGO COMES BACK

ON THE MARKET

What we’ll require from our workspaces as they slowly begin to reopen.

PAGE 4

Demolition was a possibility before this mansion was restored. PAGE 23

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2 July 12, 2021 • CRAIN’S CHICAGO BUSINESS

A surprising good news story at O’Hare

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which once housed only international flights but by around this time next year will be the new home to Delta Air Lines, which is upping its presence here. The steel and utility work is done. Now they just have to build it out.

That time frame also is notable on another count. Though my colleague John Pletz and I had to do a little gentle pushing to get her to say it, Rhee says she expects to break ground then on the first of the new satellite terminals that are the core of the O’Hare reHALF-ASLEEP PASSENGERS DON’T vamp, this one an extension off the far end of Concourse HAVE TO SCHLEP ALL OVER. C in Terminal 1, where United Airlines is based.

Following shortly thereafter will in 2028, all of the above not withbe another satellite terminal located standing. farther out on the field. And when In an interview in her office they are done, when their gates are at O’Hare, and during a tour of available, the city can demolish the recent field improvements, Rhee says the first little bit of revamping half-century-old T-2 and replace it with O’Hare’s new centerpiece.

O’Hare’s passenger facilities will That’s a spacious, tree- and woodcome on line in late 2022 or early filled new global terminal that will 2023. That’s 10 new gates being built at the east end of Terminal 5, allow dominant O’Hare carriers t’s literally an $8.5 billion bet, a highest-of-stakes gamble that, despite pandemics, political polarization, economic upheaval and more, they will come if Chicago builds it.

I’m talking about the huge terminal expansion and modernization job that’s in the initial stages of occurring at O’Hare International Airport—a job that according to city Aviation Commissioner Jamie Rhee is still on track for completion

I

United and American Airlines to locate their international flights close to connecting domestic flights so that half-asleep customers don’t have to schlep all over the place.

Design on all of that has continued despite the pandemic and now is about 10 percent complete, Rhee says. And the city’s intention has not changed: “We’re still on track to be completed by 2028.”

How believable is that? After all, if O’Hare spends all the money and new carriers and passengers don’t arrive, the airport’s costs and debt could rise so high that it will be price-uncompetitive.

Rhee says COVID in some ways actually helped the construction schedule, with the reduction in fights allowing the city to speed up construction of a new taxiway that will clear the area needed for the new terminals. She also points to recent announcements by Southwest Airlines that it’s opening up shop at O’Hare and by United that it plans to add another 100 flights from there in coming years as proof that

GREG HINZ ON POLITICS

the folks paying the construction bill are on board, too.

The best proof that Rhee can deliver is the mass of new runways that the new and expanded terminals will complement. Originally announced in 2001, it admittedly took longer to complete than the originally planned 2014. But just to get started required lots of litigation from noise-conscious suburbs, recovery from the post-9/11 collapse in air traffic and moving one cemetery while protecting another.

That all took time.

Nonetheless, the job will be done in a few months, when the last new runway opens. And I have to say, it’s hard not to believe after touring an enormous aircraft de-icing pad that was part of the

runway package, a “pad” that literally is foot-thick concrete covering what amounts to 17 football fields laid end to end.

I’m not saying there can’t and won’t be problems. That’s obvious from the years-long delay in reopening O’Hare’s people mover; the latest word on that is maybe this fall. The gates plan still is awaiting final federal environmental signoff.

But it’s hard to bet against a woman who not only survived the COVID madness and kept the airport running but with her husband started raising a young daughter, Giselle, they adopted just before the pandemic hit. For the city’s sake, I wish her luck. But here’s hoping she won’t need it.

Finger-pointing isn’t a crime-fighting plan

t seems ghoulish, somehow, to be arguing about statistics while a rain of bullets in Chicago this summer kills people in the streets.

Worse still, the people most responsible for fighting the violence are at odds, trying to finger each other for blame.

Chicago’s July Fourth weekend was the most violent since 2017—108 people shot and at least 17 people killed. The city is on a pace to match the body count from last year, with 362 homicides so far.

The 2020 death rate was up more than 40 percent from the prior year, a jump blamed in part on the COVID-19 pandemic.

Police Superintendent David Brown blames the Cook County courts for granting early release to people accused of violent crimes.

Chief Judge Tim Evans says there is no evidence connecting bail reform and the release of individuals awaiting trial to the increase in crime.

Mayor Lori Lightfoot has claimed, falsely, that the courts were closed for 15 months. State’s Attorney Kim Foxx says her office is ready to convict criminals—if only the cops could arrest more alleged criminals.

Even the Chicago City Council couldn’t resist temptations to get in on the act. Just hours before the July Fourth holiday began—perhaps the most challenging weekend of the year—the council hauled Brown down to City Hall and burned six hours with questions about why the city’s top cop does not have more answers for the city’s crime wave.

It’s cold comfort that Chicago is not alone. A 25 percent increase in homicides nationwide last year was blamed in part on people being cooped up during the pandemic.

But COVID restrictions are easing, and violent crime in major cities in the U.S. continues unabated.

Chicago got another notch of unwanted national notoriety July

P002_CCB_20210712.indd 2

7 when two federal agents and a Chicago police officer were shot hours before President Joe Biden’s visit to McHenry County.

The lack of a consensus among Chicago officials about how to fight the city’s crime wave is a symptom of the lack of an effective crime-fighting plan. Lightfoot in May described a “whole of government” approach—focused on four key zones plagued by violent crime and involving schools, libraries and family support services in the fight to cut violence.

The approach sounds good. But so did Brown’s plan to institute “de-escalation” tactics when he arrived in Chicago more than a year ago. A reprise of community policing sounded good, too. None have had much effect.

Mike Tyson is quoted as saying everyone has a plan until they get hit in the face. The same can be said about Chicago’s plans to fight violent crime. However appealing the plans, they so far have not held up once reality smacks them in the face.

To develop an effective approach, the leaders at least will need to start from a reliable set of facts.

Lightfoot repeatedly has blamed the Cook County courts for not putting criminals behind bars. “Our criminal courts have been shut down for 15 months,” she said at a June 28 press conference.

But reporting by the Better Government Association determined that most court operations continued, remotely and in person, throughout the pandemic. Jury trials resumed in March of this year.

Brown blames the Cook County courts’ reduction of cash bail and use of electronic monitoring. He points to specific cases in which people on pretrial release allegedly committed violent crimes.

But Evans correctly notes that

anecdotes are unreliable evidence.

And a Loyola University Chicago study of the implementation of bail reforms in Cook County found no increase in violent crime arising from bail reform. Besides, bail reform took effect in 2017, which makes it an improbable cause for a crime surge that started in 2020.

Brown proudly recites the Chicago Police Department’s success in taking illegal handguns off the streets. But he provides no evidence that this tactic is helping to reduce shootings overall.

The disputes, contradictions and statistical non sequiturs go on and

DAVID GREISING ON GOVERNMENT

on. Before long, the battling data does more to conceal the truth than to reveal it.

The bottom line is that Lightfoot and Brown—the people with the chief responsibility for safety in the streets—have yet to deliver a plan that works. When that plan comes, the state’s attorney’s office and the courts almost certainly will do

their parts.

First, tell us the plan. And once the plan takes effect, the data finally will create a story worth telling.

Crain’s contributor David Greising is president of the investigative watchdog Better Government Association.

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7/9/21 2:57 PM

CRAIN’S CHICAGO BUSINESS • JULY 12, 2021 3

Pat RETHINKING OFFICE SPACE? Ryan’s NOT THESE COMPANIES. second act

The octogenarian’s IPO plan has the look and feel of a tech startup

THE VIDEO GARAGE

BY STEVE DANIELS

Logistics firms are on a leasing tear despite the pandemic COVID-19 HAS BEEN A BOON for Chicago warehouse owners as demand soared for places to store products people buy online. But the rapid rise of companies that help ship things to and from those facilities is now making winners of local office landlords, too.

As many companies try to cut back on office space to adjust to the remote work movement, Chicago’s robust collection of third-party logistics and freight tech companies are almost all looking for more. Trucking company U.S. Xpress Enterprises and logistics software company Flock

Freight both signed new leases for downtown workspace over the past month, while another freight brokerage, Nolan Transportation Group, is finalizing a deal to open a new Fulton Market District office, according to sources familiar with the firm’s plans. A half-dozen other players in the fragmented and expanding industry are also in the market for more than half a million square feet of offices combined, real estate brokers say, a See LOGISTICS on Page 20

BY DANNY ECKER

“IT’S HARD TO BUILD TRUST WHEN SOMEONE IS A . . .

SHOULDER-UP VERSION OF THEMSELVES.” Brad Wilkins, Chief People Officer, Loadsmart

At 84, Patrick G. Ryan is one of the oldest, if not the oldest, founders and CEOs ever to take a company public, but the terms on which he’s doing so are more like a young tech wizard than the octogenarian insurance broker he is.

The pending initial public offering for the Aon founder’s second act, Ryan Specialty Group Holdings, lays out two classes of shares. The Class B shares for him and his initial investor group give them 10 votes for every one given to Class A shareholders.

In addition, the Ryan investor group gets to continue to nominate the chairman even if their collective stake in the company falls to as low as 10 percent, according to the registration statement with the Securities & Exchange Commission. The group is believed to have a majority stake, but Ryan’s recent partnership with a Canadian private-equity firm has diluted that.

The dual-class share structure, overwhelmingly frowned upon by shareholder advocates, is typically used by a company whose founder seeks to disrupt a traditional industry rather than a firm with a conventional roll-up strategy like Ryan’s. The argument in favor of such setups is that the founder is such a visionary that they shouldn’t be shackled by the quarter-to-quarter worries of a conventional CEO and the potential for activist shareholders to pressure them into shortterm decision-making.

See RYAN on Page 22

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C

Will downtown crime hamper the condo market rebound?

Sales are up, but some wonder if they could be better without a backdrop of violence

BY DENNIS RODKIN As the city’s post-pandemic reopening accelerated, so did the downtown condo market.

In the month ended July 7, 120 condos sold in the lakefront neighborhoods between Division Street on the north and Randolph Street on the south,

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according to Crain’s research in the records of Midwest Real Estate Data. That’s up from about 85 sales in each of the prior two months and an average of about 57 a month in the previous year.

But something else has also accelerated alongside reopening: incidents of crime and disorder downtown—and, in partic-

ular, in and near that same strip of desirable lakefront where condos are clustered.

Among them are a carjacking in River North in May and two in Old Town in June, a shooting in the 1100 block of North Lake Shore Drive, an unruly crowd of teenagers in the Loop on July 4 that resulted in 60 arrests, and a

man found keeping a rifle for no explained reason in a Streeterville hotel that overlooks Ohio Street Beach.

Will episodes like these harm the nascent recovery of the downtown condo market, which was already bruised from a year of pandemic and social unrest?

One real estate agent who lives and works in the affected area

believes it could.

“There’s a perception that there’s no control in the city,” says Kristine Farra, CEO of Gold Coast Exclusive Real Estate.

“When people buy in the Gold Coast, it’s about the Mag Mile lifestyle that comes with it, but if they’re seeing all this news, they’re not going to do it.”

See DOWNTOWN on Page 21

7/9/21 4:07 PM

So

4 July 12, 2021 • CRAIN’S CHICAGO BUSINESS

CHICAGO COMES BACK

The St. Clair Hotel at 162 E. Ontario St.

Streeterville hotel sale heads off debt bomb The St. Clair adds a data point on the value of downtown hotels after the pandemic crushed demand for travel

BY DANNY ECKER An East Coast hotel investor bought a Streeterville hotel whose previous owner was facing an imminent deadline to pay off its loan on the property as the downtown hospitality market slowly recovers from the COVID-19 fallout.

A venture of Warwick, R.I.-based Magna Hospitality Group bought the 208-room St. Clair Hotel Magnificent Mile at 162 E. Ontario St. last month, according to Cook County property records. Magna bought the 15-story property from a joint venture of Houston-based Westmont Hospitality Group and Five Mile Capital Partners, whose $19.9 million loan on it was due to mature this month, property records show.

The sale price was not listed, but it’s likely Magna paid close to the value of the loan, according to sources familiar with the transaction. Records show a venture of New York-based lender Amherst Capital Management transferred the mortgage to the Magna venture in conjunction with the sale. Spokesmen for Magna and Amherst couldn’t be reached, and a spokesman for the Westmont-Five Mile joint venture declined to comment.

The deal adds another data point showing the devastated value of downtown hotels at the hands of a pandemic that crushed travel demand for more than a year and could hamper it for several more.

While hotel occupancy has perked up from leisure visitors over the past couple of months with COVID restrictions waning, many hotel owners have struggled to make loan payments and will have a difficult time refinancing debt without leniency from their lenders or other sources of capital coming to the rescue.

At the St. Clair, which was previously a Red Roof Inn and reopened in 2018 after shutting for 18 months for a massive renovation and rebranding, Westmont and Five Mile recently hired brokerage Avison Young to try to sell the property for at least the value of the loan. But they struggled to find a buyer and were prepared to hand the keys

over to Amherst before the parties struck a deal with Magna as their debt deadline approached, sources familiar with the property say.

The sale ends an ownership run for Westmont and Five Mile that began in 2011 when their joint venture took control of 143 Red Roof Inn properties nationwide in a debt sale that resolved a massive foreclosure lawsuit involving the highly leveraged portfolio. Westmont and Five Mile refinanced a portfolio of 123 of those hotels in 2013, when the Streeterville property was appraised at $28 million, according to data from research firm Real Capital Analytics.

The owners closed the hotel in 2016 and began the multimillion-dollar renovation that turned the nearly century-old building into the first property in Red Roof Inn’s Red Collection, a soft brand meant to cater to what the company called “upscale economy travelers.”

But COVID instantly gutted demand last year, driving occupancy among downtown hotels that were open to the single digits initially and keeping it below 27 percent for every single week the rest of 2020, according to hospitality data and analytics company STR. Downtown occupancy has bounced back to nearly 50 percent in late June, though it remains well below the typical early summer occupancy rate of more than 80 percent, STR data shows.

Magna’s purchase marks its return to the downtown hotel market more than four years after it sold the 191-room Hilton Garden Inn in the Loop. Magna developed that 25-story hotel at 66 E. Wacker Place in 2015 and sold it in 2017.

Few hotels downtown have changed hands during the pandemic, but the St. Clair is the second Streeterville hotel to trade over the past several months. A venture controlled by hotel investor Remo Polselli bought the Inn of Chicago hotel one block south of the St. Clair at 162 E. Ohio St. in March, purchasing the 359-room property from New Yorkbased Stabilis Capital Management, which had been trying to sell the hotel since it seized it through foreclosure in 2017.

JOE CAHILL

WILL RETURN NEXT WEEK

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An architecture and design expert discusses the true purpose of the office and what we’ll require from our workspaces as they slowly begin to reopen

BY EMILY DRAKE AND TODD CONNOR Chicago Comes Back is a weekly series on ChicagoBusiness.com providing leadership insights to help your business move forward, written by leadership consultants Emily Drake and Todd Connor.

Drake and Connor facilitate Crain’s Leadership Academy. Drake is a licensed therapist, owner of the Collective Academy and a leadership coach. Connor is the founder of Bunker Labs and the Collective Academy and is also a leadership consultant.

Check out previous installments at ChicagoBusiness.com/comesback.

This week we’re joined by Todd Heiser, co-managing director of the Chicago office of architecture and design firm Gensler to learn more about how workspaces can level up culture, increase retention and encourage well-being as the city reopens.

EMILY DRAKE: Reopening has us thinking about physical space. For those of us who have been working from home, we may be leaving one space for another. And for those of us who never stopped going to the office, it could be getting a lot more full. And then there’s the importance of space in how we re-envision a better Chicago. Since that’s a big aspiration, I’d love to start with a big quote of yours we saw recently: “The future of work is delivering the feeling of presence.” It feels really big and ambitious, but tell us more about what you mean by that.

TODD HEISER: A lot was missing from our lives amid the pandemic, and the presence of others was at the top of the list. Coming out of this, it is really important that we deliver on the experience of a workplace.

The types of spaces we’ll return to, I like to call them magnetic spaces, people are only going to be excited to go because of the presence of one another. I hate the phrase “return to work” because we’ve been working more than ever. We brought work home, and going forward, I think we’ll be expected to bring home to work. So, we need workplaces that actually create a platform for people to thrive.

TODD CONNOR: I love your idea of bringing home to work. We’ve talked amongst ourselves about how fear of missing out is driving people to want to go to the office, too. There’s a lot of future forecasting, so I’m curious what you think we’ll see as we get back into physical spaces? And over the next couple of decades?

TH: The true purpose of an office, or physical space, is to tie us to our mission. Company culture doesn’t translate very well through a screen. An office allows for culture to evolve and for spontaneous moments of connection and inspiration.

Mentorship and coaching, if you look at Gensler’s research, has taken a huge hit during this time.

Especially for junior staff. We’re also missing separation between work and our home lives. I think the future of how workspaces support the whole human is only

GETTY IMAGES

GOOGLE

We’re bringing home to work from now on

five years down the road, and, again, brings elements of home to work. Cafes will be replaced with kitchens, for example—it becomes a place for cooking classes and interactivity. The ability to move our physical bodies will be important. Really nice gyms have become a mainstay.

One of our projects installed a boxing ring. These features present the employee with choices and options. That’s compelling.

ED: It sounds exciting. And it represents some shifts in our thinking about what an office means.

We’ve been focused on an equitable reopening for Chicago and wanting to be a city that sets the standard there. Every individual’s experience is different, so as you think about the whole human, how can workspaces account for individualized needs? A working parent who is also caring for an older adult? Or someone who identifies as having a disability or being able to work more effectively at home?

TH: We’ve been doing a lot of work on culture strategy on this very thing. Recently we used an assessment that helped us understand what each individual employee is thinking about, our articulated values as an organization and how individuals demonstrate that through actions. All of those factors were different for every single person. For so long we’ve been saying, “It’s all about

the ‘we,’ ” and I think we realized through the pandemic that, yeah, it is about the “we.” There’s an importance of team, but we can’t be great team members if our individual wellbeing is suffering. The workplace of the future won’t be one-size-fits-all.

TC: I wonder, as this thinking shifts for some leaders, what those leaders who are hesitant, unable or unwilling to invest in their workspace need to hear— and understand—to see the world a little bit more like you do.

TH: We’re going to experience a turnover tsunami and a talent war. In fact, we’re already in the middle of it. One of the indicators is that working from home has contributed to people feeling undervalued and burned out because they don’t have that physical presence. And it’s never been easier to switch jobs. It’s as simple as closing one laptop and opening another. Employers have got to be thinking about retention strategies and part of that has to be physical space. Employees are expecting things to be different when they go to the office. And if it’s not done right, it could be the deciding factor in a company’s post-COVID success. And I think with burnout being the biggest factor, the office environment and workplace culture has got to be something that employers act on now as a huge key differentiator, as “why them,” “why this company.”

7/9/21 2:56 PM

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6 July 12, 2021 • CRAIN’S CHICAGO BUSINESS

McDonald’s debuts rewards program with free fries

BY JESSICA WOHL McDonald’s is officially introducing its MyMcDonald’s rewards program with lots of free fries as it tries to deepen its relationship with millions of customers.

Loyalty programs are a treasure trove of first-person data for marketers that are becoming increasingly important as brands prepare for a cookie-less future, even one that’s been delayed for a bit. And nothing entices people to register for loyalty or rewards programs quite like free items.

Restaurant chains such as Starbucks, Wendy’s and Chipotle have long dangled introductory offers and rewards based on accumulated points. Now, it’s time for the world’s largest restaurant chain to step into the game.

On July 13, McDonald’s will give free medium fries to anyone who downloads its app and joins MyMcDonald’s Rewards.

McDonald’s, one might say, is supersizing its rewards program.

On July 13, McDonald’s will celebrate what is sometimes called National French Fry Day as World Famous Fan Day. A contest on Twitter will reward one million MyMcDonald’s Rewards points each to 66 fans. The number of winners refers to the company’s founding 66 years ago, in 1955. One fan will receive free fries for life. McDonald’s plans to have judges including super fans such as singer Jhay Cortez.

If diners play their cards right, they can get a free sandwich to go along with the fries: Subway plans to give away up to 1 million of its new Cali Turkey Fresh sandwiches on July 13.

GETTING MORE

McDonald’s has had offers for diners before, such as buying five McCafé drinks and getting one free. Now, the national rollout of

MCDONALDS

MyMcDonald’s is rolling out nationally as many other food chains work to cement their loyalty with diners

MyMcDonald’s is its biggest effort to get more visits from the millions of diners who visit the chain.

“We have the best fans in the world who deserve to unlock perks for their loyalty,” Alycia Mason, VP of digital customer experience and media, McDonald’s USA, says.

Customers who use restaurant loyalty programs often frequent the chains they like more often.

The chains can use the data to see which items sell well, plan offers, send reminders to entice visits and make other marketing moves.

The efforts help brands build

loyalty. Earlier this week, Papa John’s announced that its 11-year-old program, Papa Rewards, just signed up its 20 millionth member. So far this year, Papa Rewards has contributed to almost half of Papa John’s sales, according to the rebounding pizza chain. Starbucks announced in late April that the number of active Starbucks Rewards members in the U.S. rose 18% yearover-year, to 22.9 million. And in June, Chipotle made updates to its Chipotle Rewards program, which has nearly 23 million members, including adding a

video game with prizes including a Tesla Model 3.

Each chain has its own points system. McDonald’s is giving 1,500 points to new users of MyMcDonald’s. Typically, it awards 100 points for each $1 spent on qualifying purchases. Users who accumulate 1,500 points can get an item such as hash browns or a cheeseburger, and those who collect 6,000 points can redeem them for a Big Mac or Happy Meal.

Jessica Wohl writes for Crain’s sister publication Ad Age.

Over $100 million sought for North Side campus owners a big windfall on buildings they and other venture The owners of the Bradley partners have leased up over Business Center in the North the past 15 years.

It’s a rare listing of a large Center neighborhood have put the 23-acre industrial and of- industrial site in an affluent, fice campus up for sale, hop- densely populated part of the ing to cash out while investors city, the type of property inare shelling out big bucks for dustrial real estate investors industrial buildings like those have salivated over—particuon the sprawling riverfront larly during the COVID-19 pandemic—amid soaring demand property.

A venture that includes exec- for warehouse space to store utives at Chicago-based Cen- and distribute products peotrum Realty & Development, ple buy online. Industrial giant local developer John McLinden Prologis in March paid nearly $100 million for a 3 3 9 , 0 0 0 -s q u a re THE BRADLEY BUSINESS CENTER IS A foot warehouse RARE LISTING OF A LARGE INDUSTRIAL and office building at 930 W. EvSITE IN AN AFFLUENT, DENSELY ergreen Ave. on Goose Island.

POPULATED PART OF THE CITY. Like that property, Bradley Busiand Chicago real estate in- ness Center is flush with tenants vestors John and Rick Hansen at almost 96 percent leased, achas hired the Chicago office of cording to a Cushman marketCushman & Wakefield to mar- ing flyer, with users including ket the four-building campus RCN of Chicago, several medalong the North Branch of the ical offices and a mix of recreChicago River north of Addison ational businesses such as IK Street. Sources familiar with Gymnastics, Windy City Ninjas the offering say the properties and Goldfish Swim School.

The 466,871 square feet of could fetch more than $100 million, which would likely net the buildings on the property col-

BY DANNY ECKER

P006_CCB_20210712.indd 6

lectively generate $5.9 million in annual net operating income, according to the flyer. A sale north of $220 per square foot would tower over the prices paid the last time different parcels of the site traded.

The owners paid $8.3 million in 2006 for what was then a vacant three-building portfolio on the western portion of the site, Cook County property records show. They spent the next five years—including weathering the Great Recession—bringing the buildings to 100 percent leased, according to Rick Hansen, principal of commercial real estate brokerage Hansen Realty. The venture most recently refinanced the 152,000-square-foot western property with a $14 million mortgage, property records show.

ANOTHER VENTURE

A separate joint venture involving Centrum and the Hansen brothers paid $6.3 million in 2010 for the 355,000-squarefoot building at 2500 Bradley Place on the eastern portion of the property, records show.

Hansen says the building had one primary tenant at the time that has since moved out, but

CUSHMAN & WAKEFIELD

The Bradley Business Center is the type of property industrial real estate investors have salivated over during the pandemic, amid soaring demand for warehouse space to store and distribute products people buy online

The Bradley Business Center (highlighted) in North Center. the owners have leased up almost all of the property today among 13 tenants. Records also show the owners most recently refinanced the building with a $23.4 million loan.

Hansen estimates the owners have spent more than $40 million on capital improvements at the buildings during their ownership tenure, with projects ranging from roof renovations and new electrical and heating and cooling systems to the addition of a rooftop deck and upgrade of an underground parking garage.

Hansen says the owners are testing the market to gauge investor interest and that “if a number makes sense for us to

sell, we’re going to sell,” he says.

“And if it doesn’t, we’re just going to keep it.”

Cushman is playing up the steady cash flow from tenants as well as the potential to develop the campus with larger buildings, as the site’s current zoning allows for as much as 1.6 million square feet of development. The brokerage is also framing the property as a prime candidate to be converted into a last-mile distribution center while demand for such warehouse space is rampant.

Cody Hundertmark and Tom Sitz of the capital markets team in Cushman & Wakefield’s Chicago office are representing the owners.

7/9/21 3:26 PM

CRAIN’S CHICAGO BUSINESS • July 12, 2021 7

Chicago gets its first new bank in more than 10 years First Women’s Bank, launched by former Obama administration official Marianne ­Markowitz, raised more than $30M in equity and will open its doors in the early fall Chicago will see its first bank startup in well over a decade this fall.

First Women’s Bank, which has been in organization for nearly two years, announced that it raised more than $30 million in equity and has all the regulatory approvals it needs to open its doors in the early fall.

In addition to tennis legend Billie Jean King, whom the bank already named as a key investor, Charlotte, N.C.-based Bank of America and Boston-based Fidelity Investments are among the initial owners of the fledgling bank.

Marianne Markowitz, former regional Small Business Administration director under the Obama administration, is the CEO. “We are grateful to the many investors who recognized the strength of this team, the power of our innovative strategy and compelling mission to grow the economy and advance the role of women within it,” she says in a release.

The bank will have a small-business focus with a mission to lend to women-owned

will be chief credit officer. He most recently served as national credit director for Boston-based Radius Bank, an online community bank. Controller will be Patricia Rosa, who spent two decades at Brickyard Bank in Lincolnwood, most recently as senior vice president and cashier.

The number of Chicago-area banks has dwindled over the past 15 years, in large part due to the roughly 50 bank failures that took

P007_CCB_20210712.indd 7

Billie Jean King is an investor in First Women’s Bank.

NOW OPEN!

POP POP COUR COU RTS!

THE $30 MILLION FALLS SHORT OF THE $50 MILLION THE ORGANIZERS INITIALLY HOPED TO RAISE. BUT IT REMAINS ONE OF THE LARGEST SUMS EVER RAISED IN ILLINOIS TO LAUNCH A NEW BANK. businesses all over the country.

It will be mainly a digital enterprise, with a single location at 1308 N. Elston Ave. The $30 million falls well short of the $50 million the organizers initially hoped to raise in this phase. But it remains one of the largest—if not the largest—sums ever raised in Illinois to launch a new bank.

There are more than 200 investors, spokeswoman Colleen Ryan says in an email.

“We far exceeded the minimum regulatory capital required for launch,” she says. “The market conditions are so favorable for a bank with our strategy and mission that we made the decision to stop the offering, so we could commence operations now. We have the option to continue to raise capital and expect to do so.”

The more equity a bank has, the more it can lend. With $30 million on hand, First Women’s Bank has the capacity to make about $300 million in loans.

The bank also announced more management hires. Dan Konwent

place in the aftermath of the financial crisis, as well as a steady pace of bank acquisitions. In the meantime, there have been a historically low number of startups.

That’s true for most of the country, but even more so for the Chicago area, which historically has had more banks than any other metro area in the U.S.

GAGE SKIDMORE/FLICKR

BY STEVE DANIELS

Lamar Johnson Collaborative is proud to celebrate the opening of POPCourts! at the corner of Chicago Avenue & Lockwood Avenue in the Austin neighborhood POPCourts! was developed in concert with Mayor Lori Lightfoot’s INVEST South/West initiative. The goal in Austin was to create a sense of place and identity for a community that has limited access to public open space.

The team transformed a vacant lot at the corner of West Chicago and North Lockwood Avenues into a place for activity, gathering, and commerce. Thank you to the entire team that made this all possible.

theljc.com

7/9/21 2:55 PM

8 July 12, 2021 • CRAIN’S CHICAGO BUSINESS

After Surfside, residents in condo tower worry

BY DENNIS RODKIN In the wake of a catastrophic condo tower collapse in Surfside, Fla., residents of a high-rise near Water Tower Place are asking why urgent repairs at their building have been delayed for three years.

In April 2018, a consulting firm assessed the multilevel parking garage at the base of 111 E. Chestnut St, where former Chicago Mayor Jane Byrne lived for much of her adult life.

The firm, Walker Consultants, wrote in a follow-up report that some repairs “must be performed as soon as possible, as the conditions pose an imminent hazard to the facility users and to the structure itself.”

Eighteen columns needed immediate shoring up or repairs due to “severe concrete deterioration” to the supports for floor slabs, Walker reported. The firm estimated the cost of the immediate repairs at $497,000.

On July 1, 2021, two principals at Walker wrote to the president of the owners association for the eight garage floors of 111 E. Chestnut, saying that to their knowledge, the repairs that were needed immediately three years ago “have not been performed to date” and that it is “highly likely that the concerning conditions have grown worse.”

The 57-story tower, built in 1972, contains 444 condos. Condominium owners belong to one owners association, and owners of the garage floors are in a separate association.

Tamara Pagel, who has lived in the building for 22 years, tells

Crain’s, “My stomach is churning.

I’m stressed out. It’s disheartening and frightening that this hasn’t been done in three years.”

The building’s residential owners’ association emailed a statement to Crain’s July 8 saying the Walker report had previously been provided only to the garage association. Repairs to the garage structure are the responsibility of the garage association, the statement said, not the homeowners association.

“Now that the residential association has obtained” the report and the July 1 statement said, the homeowners association “will pursue all legal remedies available to it, including seeking injunctive relief, to get the garage association to make the required repairs on an urgent basis. The expense of this undertaking ultimately will be borne by the garage association.”

IN THE KNOW

Angel Sarkissian, one of the owners of the eight-story parking facility, is president of the 111 E. Chestnut garage owners association and was the recipient of Walker Consultants’ July 1 letter. Sarkissian says that he would respond to Crain’s request for comment after he discusses it with the condo board.

In its July 1 letter, Walker recommended that “emergency shoring be installed immediately to appropriately support all of the parking level slabs within the building until all required immediate and base structural repairs are implemented.”

Pagel says, “Why hasn’t the city shut the parking garage down if these urgent repairs weren’t made three years ago?”

The Chicago Department of Buildings emailed Crain’s that it is sending an inspector to review the property.

Walker’s 2018 report said the firm first reported some of the needed repairs to the condo board in 2015, which indicates the problem has been known for six years. Daniel Moser, a vice president of Walker Consultants who signed the July 1 letter, did not respond to a request for comment.

“I can’t sleep at night,” says Tracey Ryniec, a stock strategist who lives in the building and first heard about Walker’s report of urgent problems at a condo board meeting a few years ago. She says she has “forbidden my family and friends from parking in the garage for over two years” for fear of someone being trapped in a collapse Ryniec has no car herself.

“Now that Walker has sent that letter, that’s super-concerning,” she adds. She and other condo owners “are sitting right on top of that garage; that garage that could collapse.” Ryniec says bids on the full slate of repairs, not only the most urgently needed ones, ran between $4 million and $6 million.

She believes the repairs have been put off because of the cost.

The letters and reports were shared with Crain’s by Brian Connolly, a 20-year resident of the building who has battled with the condo board over various concerns

@PROPERTIES

Repairs on support columns that an engineering firm called “urgent” in 2018 have not been done at a Gold Coast high-rise building on Chestnut Street

Eighteen columns in the parking garage under 111 E. Chestnut , center, need immediate shoring up or repairs, according to a report. for several years. In 2017, a Cook County judge ordered Connolly to pay $100,000 to the board to settle its legal fees for fighting a “meritless” and “frivolous” lawsuit he brought against the board. In 2019 the Appellate Court reversed and remanded the penalty.

Pagel says she’s “aware Brian is a thorn in the side” of the board, but in this latest situation, she says she appreciates his “willingness to pay attention to the details in what could be a very dangerous problem.”

Connolly tells Crain’s he’s “very worried” about the delayed repairs to the parking garage at the base of the tower. “The parking garage is our foundation,” he says. “The bottom line is, a column down there could fall in a random fashion, and if we lose a column, this building is in trouble.”

Crain’s attempted to reach three

other homeowners in the tower, but did not receive responses.

Pagel says she has only a vague recollection of the condo board reporting on Walker’s report back in 2018, “but I don’t pay much attention to what’s going on with the board.” When Connolly distributed this latest update from Walker, she says, “I paid attention. I mean, look at what happened in Florida.”

After a wing of Champlain Towers South, the 12-story oceanfront condominium building in Surfside, suddenly collapsed on June 24, news reports say an engineering firm that inspected the building in 2018 found major structural damage that needed to be repaired immediately but never was fixed.

At least 60 people have been confirmed dead and another 80 people are still missing, according to the Miami Herald.

Willis Tower insurer sues city, sewer district over flood

Storms in May 2020 dropped more than 8 inches of rain, overwhelming Chicago’s sewers and causing $110 million in damage to the lower floors of the skyscraper About 14 months after the Willis Tower sustained an estimated $110 million in damage from a massive flood, the skyscraper’s insurance company has gone to court to force the city of Chicago and local sewer district to cover some of the cleanup cost.

A lawsuit filed by Travelers Property Casualty Company of America alleges that the city and Metropolitan Water Reclamation District of Greater Chicago are responsible for the flooding at the building during storms in May 2020 that dropped more than 8 inches of rain on the city, overwhelming its sewers. The Chicago River overflowed its banks on May 17, and the reclamation district opened up the locks near Navy Pier, allowing the floodwater to flow out into Lake Michigan.

But the district was slow to respond, according to Travelers. Certain floodgates “were not opened or were only partially opened, which allowed water levels in the River to rise well above flood stage and overwhelm the sewer system and

P008_CCB-20210712.indd 8

cause it to fail,” the complaint says.

More than a million gallons of stormwater inundated the lower levels of 110-story high-rise at 233 S. Wacker Drive, according to the suit. The building lost power, and its owner, New York-based Blackstone Group, temporarily closed it to tenants like United Airlines Holdings.

The lawsuit says the city and reclamation district are responsible for more than $14 million in damage to the building. But estimated losses from the flood total $110 million, according to public filings from a servicer overseeing the property’s mortgage. That’s a big sum, but a fraction of the property’s 2018 appraised value of $1.8 billion.

The Water Reclamation District and the city say they do not comment on pending litigation. An attorney for Travelers did not return a call.

Blackstone is not involved in the litigation. A spokesman for the property had only good things to say about the city.

“The City of Chicago continues to be an exceptional partner, and we are grateful to the City, the Chicago

Fire Department and Commonwealth Edison teams, along with the Willis Tower team, who worked diligently and expeditiously to manage the water intrusion in May 2020 and ensured that all of our tenants and visitors remained safe,” a Willis Tower spokesman said in a statement.

WHICH COURT?

Travelers filed the lawsuit in Cook County Circuit Court in May, but the city is transferring the case to U.S. District Court. The city argues the case should be litigated in federal court because Travelers alleges that the flood damage represented a “taking” of the property by the city and reclamation district without compensation, a violation of the U.S. Constitution.

Blackstone, which paid $1.3 billion for the Willis Tower in 2015, is overseeing a major redevelopment of the skyscraper, the tallest building in Chicago and second-tallest in North America. Travelers provided insurance for the construction project, according to the complaint.

Blackstone has submitted claims to Travelers, and Travelers has made

GUIDO COPPA/UNSPLASH

BY ALBY GALLUN

The sewer district was slow to respond to a flood, causing damage to Willis Tower, the lawsuit alleges. payments to Blackstone to cover the claims, the suit says.

The Chicago water reclamation district manages stormwater through a variety of tools, including a network of tunnels and reservoirs.

As a last resort, it can open floodgates and locks at the mouth of the Chicago River and the terminus of the North Shore Channel in Wilmette, dumping millions of gallons of runoff and sewer waste into Lake Michigan. The May 2020 storms exposed the limits of the system, even

after billions of dollars were spent to increase its capacity.

“Due to faulty construction, operation and/or maintenance of the above-referenced systems, (the city and reclamation district) knew or should have known the systems were inadequate and that this inadequacy would result in flooding of adjacent property such as the Willis Tower during an anticipated rainfall event with sufficient time to redirect the flow of water away from” the property, the suit says.

7/9/21 2:55 PM

CRAIN’S CHICAGO BUSINESS • July 12, 2021 9

Archdiocese sells mansion it had owned since the 1960s Built in 1899, the mansion on President Obama’s block of Greenwood Avenue in Kenwood was designed by the architect behind the Drake and Blackstone hotels and the South Shore Cultural Center

tenths of an acre—is a coach house with five more bedrooms.

The house, on the same block as The Archdiocese of Chicago has sold a Kenwood home where a re- the Chicago home of former Presiligious order was housed for more dent Barack Obama, was originally built for D.F. Bremner, founder of than half a century.

The 11,000-square-foot, nine-­ Bremner Biscuit.

Beginning in 1966, the manbedroom mansion on Greenwood Avenue sold July 7 for a little more sion was the Chicago base for the than $1.57 million, about two years Catholic Church’s Focolare Moveafter it came on the market at $2.35 ment, which teaches a spirituality of unity among people. The website million.

Built in 1889, the three-story does not indicate where Focolare is red brick mansion was designed housed now.

In recent years, the archdiocese by architects Benjamin Marshall and Horatio Wilson. Marshall was has been selling real estate assets. a prolific designer whose works It still owns a mansion two doors include the Drake and Blackstone down Greenwood from this one, hotels and the South Shore Cultur- according to Cook County tax real Center. Wilson designed railroad cords.

Shirley Walker of Berkshire Hastations, hotels and other buildings.

The most dramatic original finish thaway HomeServices Chicago inside is a circular dining room ceil- represented the property for the ing with plaster ribs and painted archdiocese. By the time of the sale, figures. There’s also a rotunda-like the asking price had been cut to just foyer with a circular overlook under $2 million.

A fellow Berkshire agent, Susan above, a seating nook set behind a big wooden arch, numerous built- O’Connor Davis, represented the in columns and bookcases, and a buyers. Davis declines to identify third-floor ballroom with a bar- them, and they are not yet named in public records, but she says they rel-vaulted ceiling.

At the rear of the lot—about six- “weren’t intimidated by rehabbing

BERKSHIRE HATHAWAY HOMESERVICES CHICAGO

BY DENNIS RODKIN

Royal Bank offers commercial loans with attractive rates and terms.

11,000 square feet.”

Davis says the buyers plan to live in the house after the rehab, not flip it. She says they would decline to comment and that she does not know their budget or timeline for the rehab.

The work will entail updating the kitchen, baths and utilities, Davis says, but the grand details in the main rooms are in good condition.

“The church took good care of it,” Davis says.

Contact Michael Lintvelt, Vice President 2IƓFH Ř 0RELOH (PDLO POLQWYHOW#UR\DO EDQN XV Putting community first since 1887.

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CRAIN’S CHICAGO BUSINESS 2021

Nominations close July 16

You or someone you know could be in the next Crain’s 40 Under 40 class

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7/9/21 2:54 PM

10 July 12, 2021 • CRAIN’S CHICAGO BUSINESS

EDITORIAL

I

n a town where the opening minutes of the nightly news routinely feature a numbing inventory of the day’s shootings—including, lately, of two federal agents and a police officer—as well as the odd carjacking and, now, even occasionally harrowing video of mobs sowing mayhem in the streets of downtown, it is a weird sort of comfort to discover we still have the capacity to be shocked. Yes, the tally of bloodshed over the July Fourth weekend was as sickening as we have come to expect on any warm holiday stretch in the summer: 108 Chicagoans shot, 17 killed. Yet this one particular scene, vividly described by Madeline Kenney and Manny Ramos of the Chicago Sun-Times, still manages to horrify: For several years, Jerry Dale Sr. and his neighbors have shut down their block near the border of Roseland and West Pullman for a Fourth of July cookout where everyone sets up lawn chairs outside and mingles while children play and ride bicycles until they’re tuckered out.

While the tradition has gone off for a decade without incident, that streak came to an end shortly after 1 a.m. Monday, as the group cleaned up from the festivities.

A gray SUV drove down the 100 block of East 119th Street and sprayed the crowd of about 50 people—including at least 15 children—with bullets . . .

While Dale’s 11-year-old grandson ditched his bike in the street and dove into the grass in an attempt to get out of harm’s way, others jumped over fences into backyards or hid behind cars.

But Dale’s daughter, Katina Manu-

NEWSCOM

Slouching towards Chicago

el, wasn’t able to escape the carnage. She yelled, “ ‘I have been shot! I have been shot!’ ” Dale recalled. And next to her was her own 6-year-old daughter, who was also hit: “ ‘My hand! My hand! My hand!’ ” she cried out.

Chicago has been trying to live down its violent reputation for years. It’s nothing new. Even so, this moment in time feels different. Our impulse, as proud Chicagoans, is to resist that reputation, to reach for statistics that contradict the gut sense that Chicago has it worse than any other city. Sadly, the figures are no longer much help. As of this writing, 2,127 people have been shot in Chicago so far this year; 363 were shot and killed. Even if that record is

technically superior to, say, New York, L.A. or Dallas, is that really supposed to make any of us feel any better? It certainly won’t undo the damage done to those 2,127 shooting victims and their loved ones.

Video of tumult in the streets of the Loop only adds to the stress. As one real estate agent tells Crain’s Dennis Rodkin in this week’s issue: “There’s a perception that there’s no control in the city.” She’s right about that. To put it another way: Things fall apart; the center cannot hold.

When editorial writers take to mangling William Butler Yeats, you know things have gotten pretty dark. And yet, here we are. Perception becomes reality. And

the truth is, no one we know of has confidence that Mayor Lori Lightfoot and her police chief, David Brown, have a workable plan to bring violence under control in the city. Crain’s contributing columnist David Greising is right when he says in this week’s issue that Chicago officials lack consensus about how to fight the city’s crime wave, and that this lack of consensus is a symptom of the lack of an effective crime-fighting program.

It’s up to the mayor to create the conditions for that consensus. In other words, to lead. She needs to articulate a plan, work with her fellow elected officials and then get her various constituencies on board.

There is simply no alternative. If people don’t feel safe living and working in Chicago, no other policy on the mayor’s priority list can be realized. The status quo cannot continue—and, considering the downward path we are on, it’s not even clear that the status quo is the worst possible scenario we face.

We’re a nation that over time has been politically atomized, one faction set against the other, so perhaps it shouldn’t be surprising that our elected leaders are not much better than we are at figuring out what’s wrong and working together to fix it. But this is the job the mayor asked for and ran hard to win, and the credentials she brought to that campaign included her track record on the Police Accountability Task Force. So she can’t change the subject anymore. She can’t escape her own accountability. She must demonstrate that she understands the gravity of this moment and is capable of meeting it.

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ture—all done in coordination ecent action by the Illiwith IDOT. nois General Assembly The commission will rewill put Illinois in a poview existing railway systems, sition to quickly move forward looking at improved access to on developing a high-speed O’Hare International Airport rail network once the American and McCormick Place, as well Jobs Plan, or any future federal as how services like Metra, inrailway infrastructure legislatercity buses and Amtrak sertion, passes. vices to Rockford, Moline, PeoThe Illinois General Assembly ria and Decatur would fit into recently passed HB 399, which the network. will give the Illinois Department Rick Harnish is The Illinois High Speed of Transportation a forum it can executive director Rail Commission will have an use to move from its current of the High Speed impact on three high-prioriwish list of individual projects to Rail Alliance and ty items for Chicago’s region: a true, statewide railway trans- a primary advomodernizing Metra, an O’Hare portation plan. Doing so will cate for the Illinois place Illinois at the center of the High-Speed Railway express train and express trains from throughout the Midwest national railway infrastructure Commission. through to the Loop and O’Hare. revolution.

Connecting Metra to the new high-speed The bill formally grants the High-Speed Railway Commission the authority to de- network will increase its ridership, but Mevelop a statewide plan for a high-speed tra will need to modernize in order to make rail line and feeder network connecting that connection.

As the commission plans, it should look St. Louis and Chicago. Once the legislation is signed into law, the next steps are beyond the existing system that is primarconducting a ridership study and making ily designed to transport people to and recommendations on a governance struc- from bedroom communities during peak

hours. A different model would run Metra trains much more frequently—think every 15 minutes—and could even include new lines that connect suburb to suburb instead of relying on a central hub model with Chicago at its center.

Before it can run faster and more frequently, Metra needs new equipment. The passenger coaches follow a post-WWII design. Modern passenger coaches hold more people, are easier to get on and off of and have space for luggage and bikes. They are lighter, meaning they can start and stop faster, which makes them safer. They are more environmentally friendly, producing as much as 86 percent fewer emissions.

A better way to get from the Loop to O’Hare is essential. Metra is proposing to offer express trains from Union Station and/or Ogilvie Transportation Center directly to O’Hare—a trip that will take about 30 minutes. The project is a less expensive and more immediately viable alternative to the O’Hare tunnel proposed by Elon Musk’s Boring Co. With some infrastructure improvements, high-speed trains could stop at McCormick Place on their way to Union

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, 150 N. Michigan Ave., 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.

P010-P011_CCB_20210712.indd 10

Station and O’Hare—making Chicago the business center of the country.

Improving existing tracks and connecting them to a new high-speed line will place Chicago at the center of a growing Midwest high-speed network and make same-day round trips possible between all of Illinois’ major cities and destinations.

For Chicago, this will mean a significant bump to our economy—with tens of millions of additional riders arriving in Chicago each year and hundreds of millions of dollars in new, local spending.

A 2011 study undertaken by the High Speed Rail Alliance—then known as the Midwest High-Speed Rail Association— predicted that $13.8 billion would flow to the Chicago area as the result of increased ridership revenue, increased business sales revenue, new permanent high-paying jobs and increased tourism.

With a rail-loving president who has earned the moniker ‘Amtrak Joe’ and a high-speed railway-friendly Secretary of Transportation now in Washington D.C., there is no better time for Illinois to move forward with a plan to introduce highspeed rail to the state. All aboard, Illinois.

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.

7/9/21 2:58 PM

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CRAIN’S CHICAGO BUSINESS • July 12, 2021 11

LETTERS TO THE EDITOR

Amazon’s newest warehouse brings health hazard Amazon warehouses have been appearing seemingly everywhere in non-affluent neighborhoods, because people want a dog brush, a toothbrush holder or a tablet delivered instantly. But that constant motion increases big diesel vehicle traffic in those neighborhoods and the dangerous air pollution those vehicles bring.

The newest massive warehouse announced for Humboldt Park is a bit alarming, because it honestly couldn’t be located in a worse place (“Amazon plans warehouse, hundreds of jobs in Humboldt

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Park,” June 22). It’s the heart of Chicago’s Puerto Rican community. And of all ethnic groups, Puerto Ricans have the highest asthma rate. City data indicate as many as 20 percent of all adults in the Humboldt Park community have been diagnosed with asthma. It’s one of the last places you would want to base a large number of polluting diesel vehicles.

Ironically, Amazon is having 100,000 electric, zero-emission package delivery vans built in downstate Normal at the new Rivian plant. But it’s likely most, if not all, of those will go to 15 other states, unlike Il-

linois, committed to requiring an increasing percentage of new panel vans, buses and trucks to be electric. In the last month, the Illinois House and Senate both urged Gov. Pritzker to have Illinois join those pro-electric truck states and require increasing numbers of electric commercial vehicles to be sold in Illinois. He hasn’t acted yet.

Chicago issued guidelines to encourage the use of electric vehicles in commercial projects last year. But cheerleading aside, it doesn’t require any trucks or vans at new warehouses to be zero-emission vehicles.

With its immense market strength, Amazon could have struck a huge PR win here by committing to electrify vehicles and clean the air where thousands of people now have trouble breathing. But instead, it looks like the health of the surrounding community will suffer from the decisions of the company and local officials for years to come.

DR. D. KYLE HOGARTH Professor of medicine and director of bronchoscopy UChicago Medicine

CRAIN’S WEBCAST

***

Editor Ann Dwyer Creative director Thomas J. Linden

Assistant managing editor/ Joe Cahill columnist Assistant managing editor/digital Ann R. Weiler Assistant managing editor/ Cassandra West news features

Deputy digital editor Todd J. Behme

Digital design editor Jason McGregor

Associate creative director Karen Freese Zane

Copy chief Scott Williams Copy editor Robert Garcia Deputy digital editor/ Sarah Zimmerman audience and social media

Contributing editor Jan Parr

Political columnist Greg Hinz Senior reporters Steve Daniels

Alby Gallun John Pletz

Reporters Danny Ecker

Stephanie Goldberg Wendell Hutson Ally Marotti A.D. Quig Dennis Rodkin Steven R. Strahler

REAL ESTATE FORUM

Thursday, July 15 | 1-2 p.m.

Has the pandemic sparked suburban migration?

After a decade dominated by people and jobs moving to Chicago’s urban core, COVID-19 has sparked renewed interest in living—and likely working—in the suburbs. What do the pandemic-induced changes mean for the future of the metro area? Join us for a panel discussion with major local commercial real estate stakeholders and Crain’s Real Estate reporter, Danny Ecker, about the area’s evolving demographic picture and its impact on suburban properties.

Contributing photographer John R. Boehm

Moderator

Featured Speakers

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7/9/21 2:59 PM

12 July 12, 2021 • CRAIN’S CHICAGO BUSINESS

CRAIN’S LIST

How COVID affected area’s out-of-town employers Amazon rides surge of pandemic-fueled demand as 2020 brings changes in roster of organizations based outside Chicago that employ large workforces here Amazon has surpassed Walmart and now holds the No. 2 spot on Chicago’s Largest Out-of-Town Employers list. This is Crain’s second year publishing the list, which highlights organizations headquartered outside the Chicago area that employ large workforces in the city and surrounding suburbs.

Amazon had a hiring spree throughout 2020 to meet growing demand for online shopping during the COVID-19 pandemic.

The Seattle-based company now employs more than 36,000 full- and part-time employees in Illinois.

Amazon had over 15,500 employees across distribution centers alone in the Chicago area during 2020, according to MWPVL International, a supply chain and logistics consulting firm based in Canada. Factoring in Whole Foods

Markets, Crain’s estimates Amazon had over 18,000 full-time employees in the Chicago area as of Dec. 31.

The U.S. government holds its recurrent No. 1 spot as Chicago’s largest out-of-town employer, as well as the city’s largest employer in general, with a total of 52,357 full-time employees. That’s a 14.5 percent increase from 2019.

RX FOR GROWTH

New to our list, and coming in at No. 14, is Woonsocket, R.I.-based CVS Health. The pharmacy chain has a growing presence in Illinois, especially in the Chicago area.

CVS Health has about 13,000 employees across Illinois, according to Joe Goode, the company’s senior director of corporate communications. Crain’s estimates that CVS Health has about 6,200 full-time employees in the Chicago area.

BLOOMBERG

BY SOPHIE RODGERS

Retailers like Walmart and Target also saw an increase in local full-time employment to meet increased demand during the ­ pandemic. Walmart comes in at No. 3 with 16,900 employees, and Target comes in at No. 12 with

7,000 employees.

However, not all companies on our list experienced a hiring spree.

Predictably, the two airlines in the top 25—American Airlines and Southwest Airlines—saw both local and worldwide full-time em-

ployment fall due to decreased travel demand.

The full Excel version of the list includes 52 organizations. To download the full list, become a Crain’s Data Member and head over to our Data Center.

value is about $227,500. Show Low, Ariz., a picturesque area near the White Mountains, rounds out the top three, with home prices up almost 25 percent, to $292,150.

Those hoping for a better deal will have to head pretty far afield.

Steven McCord, a real estate investor who co-founded Locate Alpha, which provides city and subcity analyses, says he’s surprised at how inflated home values are even in relatively obscure vacation areas in the middle of the country and in the South.

Those with below-average price growth over the past year that offer average prices or lower include Waterloo State Recreation Area in Michigan; Cloudcroft, N.M.; and the Kerr reservoir area near Clarksville, Va., according to McCord.

Still, even if you’re able to find

a reasonably valued vacation home in this environment, there’s a laundry list of things to keep in mind. If you are considering renting it out, make sure you know if there are any local limitations on doing so. Given the frenzied vacation demand, some towns have established new rules (or are in the process of doing so) around what can and can’t be done when it comes to renting a home.

Even if prices continue to go up, the expense of owning a place may easily outpace those gains. Budget a lot more for maintenance than you might initially think.

Second homes close to the water or in the mountains need more upkeep—from replacing the HVAC and windows more frequently to dealing with pest damage.

If you aren’t going to be there all the time, and don’t want to arrive

for the weekend to find that flying squirrels have gotten down the chimney and eaten all the window sills (which insurance may not cover) or where the water pipes have burst, you might need to pay someone to check on it.

And finally, be aware that Fannie Mae and Freddie Mac are now subject to a lower cap on how many second-home loans they can buy from mortgage lenders.

In turn, that means lenders could be stuck with those loans and will charge extra for that risk.

So if you plan on financing a second home purchase, you may be facing a higher mortgage rate or fees. Yet another reason why buying a vacation home right now may be less than idyllic.

OPINION

Second homes are overrated

Just because the vacation housing market appears to be cooling off doesn’t mean it’s a good time to buy

The vacation housing market seems to be cooling off.

At first glance, that statement seems hard to prove. After all, the number of mortgage rate locks (when borrowers are guaranteed a specific rate for a certain period of time) on second homes increased 48 percent in May compared with a year earlier, according to Redfin. But if that sounds pretty robust, consider that since last June, the jump had been greater than 80 percent each month.

Another Redfin metric, prices of homes in seasonal towns, rose 19 percent in April compared with 16 percent in the rest of the U.S. That’s down from a spread of as many as 7 percentage points last year.

But prospective second-home buyers shouldn’t interpret the data as indicative of some big shakeout and a sign to take action. It’s likely to remain a seller’s market for vacation homes for the foreseeable future.

While some employees will be returning to the office if they haven’t already, many will continue to have some flexibility, or at least more than they used to (or find jobs where they’ll be given some). And with limited labor available in seasonal

P012_CCB_20210712.indd 12

towns, it will take even more time to increase the supply of homes than in the rest of the market.

HEADACHES

Owning a second home often comes with headaches and unforeseen expenses. But buying in a market that continues to be so tilted to sellers could prove to be especially disastrous for vacation homeowners. From rushing to buy without understanding local ordinances targeting renters to waiving a home inspection in a destination prone to hurricanes, pitfalls abound.

Even worse, many seasonal towns have had such a run-up in prices, it’s likely buyers may overpay, then be disappointed if they’re expecting those eye-popping gains to continue. Think twice before buying in Lake Tahoe, Calif., where the typical home value is now more than $604,000. As of May, it had the biggest year-overyear jump in home values—28.2 percent—out of the top 20 metro areas tracked by Zillow with the highest share of homes listed as vacation homes in Census data.

It’s a similar story in less expensive areas as well. Home prices have also skyrocketed 28 percent in East Stroudsburg, Pa., in the Poconos, where the typical home

ISTOCK

BY ALEXIS LEONDIS

Alexis Leondis writes for Bloomberg Opinion.

7/9/21 2:57 PM

CRAIN’S CHICAGO BUSINESS • July 12, 2021 13

CRAIN’S LIST CHICAGO’S LARGEST OUT-OF-TOWN EMPLOYERS Ranked by the number of local full-time employees. e = Crain’s estimate (in gray).

2020 rank

Company

Top Chicago executive

Want 52 organizations in Excel format? Become a Data Member: ChicagoBusiness.com/data-lists

Full-time local employees 12/31/2020; 1-year change

Full-time worldwide employees 12/31/2020; 1-year change

Global headquarters; % of employees in Chicago area

52,357 14.5%

2,791,819 4.6%

Washington, D.C. 1.9%

18,210e,1,2 24.6%

1,298,0002,3 62.7%

Seattle, Wash.

1.4%

Primary industry

1

1

U.S. GOVERNMENT 230 S. Dearborn St., 35th Floor, Chicago 60604 Chicago.FEB.gov

Jonlee Anderle Chair, Chicago Federal Executive Board

2

3

AMAZON.COM INC. 227 W. Monroe St., Chicago 60606 Amazon.com

Andy Jassy CEO

3

2

WALMART INC. 8430 W. Bryn Mawr Ave., Chicago 60631 Walmart.com

Missy Craig Vice president, regional general manager

16,900 12.7%

2,200,0003 0.0%

Bentonville, Ark. 0.8%

Retail marketplace

4

5

STATE OF ILLINOIS 100 W. Randolph St., Suite 16-100, Chicago 60601 Illinois.gov

J.B. Pritzker Governor

13,936 14.2%

45,887 2.8%

Springfield, Ill. 30.4%

State government

5

4

JPMORGAN CHASE & CO. 10 S. Dearborn St., Chicago 60603 JPMorganChase.com

Tony Maggiore President, Midwest middle market banking

13,750 0.1%

256,981 0.3%

New York, N.Y. 5.4%

Banking and financial services

6

7

JEWEL-OSCO 150 Pierce Road, Suite 400, Itasca 60143 JewelOsco.com

Mike K. Withers President

10,032e 3.0%

10,754 3.3%

Boise, Idaho4 93.3%

Grocery retailer

7

6

AMERICAN AIRLINES GROUP INC. O’Hare International Airport, Terminal 3, Chicago 60666; AA.com

Franco Tedeschi Vice president - Chicago, Europe and Asia Pacific

9,7005 -3.0%

102,7005 -21.0%

Dallas-Fort Worth, Texas 9.4%

8

8

AT&T INC. 225 W. Randolph St., Chicago 60606 ATT.com

Eileen M. Mitchell President, AT&T Illinois and AT&T Great Lakes states

9,340e -2.6%

230,7603 -6.9%

Dallas, Texas 4.0%

Tech and telecom

9

9

UNITED PARCEL SERVICE INC. 1245 S. Michigan Ave., Chicago 60605 UPS.com

Darren Jones President, UPS Central Plains district

8,248e 9.1%

321,932e 9.1%

Atlanta, Ga. 2.6%

Logistics

10

11

FORD MOTOR CO. 12600 S. Torrence Ave., Chicago 60633 Ford.com

Salih Ahmad Manager, Chicago Stamping Plant

7,1003 0.0%

186,0003 -2.6%

Dearborn, Mich.

3.8%

11

16

HOME DEPOT INC. 2665 N. Halsted St., Chicago 60614 HomeDepot.com

Craig Menear Chairman, CEO

7,090 25.8%

500,000 25.0%

Atlanta, Ga. 1.4%

12

20

TARGET CORP. 1 S. State St., Chicago 60603 Target.com

Brian Cornell Chairman, CEO

7,000 52.8%

409,0003 11.1%

Minneapolis, Minn.

1.7%

Retail marketplace

13

10

BMO HARRIS BANK NA 111 W. Monroe St., Second Floor, Chicago 60603 BMOHarris.com

David R. Casper U.S. CEO, BMO Financial Group

6,729 -8.5%

53,457 -5.3%

Montreal, Canada6 12.6%

Banking

14

New

CVS HEALTH CORP. 2211 Sanders Road, Northbrook 60062 CVSHealth.com

Andy Arland Region director, CVS Health

6,244e NA

213,0007 NA

Woonsocket, R.I. 2.9%

15

12

ACCENTURE LTD. 161 N. Clark St., Chicago 60601 Accenture.com

Jim Coleman Managing director, Chicago office

6,200 0.0%

539,821 13.2%

Dublin, Ireland 1.1%

Management consulting, technology services

16

14

BANK OF AMERICA 110 N. Wacker Drive, Chicago 60606 BankofAmerica.com

Paul T. Lambert Chicago market president

6,000 0.0%

213,000 2.4%

Charlotte, N.C. 2.8%

Financial services

17

13

DELOITTE8 111 S. Wacker Drive, Chicago 60606 Deloitte.com

Kathy Scherer Central Region market leader and Chicago managing partner

5,805 -3.4%

113,2579 5.9%

New York, N.Y. 5.1%

Audit, consulting, tax and advisory services

18

15

COMCAST CORP. 1500 McConnor Parkway, Schaumburg 60173 Chicago.Comcast.com

John Crowley Regional senior vice president

5,800 0.0%

190,000 0.0%

Philadelphia, Pa. 3.1%

Telecommunications

19

18

AON PLC 200 E. Randolph St., Chicago 60601 Aon.com

Gregory C. Case CEO

5,00010 0.8%

48,5313 1.3%

London, England 10.3%

Professional services

19

17

SOUTHWEST AIRLINES Chicago Midway International Airport, Chicago 60638; Southwest.com

Gary C. Kelly Chairman, CEO

5,0005 -7.4%

58,0005 -3.3%

Dallas, Texas 8.6%

21

19

UNITEDHEALTHCARE 200 E. Randolph St., Suite 5300, Chicago 60601 UHC.com

Tom Kunst CEO

4,700 0.0%

330,000 1.5%

Minneapolis, Minn.

1.4%

22

21

CLEVELAND-CLIFFS 1 S. Dearborn St., Chicago 60603 ClevelandCliffs.com

Wendell Carter Senior vice president, flat-rolled steel operations

4,153 -7.4%

25,452 -86.7%

Cleveland, Ohio 16.3%

23

22

ERNST & YOUNG LLP 155 N. Wacker Drive, Chicago 60606 EY.com

Judson Snyder Chicago managing partner

3,950 -2.8%

298,965 5.3%

New York, N.Y. 1.3%

24

23

MARIANO’S 9501 W. Devon Ave., Fifth Floor, Rosemont 60018 Marianos.com

Michael Marx Division president

3,936e 0.5%

3,936e 0.5%

Cincinnati, Ohio11 100.0%

Grocery retailer

25

24

PRICEWATERHOUSECOOPERS LLP 1 N. Wacker Drive, Chicago 60606 PWC.com

Carina Markel Central market managing partner

3,572e -0.9%

284,258 3.0%

London, England 1.3%

Audit, assurance, consulting and tax services

Federal government

E-commerce, tech and telecom

Airline

Automaker

Home improvement retailer

Retail health care

Airline

Health insurance and health care

Steel and mining

Advisory and accounting services

Includes large employers with primary headquarters outside Cook, Kane, Lake, DuPage, Will, and McHenry counties in Illinois and Lake County in Indiana. Crain’s estimates are in gray; figures estimated by Crain’s are derived from a variety of sources. The list is built using data submitted by companies, Crain’s estimates and information reported elsewhere when available, but it is not a complete list of all large employers with headquarters outside the Chicago area. Local addresses and top Chicago-area executives are included when available, but some addresses and executives outside the Chicago area are included. In cases where we’ve published a full-time local employment figure alongside a worldwide figure that also includes part-time employees, the figures in the column listing the percentage of employees in Chicago should be taken as rough approximations. NA: Not available. e: Crain’s estimate. 1. Includes estimated distribution center employment figures from MWPVL International. 2. Includes Whole Foods employees. 3. Includes part-time employees.

4. Reflects headquarters of parent company, Albertsons. 5. This airline reduced the size of its workforce due to decreased travel demand caused by the COVID-19 pandemic. 6. Reflects headquarters of parent company, Bank of Montreal. 7. Calculated from SEC filings.

8. Includes subsidiaries of Deloitte LLP. 9. Includes only employees of Deloitte US. 10. Figure is from Crain’s Chicago Business and as of June 2020. 11. Reflects headquarters of parent company, Kroger.

Research by Sophie Rodgers (sophie.rodgers@crain.com)

P013_CCB_20210712.indd 13

7/8/21 9:34 AM

14 JULY 12, 2021 • CRAIN’S CHICAGO BUSINESS

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

ARCHITECTURE / DESIGN

BANKING / FINANCE

LAW

LAW

LAW

Hoerr Schaudt Landscape Architects, Chicago

PNC Bank, Chicago

Benesch Law, Chicago

Freeborn & Peters LLP, Chicago

Willkie Farr & Gallagher LLP, Chicago

Dorothy Abreu has been promoted to senior vice president and relationship manager for PNC Public Finance. Abreu will help lead the provision of capital solutions and tailored financial services to public sector and non-profit entities including the State of Illinois, the City of Chicago and its sister agencies, and other not-for-profit organizations. She brings nearly 20 years of experience in commercial banking in both sales and underwriting capacities.

Mircea A. Tipescu has joined Benesch as a Partner in the firm’s Litigation Practice Group.

Mircea represents clients in intellectual property litigation matters and provides strategic counseling regarding all facets of patent protection and enforcement. On the litigation side, he has represented domestic and multinational clients in federal court and before the International Trade Commission.

Freeborn & Peters LLP is pleased to announce that the firm has elevated attorney Ann M. Zwick to Income Partner, effective January 1, 2022.

Ann M. Zwick is a Partner in the Environment and Energy, and Real Estate Practice Groups. Ann has in-depth knowledge and experience in all aspects of environmental law, with a focus on the solid waste and scrap metal industries and air regulatory matters.

Willkie Farr & Gallagher LLP announced that Melainie Mansfield has joined the firm as a partner in the Business Reorganization & Restructuring Department.

Melainie focuses her practice on complex finance transactions and restructurings, and has significant experience advising funds and financial sponsors on direct investments and distressed investment reorganizations inside and outside of bankruptcy. She is based in Willkie’s Chicago office.

Hoerr Schaudt Landscape Architects is thrilled to announce the promotion of Carroll Conway to President. Over the past twenty years, Carroll has helped manage and advance the firm, maximizing the efficacy of Hoerr Schaudt’s business practices through strategic leadership and operations. During her tenure, the company has grown from eight employees to over 50 across three nationwide locations. Her commitment to the firm has yielded significant growth in both size and revenue.

BANKING Elgin State Bank, Elgin Yaneth Medina has been promoted to president of Elgin State Bank, part of the Wintrust Community Banks family. With 25 years of experience, she is responsible for overseeing budget planning, loan growth, and maximizing revenue in the Elgin market. Yaneth also serves as vice president and board member for Centro De Informacion; chair and board member for the Elgin Area Chamber of Commerce; and board member for Marklund. She has earned awards from Latina Style Magazine and Today’s Inspired Latina.

LAW

BUSINESS ORGANIZATIONS Calumet Area Industrial Commission, Chicago Beth Dybala has been named VicePresident of Economic Development at CAIC. Ms. Dybala has over 20 years of experience in expanding public/private partnerships as well as business retention and expansion efforts on the North Side of Chicago, Lake County IL, and the South Suburbs of Cook County. With a Master’s degree in Urban Planning from UIC and a Bachelor of Arts in Economics from UIUC, Ms. Dybala will be planning and overseeing multiple programs at the Commission.

NON-PROFIT

Franczek P.C., Chicago

LAW

Franczek P.C. is delighted to announce that Koga Ndikum-Moffor has joined the firm as an associate. Koga’s practice includes representing and advising school districts, higher education clients, and public and private sector employers on a variety of education and employment law matters. She has previously represented Chicago Public Schools as a Due Process Attorney and the African Development Bank in employment law matters before international administrative tribunals.

Golan Christie Taglia LLP, Chicago Anthony R. Taglia has been named Managing Partner of GCT, overseeing a team of over 30 legal professionals who serve businesses, corporations, high-net-worth individuals and non-profit organizations from their Chicago office. Tony represents closely held businesses and business owners in corporate matters, tax, real estate, banking and finance. He also leads business owners on the design and implementation of commercial transactions, structuring of new business ventures and mergers & acquisitions.

First Bank Chicago, Northbrook First Bank Chicago, a Division of First Bank of Highland Park, is pleased to announce Sarah Gin has been promoted to Senior Vice President, Middle Market Banking. As the bank continues to grow its Middle Market portfolio, Sarah is responsible for managing and building strong client relationships as well as underwriting new credits. Sarah has over 20 years of financial expertise and joined the First Bank team in 2016.

BANKING Wintrust Commercial Real Estate, Chicago Jason Baeten joins Wintrust Commercial Real Estate as vice president, relationship manager. In this role, Jason will focus on providing acquisition, construction, and term debt financing for commercial real estate owners and developers. Jason has 14 years of industry experience, most recently serving as vice president, credit products manager at Regions Bank.

Jason holds a Bachelor of Science in finance from Illinois State University.

P014_CCB_20210712_v1.indd 1

BUSINESS SERVICES Purchasing Power, Chicago Patrick Cleary has been appointed Mid-Central Regional Sales Director at Purchasing Power, a voluntary benefit fintech company offering the leading employee purchase program through payroll deduction. He oversees regional sales (Illinois, Iowa, Colorado, Arizona, Nebraska, Utah) focused on benefit brokers and their employer clients. He will be building new broker segments to generate lasting business relationships representing the program and its financial flexibility advantages for employees.

EXECUTIVE SEARCH Korn Ferry, Chicago Korn Ferry is pleased to announce Radhika Papandreou has been appointed as Managing Partner of the Korn Ferry Chicago Office.

In her expanded role, Radhika will provide leadership for the Chicago team while continuing to lead the Firm’s Travel, Hospitality and Leisure practice. Radhika joined Korn Ferry from another executive search firm, where she was global head of its Hospitality practice.

Previously, Radhika had an eighteenyear career in corporate banking in New York, Chicago and London.

Cara Collective’s Board of Directors announced Kathleen S. Caliento will assume the role of President & CEO. She will lead the 30-year-old social purpose enterprise and its four entities - which produce nearly 1,000 jobs annually for people experiencing homelessness and poverty - beginning July 6. Caliento has spent two decades committed to urban education, student success, and dismantling social injustice. Previously, she was the Chief Learning and Design Officer at the Academy Group.

LAW NON-PROFIT

Freeborn & Peters LLP, Chicago

BANKING

Cara Collective, Chicago

Freeborn & Peters LLP is pleased to announce that the firm has elevated Katheleen A. Ehrhart to Equity Partner effective January 1, 2022. Kathy is a member of the Litigation Practice Group and Insurance/Reinsurance Industry Team and Co-Leader of the Insurance Brokerage Group. She has extensive experience working with executives, senior management and in-house counsel of corporations in managing litigation as well as advising on litigation risks and strategy.

LAW Freeborn & Peters LLP, Chicago Freeborn & Peters LLP is pleased to announce that the firm has elevated Jeffrey A. Rossman to Equity Partner effective January 1, 2022. Jeff is a member of the Litigation Practice Group. He has extensive trial and appellate experience and has tried and argued cases in federal and state courts across the country. Jeff also regularly counsels clients on litigation, tax and regulatory matters across the country, acting as national counsel for several large eCommerce companies.

To order frames or plaques of profiles contact Lauren Melesio at lmelesio@crain.com or 212-210-0707

Mikva Challenge, Chicago LAW McCormack Schreiber Legal Search, Chicago McCormack Schreiber Legal Search is pleased to announce the addition of a new Managing Director, Howard Rosenblum.

Howard joins McCormack Schreiber after more than 25 years in the Chicago legal community. He practiced for the last 17 years in-house at Walgreens, having served as both Senior Litigation Counsel and Director and Managing Counsel. We are delighted to welcome Howard to our team of talented recruiters.

Verneé Green has been appointed as the new Chief Executive Officer of Mikva Challenge, a national leader in the field of youth civic engagement that works with over 100,000 students in sixteen states. A seasoned educational leader, Verneé was most recently the Executive Director of Mikva’s Illinois chapter and joined the organization three years ago as the Chief Program Officer. She has worked in the field of education for 25 years, including three years as a teacher in Chicago Public Schools.

TECHNOLOGY Information Resources, Inc. (IRI), Chicago LAW Nixon Peabody LLP, Chicago Kate Michalski has joined Nixon Peabody LLP’s Community Development Finance, New Markets Tax Credits practice group as an associate based in our Chicago office. She focuses her practice on transactions involving complex tax credit financing, analysis of tax structure, and related areas for clients with sophisticated real estate credit needs.

Cecilia Ogude has been appointed senior vice president of Diversity, Equity and Inclusion at IRI. In her role, Ogude will partner with IRI leadership across the global organization to facilitate the development, implementation, and continuous evolution of IRI’s DEI strategy, initiatives, programs, tools and resources, building on the successful programs and efforts already established. Prior to joining IRI, Ogude was a Firmwide Diversity and Inclusion Program Lead at JPMorgan Chase & Co.

7/6/21 2:56 PM

CRAIN’S CHICAGO BUSINESS • July 12, 2021 15

Big Lincoln Park shopping center for sale RPT Realty, which paid nearly $53 million for Webster Place in 2017, has decided not to go forward with a redevelopment of the 135,000-square-foot property The owner of the Webster Place shopping center in Lincoln Park has decided to scrap a major proposed redevelopment of the property and put it up for sale instead.

New York-based RPT Realty has hired Jones Lang LaSalle to sell the 135,000-square-foot shopping center at Webster and Clybourn avenues. Webster Place, which opened in 1987, sits in a dense, high-income neighborhood, a big plus for many investors, but it’s just 69 percent occupied after a big tenant, Webster Place Athletic Club, closed in October 2019.

That will limit what investors are willing to pay for the shopping center and raises the prospect that it will fetch less than the $52.7 million RPT paid for it in February 2017. Investors also are cautious about retail properties these days, unsure of how the sector will recover after the pandemic, which hit retailers especially hard and

accelerated the rise of e-commerce, a major threat to brickand-mortar stores.

The decision to put Webster Place on the market represents a shift for RPT, which drew up plans in 2018 for a redevelopment that would have included a reconfiguration of the shopping center’s retail space and the construction of two 20-story towers including residential and office space on a site next door.

BUYER SEARCH

Now, RPT aims to find a buyer interested in running with those plans. A JLL marketing brochure pitches Webster Place as a “repositioning and redevelopment opportunity.” Including the fitness club space, a Barnes & Noble bookstore operating under a short-term lease and other spaces there, a new owner could have nearly 71,000 square feet—more than half of the property’s space—to re-lease, according to the brochure, an ap-

COSTAR GROUP

BY ALBY GALLUN

Webster Place at Webster and Clybourn avenues in Lincoln Park. pealing prospect for investors that specialize in turnarounds.

Webster Place also has zoning to build more than 168,000 square feet on the property, according to the brochure. That, combined with a 1.1-acre site next door that’s not included in the offering, could

accommodate a major residential project.

The brochure does not include an asking price. Representatives of Chicago-based JLL and RPT do not respond to requests for comment.

RPT, which specializes in shop-

ping centers, owns 62 properties totaling nearly 12 million square feet in the U.S. In addition to Webster Place, it owns three in the Chicago area: Deer Grove Centre in Palatine, Market Plaza in Glen Ellyn and Mount Prospect Plaza in Mount Prospect.

Fulton Market leasing streak continues

BY DANNY ECKER Restaurant reservation platform Tock and a company that provides maintenance to private jets are set to open new offices in the Fulton Market District, adding to a run of recent deals in the trendy corporate corridor as effects of the COVID-19 pandemic subside.

In the bigger of the two moves, Tock has inked a lease for 51,000 square feet on two floors in a new 13-story building recently completed at 320 N. Sangamon St., according to the company and New York-based developer Tishman Speyer. Three blocks away at 167 N. Green St., Chicago-based Jet Support Services leased about 25,000 square feet in a 17-story office building finished this year, the company confirmed.

The deals are signs of companies regaining confidence in their post-pandemic workspace needs after re-evaluating them while many people worked remotely during the past year. That’s good news for downtown office landlords saddled with the highest central business district vacancy rate on record, even though many companies are cutting back on their office footprints amid the rise in remote work.

Tock is countering the downsizing trend with a significant expansion from the roughly 20,000 square feet it leases today in Fulton

P015_CCB-20210712.indd 15

Market at 401 N. Morgan St. The company, recently acquired by website-hosting company Squarespace in a $400 million deal, is notching a much-needed win for Tishman Speyer, which just completed the 270,000-square-foot Sangamon Street project without any tenants signed in advance.

Tock will relocate its headquarters in January from the Morgan Street building, which was sold this year to New York-based Vista Property Group. Vista Principal Hymie Mishan declines to comment.

MOVING PLANS

Tock CEO Nick Kokonas, who is also co-founder of upscale restaurant company Alinea Group, says in a statement that the company is “”excited to expand our footprint in Chicago with our new office at 320 N. Sangamon as we continue delivering on our mission to reimagine how the restaurant and hospitality industries connect with customers.”

JSSI, meanwhile, is set to move to the Green Street building early next year from a slightly larger space in the Two Prudential Plaza tower at 180 N. Stetson Ave. in the East Loop, CEO Neil Book says.

Book spent recent months touring office buildings in different areas of downtown as his company faced an expiring lease this fall, ultimately landing on the former meatpacking district because of its

appeal to younger employees who want to be in the office every day even as others may be in-person only a couple of days each week.

“This pandemic experience greatly changed our thinking and influenced our decision-making with changing neighborhoods,” says Book, whose company has just over 100 employees locally.

“We wanted a place that’s going to be high-energy, with great food and hotel options for customers and suppliers that are coming in town to visit. There’s no better place than Fulton Market to provide those great options for customers, suppliers, partners and our employee base.”

Book does not disclose financial terms of the deal but says his firm’s new lease is for more than 10 years.

In line with many companies adjusting to the rise of remote work, Book says the new office will have more “collaborative space” rather than individual desks, a change that allowed the company to slightly shrink its square footage.

JSSI is the latest leasing victory for Chicago-based developers Shapack Partners and Focus, which teamed up to develop the 750,000-squarefoot building on Green Street.

The duo thus far has signed auto insurance claim software provider CCC Information Services to a 125,000-square-foot lease and inked other deals with professional services firm Kroll—formerly Duff

COSTAR GROUP

Restaurant reservation platform Tock and plane-maintenance company Jet Support Services are set to open new offices in the former meatpacking district as businesses start to regain confidence in their post-pandemic workspace needs

Jet Support Services is set to move to 167 N. Green St. early next year. & Phelps—convenience store company Foxtrot Market and co-working provider WeWork.

Internet of things company Hologram also recently signed a nearly 11,000-square-foot lease to move its headquarters from a small Loop office into the building, which is now close to 70 percent leased.

Founded in 1989, JSSI provides maintenance plans and financial services for private jets owned by corporations, high-net-worth individuals and charter plane operators.

The company, which sold a majority stake last year to Chicago private-equity firm GTCR, is set to leave behind its longtime office in a building owned by Chicago developer Sterling Bay. A Sterling Bay spokeswoman declined to comment.

JSSI’s lease also highlights the

increasingly diverse mix of tenants gravitating to newly built office space in Fulton Market, says CBRE Vice Chairman Brad Serot, who teamed with fellow CBRE tenant rep Tony Coglianese to represent JSSI in negotiating the deal. Leasing agents Paige O’Neil and Annie Aldrich represented the Shapack and Focus joint venture.

With a roster of Fulton Market tenants that includes Google and McDonald’s but has since added companies from a variety of sectors including Kroll, advisory firm Ernst & Young, consumer products giant Kimberly-Clark and JSSI, “it runs the gamut now,” Serot says.

“Now you have corporates and other professional services and creative firms and everything in between validating that this is a place to do business.”

7/9/21 2:56 PM

16 July 12, 2021 • CRAIN’S CHICAGO BUSINESS

Food trucks were hit hard—and the survivors are still waiting for a rebound

Ma

The pandemic hit food trucks harder than any other restaurant segment, says Mark Brandau, an analyst at Datassential, a food industry consultancy based in Chicago. Spending in the U.S. food truck market was 41 percent lower in 2020 than was initially forecast, Datassential reckons. Food trucks that were once dependent on bustling Loop lunch crowds and catering events sat mostly stationary. There were some bright spots, like events for front-line workers and stops in suburban neighborhoods. But for many, it was not enough to recuperate their losses.

Pre-pandemic, there were 80 to 100 modern food trucks operating in Chicago, says Gabriel Wiesen, owner of Beavers Coffee + Donuts food truck and head of the Illinois Food Truck Association, which has been mostly dormant since the pandemic struck. He estimates about half of that fleet did not survive.

“Food trucks, in particular, are vulnerable because they’re such a bootstrapped business.

Oftentimes it’s someone’s life savings” tied up in the enterprise, he says. “There are no nest eggs or ability to deal with a week’s loss in revenue, let alone a year.”

For those that survived the months of COVID restrictions, recovery is expected to take 18 to 24 months, as food truck operators wait for downtown foot traffic and large-scale, in-person events to return. That’s assuming, of course, that the scene isn’t forever altered by the pandemic. Food trucks, so dependent on downtown office denizens for survival, may be out of luck if the COVID-era work-from-home revolution permanently upends 9-to-5 office life as so many observers predict.

Worker occupancy in downtown offices was at about 30 percent of pre-pandemic levels

JOHN R. BOEHM

FOOD TRUCKS from Page 1

Brothers Alexis Vejar, left, and Teddy Vejar own Jarabe Mexican Street Food. “The Loop was a ghost town” during the worst of the COVID outbreak, “and it’s still relatively empty,” says Alexis Vejar. a ghost town” during the worst of the COVID outbreak, “and it’s still relatively empty.”

SHIFT IN FOCUS

Jarabe was one of the first food trucks in Chicago more than a decade ago, says Vejar, who owns the business with his brother. They have since shifted their focus, opening a brickand-mortar location and delving into catering. Now the food truck is mostly seasonal, bringing in about 25 percent “OF COURSE, DOWNTOWN GOT ELIMINATED. of the business’ reveI WAS LIKE, ‘OK, WHERE WILL EVERYBODY nue in the BE?’ SO I PARKED IN FRONT OF A JEWEL” AT summer and even less 75TH STREET AND STONY ISLAND AVENUE. other times.

Roughly 70 Thomas Brewer, owner, Whadda Jerk Food Truck percent of Jarabe’s revlate last month, according to enue came from catering, which the Chicago Loop Alliance. The intensified the pandemic’s sting advocacy group for downtown but might set the business up businesses, civic and cultural for a faster recovery. institutions expects occupanThere are almost 11,000 food cy to increase to 50 percent by trucks operating in the U.S., acthe end of July and grow from cording to Datassential, and conthere, but many experts say sumers spend about $1.5 billion most workplaces will maintain a year on them. In Chicago, there some work-from-home flexibil- are 200 licensed food trucks, inity even after Labor Day. cluding those that prepare food “That was the only part of Chi- on the truck and those that precago where there was enough pare it in a kitchen and sell from foot traffic to generate the sales the truck, says Isaac Reichman, somebody would need to make a city spokesman. That number a profit each day,” says Alexis could also include some that are Vejar, co-owner of Jarabe Mexi- not currently operating, since can Street Food. “The Loop was their licenses were automatically

P016-P017_CCB_20210712.indd 16

extended during the pandemic.

In 2019, there were 233 licensed food trucks.

The city plans to bring the Chicago Food Truck Festival back to Daley Plaza later this month after a pandemic hiatus. Thomas Brewer, owner of Whadda Jerk Food Truck, says he plans to attend. But for the most part, he has stayed out of downtown during the pandemic. Whadda Jerk used to frequent stops such as Monroe and Clark streets and the Aon Center.

“Of course, downtown got eliminated,” Brewer says. “I was like, ‘OK, where will everybody be?’ So I parked in front of a Jewel” at 75th Street and Stony Island Avenue to capture lost business.

That tactic worked well for Brewer for a few months, when grocery stores were one of the few businesses open. But it wasn’t sustainable. His revenue took a 70 percent hit last year. Whadda Jerk Food Truck is now focusing mainly on private events, where it is guaranteed to make money.

Brewer says he doesn’t have the staff to do more.

Indeed, Chicago food trucks are finding success catering events—as they slowly return— and eagerly awaiting high-dollar corporate gigs. Though event attendance remains lower than pre-pandemic, food truck operators are learning their sweet spot. They must be choosy about where they go, to ensure

an event or location is financially viable.

Evanston catering company Soul & Smoke won’t dispatch its food truck to an event unless it can make $3,500 on the weekends, says owner Healther Bublick. That equates to about 250 barbecue brisket sandwiches.

There’s a $2,500 minimum on weekdays, too. The food truck frequents Sketchbook Brewing, hits up farmers markets and set up at a firework show in Wilmette. Soul & Smoke bought the food truck last summer to reach more customers, and it’s working.

“I very much treat it now like it’s one of our main locations,” Bublick says. “There’s Evanston, there’s Time Out (Chicago) and the truck. Those are our three big producers.”

COMPETITION

That approach highlights another part of the food truck industry’s pandemic saga: new competition. Some restaurants launched food trucks over the past 15 months as additional revenue streams.

Rainbow Cone is among those ranks. The 95-year-old brand launched its first food truck last year “to get Rainbow Cone out to the people that we were missing,” says marketing director John Buonavolanto. Now, Rainbow Cone has five food trucks— one named for each flavor in its famous multicolored ice cream cone—and their popularity

is helping drive decisions on where to open new brick-andmortar locations.

Similarly, Stan’s Donuts plans to debut a second food truck in August, says vice president of operations John Gurgone.

The company has had its “Stan Van” for about four years, but it served mainly as a marketing tool up until the pandemic. Five of Stan’s stores were closed for two months, and its downtown locations suffered for much longer. For a while last year, the food truck was Stan’s No. 1 sales generator.

Wiesen from Beaver’s Donuts also owns a manufacturing company that builds food trucks for companies across the country. Midwest Food Trucks got an influx of interest from restaurants wanting to buy or lease the vehicles.

Established restaurants can often buy a food truck for less than $50,000 and write off the expense, Wiesen says. It was a good way for restaurants that were watching their indoor dining revenues languish to get out into different areas and meet consumers near their homes, for example. But in Chicago, at least, the new food trucks hitting the streets weren’t enough to offset the industry’s losses.

“The people that were inquiring were those that already had restaurants, that had revenue,” he says. “It wasn’t a mom-andpop food truck owner.”

7/9/21 4:12 PM

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CRAIN’S CHICAGO BUSINESS • July 12, 2021 17

Mayor gravitates to the media venues most likely to give her a warm embrace

JOHN R. BOEHM

LIGHTFOOT from Page 1

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Overall, between her inauguration in May 2019 and June 20, 2021, Lightfoot has granted slightly more one-on-one sit-downs to local outlets than national ones, 164 to 153.

That’s different than the emphasis placed by prior mayors. And her numbers tilt to a national majority if you exclude the big batch of local interviews Lightfoot grants at limited specified times, like the week she unveils her proposed city budget.

Though the lack of access clearly has irritated portions of the Chicago media—Crain’s last interviewed Lightfoot on Oct. 15, 2020, and has had multiple interview requests turned down since then—observers say more than granular, inside baseball-style coverage and local media bragging rights are at stake.

“Local journalists should have more access than national reporters who drop in and don’t have the basis of knowledge to ask needed questions,” says David Greising, a former Tribune columnist who now contributes a monthly column to Crain’s and now heads the watchdog Better Government Association.

“Chicagoans have an interest in the mayor being available to reporters for in-depth interviews where nuances can be explored,” he says.

“If national reporters are getting the lion’s share of those, Chicago residents are being short-changed.”

In part, the data on Lightfoot’s interviews reflects the reality that modern media is splintered, making it difficult for any mayor to reach a mass audience. National media interviews allow the mayor to shape perceptions of the city while appealing to her progressive base by hitting the outlets those people watch and read, says former Tribune editor Tim Franklin, now a professor at Northwestern University’s Medill School of Journalism.

But part of it is Lightfoot herself, he adds. “For whatever reason, she doesn’t seem to want to get into indepth interviews with individual outlets where she may get pushed really hard on some of these very challenging issues facing the city.”

PRESSURE

A City Hall insider seconds that view, noting that when the mayor feels she’s under pressure on crime rates, school strikes or other woes, she is inclined to seek a friendly venue to talk about it, and those sympathetic ears are likely to be found at outlets like MSNBC. The mayor understands that worsens her relationship with local media, the insider says, but “she doesn’t care.”

In a statement, a Lightfoot spokesperson says the mayor’s office has used a variety of media to “communicate with residents and advocate on behalf of Chicago,” including panel discussions, social media and public events. Since September 2019, they say, the mayor has held 180 press conferences—an average of two per week—“which offer reporters an opportunity to ask an array of questions.”

“We will continue to use a variety of opportunities to both advocate for our beloved city, and communicate with residents.”

P016-P017_CCB_20210712.indd 17

MSNBC did not respond to a request for comment.

Lightfoot, of course, came into office with a compelling story: a selfmade attorney and nonpolitician who rose to become the first African American woman and openly gay person to be Chicago’s mayor.

Here’s what the record shows: While the mayor often spends a fraction of the scheduled time reflected in her records on the air, the total allotted minutes for MSNBC also exceeds that of local papers: MSNBC interviews accounted for more than 17 hours of the mayor’s scheduled time since May 2019, while together, the Sun-Times and Tribune got just over six hours.

The mayor granted 25 interviews to CNN, involving nearly 10 hours of her time. That outpaces WGN-TV and radio, where she had 18 scheduled interviews, totaling 4.5 hours.

There were 13 scheduled interviews, plus one photo shoot, with the New York Times and its magazine— as many as the hometown Tribune and more than the Sun-Times. The Washington Post received four scheduled interviews. Time magazine and the New Yorker were each scheduled for two. The Wall Street Journal, USA Today, Rolling Stone, Harper’s Bazaar, Glamour and Elle were each scheduled for one.

On the local airwaves, public media outlets—WTTW, with 13, and WBEZ, with 10­—ranked in the top 10 for one-on-ones with the mayor. But Lightfoot was an even more frequent guest on WVON-AM, the oldest Black-oriented radio station in Chicago, where she had 15 scheduled interviews. She also had eight scheduled with V-103, the R&B and throwback station, mostly with “Chicago Speaks” host Darryl Dennard.

Smaller or independent local media, including ProPublica, the Triibe, the Windy City Times, and

ONE-ON-ONES Overall, the mayor split her time roughly equally between local and national outlets, but MSNBC and CNN have been clear favorites for sit-downs.

Local vs. national appointments National

153

jects like his relationship to power broker Tony Rezko in favor of chats with TV networks and the like, recalls former WLS-TV reporter and former BGA chief Andy Shaw. “You get much more of a pass from the national media.”

Still, Lightfoot’s style is different from those of earlier mayors. Richard M. Daley “frequently declined national interviews because Chicagoans didn’t much care about the mayor’s national profile,” says former Daley deputy press secre-

tary Carolyn Grisko. Sources close to Rahm Emanuel say he routinely gave only about half a dozen national media interviews a year.

In national appearances, the mayor is “not going to get pressed on the specifics of all the shootings over the July Fourth weekend, how they happened and what she’s going to do.

It’s more big-picture existential issues,” Northwestern’s Franklin says.

“I think that’s probably why she’s doing it. And I would expect her not to stop doing it anytime soon.”

CRM-Powered Transportation Management for Freight Brokers, Logistics Service Providers (3PL/4PL) and Shippers

www.revenova.com 312.319.5410

Minutes

3,768

164 3,918

Local Appointments by outlet MSNBC CNN

40 1,033 25

WGN

18

585 270

WVON

15

258

New York Times

14

325

Chicago Tribune

14

475

WTTW

13

420

WBEZ

10

205

ABC7

10

200

V103

8

135

Chicago Sun-Times

8

315 100

WLS-AM 890

7 6

Univision

6

130

Crain’s Chicago Business

6

250

CBS (national)

6

165

NPR

N’Digo, were scheduled for one interview each, though some could have been part of smaller ethnic media roundtables the mayor has hosted. The Triibe was also granted an interview as part of the mayor’s two-year anniversary tour, which is blocked off on the mayor’s schedule for two hours on May 19, 2021.

While on the presidential campaign trail, U.S. Sen. Barack Obama employed the same “go national” technique, avoiding local interviews that might touch on sensitive sub-

LET’S MOVE LET’S MOVE YOUR BUSINESS YOUR BUSINESS FORWARD TOGETHER FORWARD TOGETHER

180

Source: Mayor’s schedules, May 20, 2019, to June 20, 2021

7/9/21 4:12 PM

TRENDS IN LOGISTICS NAVIGATING THE POST-COVID BOOM

Since the COVID pandemic began, the logistics industry has been tested repeatedly as consumers shopped online in record numbers—a trend that shows no sign of abating. Executives of three companies that frequently collaborate to serve the logistics industry shared their insights with Crain’s Content Studio.

HALEY EVANS is vice president – broker and third-party logistics services for TriumphPay, which is creating a fully integrated payments network for transportation. She works with freight brokers and logistics providers to understand industry pain points, and collaborates with product management and marketing to provide solutions. Previously, she worked in health care and reinsurance, designing programs to reduce institutional risk and improve safety.

MICHAEL HORVATH is cofounder, executive vice president and chief marketing officer of Revenova, a cloud application provider of transportation management solutions (TMS) for shippers, brokers and third-party logistics companies.

He has more than three decades of experience in the cloud computing/ software industry where he managed sales, marketing, customer service and product development. Previously, he co-founded Forseva, a credit and collection management application suite.

WES TILGNER is vice president – information systems for OpenRoad Transportation, a global supply chain and logistics provider. Since joining the company in 2006, he has worked in sales, operations, equipment, technology and corporate management—helping it grow from a small start-up to one of the fastestgrowing logistics companies. His passion is helping people succeed by providing an opportunity with the right technology tools.

What role does your organization play in the logistics industry?

Michael Horvath: Revenova provides customer relationship

and scalability of the Salesforce.com platform with the transportation management features needed to manage the entire quote-to-cash process of shipping freight across the globe; in other words, customer relationship management-powered transportation management.

Haley Evans: TriumphPay is an integrated payments network that connects brokers, shippers, factors and carriers through forwardthinking solutions that help each party successfully process, settle and manage carrier payments and drive growth. We offer supply chain financing to brokers, allowing them to focus on the carrier experience, pay their carriers faster and drive carrier loyalty. We also provide the tools and services for factors to increase automation, mitigate fraud, create back-office efficiency and improve their client’s payment experience.

Wes Tilgner: OpenRoad Transportation provides both third-party and asset-based logistics management for domestic and international shipments of all kinds, as well as invoice factoring services.

We excel where shippers and carriers prefer a personal connection with a logistics provider that can provide everything they need.

What are some of the biggest challenges currently facing freight brokers and logistics service providers?

Evans: Two of the biggest challenges facing freight brokers today are maintaining carrier capacity and preserving efficiency while margins continue to be compressed. Because of the current rate environment, brokers need to find and keep carriers happy to continue serving their

“TWO OF THE BIGGEST CHALLENGES FACING FREIGHT BROKERS ARE MAINTAINING CARRIER CAPACITY AND PRESERVING EFFICIENCY WHILE MARGINS CONTINUE TO BE COMPRESSED.” — HALEY EVANS, TRIUMPHPAY management-powered transportation management solutions for logistics service providers, freight brokers and shippers. It runs on Salesforce.com, a cloud-based software that helps organizations effectively streamline their sales and marketing operations.

Our customers enjoy the benefits of the features, security, reliability

P018_019_CCB_20210712.indd 18

customers. This can be difficult to do while keeping a healthy margin, so brokers must look for other ways to develop a growing carrier base.

Tilgner: Logistics is about bringing everyone together to work efficiently.

During volatile market conditions like we’re currently experiencing,

providing the best experience for both shippers and carriers takes extra care. Bringing together the diverse technology platforms of the different market segments we serve is also a challenge we’re working through every day.

“IT ISN’T ALL ABOUT REPLACING PEOPLE WITH COMPUTERS, BUT GIVING PEOPLE WHAT THEY NEED TO BE EFFICIENT.” — WES TILGNER, OPENROAD TRANSPORTATION

Horvath: The logistics industry is experiencing very tight truck capacity, largely due to a driver shortage, emphasizing the need for freight brokers and logistics service providers to build and maintain a larger and more dedicated carrier network. Tight capacity also means tighter margins and volatile pricing, putting pressure on operations to maintain competitive customer pricing and profitability.

able to speak with a person when I call?” “Do you provide carriers with a portal where they can self-serve and see all of their information, loads, invoices and payments in one place?”

In our everyday lives, we’re used to phone apps and seeing information in real time. Carriers have similar expectations; brokers either need to develop this technology or partner with someone who can provide it for their carriers.

With carrier capacity so tight, how are you finding and keeping carriers in your network?

Tilgner: We’ve always relied heavily on our personal relationships with carriers. Our carriers appreciate our core values of proactive communication, personalized solutions and respect. We’re continually investing in technology that helps us communicate, track and pay carriers quickly and easily. Our logistics software, Revenova TMS, is built on a customer relationship management platform that helps us stay connected with our carriers.

And HubTran, now a service of TriumphPay, has made processing shipment paperwork and carrier payments simpler for everyone.

Horvath: Carrier relationship management is arguably even more important than customer relationship management. If you have carrier capacity in your network, you’ll find freight to move. Unlike most transportation management applications that are solely focused on load management, ours empowers customers to effectively prospect, onboard and retain carriers by engaging them in a more personalized and targeted fashion based on detailed carrier preferences. Offering loads that meet their lane preferences and providing functionality for easy settlement and quick payment builds trust and loyalty. If you’re easy to do business with and personalize the experience, your carrier partners will stay with you.

Evans: While rates are certainly part of the equation, over the last few years we’ve seen brokers focus even more on the carrier experience.

Carriers want to know, “Are you easy to do business with?” “Am I

Given your organization’s experience with COVID-19, what business continuity plan recommendations would you offer customers ?

Tilgner: With a major disruption like we had last year, the shippers that thrived were those that partnered with logistics providers with the relationships and technology to adapt quickly. Critical to success is having those hard conversations up front with logistics providers regarding schedules, budgets and contingency plans. We’ve all had to be flexible, use new technologies and protect our company culture during the COVID-19 pandemic.

Evans: As you think about how your work gets done, think about the location of your workforce. Due to COVID and many restrictions placed in countries overseas, companies had less control and contact with their offshore labor force. Because of this, we’re seeing companies start to bring their labor closer to home. Another aspect to consider is what technology can be used to mitigate risk and still enable you to scale without increasing headcount.

Horvath: The pandemic exposed the IT infrastructure and business application strategy of many companies that were simply unable to deploy an “at home” workforce that could fully function in a distributed environment.

Many legacy applications operate on local networks that weren’t designed to scale to a fully remote workforce.

Our recommendation has always been to deploy cloud-based solutions that can fully function wherever there’s an internet connection, offering scalability and accessibility on demand with little to no local application or IT infrastructure required. Cloud platforms have proven to be reliable

and secure—often more secure than local infrastructure—and they enable company employees to work from anywhere.

How will artificial intelligence improve logistics operations?

Evans: The logistics industry was built on repeatable tasks, and many of these tasks are still completed manually today. We’ll always want people answering the phone and building relationships with customers and carriers, but we’re really starting to see technology take over the manual and repeatable tasks.

Ultimately, this will help brokers with their margins, enabling them to deploy more employees to sales and customer service.

Horvath: Logistics is a documentheavy industry. AI is currently being used to process documents, and automate traditionally manual processes in both operations and accounting—reducing the cost and processing time. Other opportunities fall into the predictive analytics category. For example, AI could reliably calculate spot market prices, predict on-time pickup and delivery based on real-time traffic and weather analysis, and use the information to optimize routes to ensure ontime performance. Probably the most disruptive use of AI is in the autonomous vehicle projects we see across the industry; self-driving vehicles and drones are all dependent on AI technology.

Tilgner: While it’s difficult to predict where AI will take us, I can see it making improvements to most areas of our operations. We’ll be better at predicting carrier capacity in lanes, reducing the miles that trucks drive empty, processing paperwork and paying carriers more accurately without human involvement—and it will enable us to provide better, more targeted service to our partners. It isn’t all about replacing people with computers, but giving people what they need to be efficient.

What are some best practices to reduce backoffice time and carrier settlement payment expenses?

7/2/21 2:23 PM

SPONSORED CONTENT Horvath: Shipping typically involves dozens of documents.

There’s a growing trend toward digital engagement to reduce the physical handling of paperwork-electronically communicating and processing documents saves a lot of time. Of course, once a carrier has submitted the required proofs of delivery and supporting documents, they expect prompt payment. Electronic payments have been around for quite some time and the area for cost reduction is in auto-settlement—basically, where the system can auto-approve invoice amounts, confirm that the required supporting documents are present, and then present the payment options to the carrier within seconds after the paperwork is submitted. This is an area we’ve focused on in partnership with TriumphPay and Hubtran, and are seeing very good results.

Tilgner: This is one area where we’ve seen great improvement with new technology. First, we make it easy for carriers to deal with paperwork electronically by integrating intelligent document processing, logistics software and accounting—all through cloud-based connections to create a seamless process. It’s important to have this integration in mind when selecting software partners. HubTran for document processing and Revenova TMS is an example of a great integration we rely on every day.

Evans: The first thing you want to look at are those manual and repeatable processes. Consider whether you can use technology to automate those, or at least decrease the amount of time you have someone working on them. You can make manual processes efficient only to a certain extent. Once you reach that point, as you grow your business, you’ll continue to increase your headcount in back-office and nonrevenue- generating activities.

What are the most effective key performance indicators you’ve used to drive process improvement?

Tilgner: The foundation of all our processes is our people, so we look at our employee turnover ratio as an indicator of our culture. Hiring and retaining great people means we have the experience and expertise to execute our business well. We also look at the percentage of carrier settlements that need manual interaction because of missing paperwork or rate discrepancies.

Horvath: Our customers focus on service delivery and profitability metrics, so it’s important to have a TMS that can track overall organizational performance as well as profit margin and activity down to the transaction level. In addition, customers focus on operational metrics such as on-time delivery, quotes generated per salesperson, close ratios, average time to book a carrier and customer satisfaction ratings. They also track digital engagement percentages, such as the percent of processes where

P018_019_CCB_20210712.indd 19

automation—versus employees—does the work in areas like order entry, carrier matching and engagement, digital bookings and auto-settlement.

By automating routine tasks, brokers and logistics service providers can deploy their human capital to much higher value-added functions. By automating routine tasks, brokers and logistics service providers can deploy their human capital to much higher value-added functions.

Evans: One of the main metrics we track is the percentage of payments that are reversed. A reversed payment means that we paid the wrong entity and had to stop a payment and reissue. For us, this is always well below one percent, and we build our processes to keep this number low.

If this number increases, it doesn’t just cost us human capital to fix the payments—it also impacts our customer and carrier experience. As a payments network, we want to ensure that the correct person gets paid on time every time.

How does your organization maximize customer satisfaction and retention?

Evans: Maximizing customer satisfaction and retention is the same in almost every industry—do what you say you’re going to do and do it really well. We continue to focus on creating on a great customer and carrier experience by hiring the right people to serve our stakeholders.

engagement and personalize it for carrier partners. Customers create a profile for each carrier’s preferences and use it in the carrier engagement process. The goal is to understand the types of freight they prefer to move in the areas where they prefer to work. In addition, our TMS makes it easy for carriers to engage, communicate and settle loads for payment with our customers.

Tilgner: Our carrier relationships are managed much the same way as our customers. We understand the needs of our carrier partners very clearly because we’re also an asset-based carrier. This gives us unique insight to the challenges and pain points for a carrier in today’s logistics industry.

Our carrier teams match the carrier to the right load and clearly communicate throughout the trip. To finish it off, we pay carriers promptly and accurately with no effort required on their part. We work to make it a seamless and frictionless process for each of our carriers, and, when there’s a problem, our approach is respectful and understanding. All decisions are made based on the premise that each carrier will be our partner for many years to come.

Evans: With a hyper-focus on customer satisfaction, we’re committed to providing a product that’s relevant and user-friendly for all stakeholders. For carriers in particular, we provide a free portal and mobile app where they can see their loads, invoices and payments

“ . . . IF THE CUSTOMER’S FREIGHT IS MOVING FROM A SHIP TO A TRAIN TO A TRUCK FOR FINAL DELIVERY, THE CUSTOMER IS EXPECTING A SEAMLESS TRACKING EXPERIENCE ACROSS ALL THREE CARRIERS.” — MICHAEL HORVATH, REVENOVA Tilgner: We’ve always treated customers as individuals with unique needs and requirements. We make the effort to understand their businesses so we can be prepared for whatever they need from sales, operations, accounting or technology. Personal service through stable relationships has been successful for us.

Horvath: We developed our TMS on the world’s highest rated and most popular customer relationship management platform for this very reason. Our customers have options available to deploy world-class tools for customer engagement, load tracking, billing and claims management using web-based and live call center support services. Many issues can arise when shipping freight; having a service-oriented partner that provides real-time visibility to load status and a multi-channel support model builds loyalty and retention.

How about carrier satisfaction and retention?

Horvath: Our TMS empowers customers to take the same “relationship management” approach used for customer-facing

for all of their TriumphPay brokers.

This transparency and visibility allows carriers to know where their payments are at all times.

What automation trends will likely improve logistics operations?

Horvath: We talk a lot about “digital freight brokering” where processes that used to be done by people can be done through automation. Certainly, the “happy path” transactions can be fully automated. For example, a customer enters a load on a portal and instantly receives pricing and approves the rate. The TMS automatically books the load and confirms the carrier. The TMS tracks the carrier from pickup to delivery providing real-time location updates while moving. Once delivered, the TMS requests documentation from the carrier and automatically processes it when received. Lastly, the TMS sends the customer a bill and pays the carrier. Of course, not all freight travels the “happy path” and that’s why there will always be a need for people to service customers and partners.

Evans: We’ve seen a couple of trends develop over the last few years. One is the number of integrations that stakeholders— transportation management systems, brokers, carriers, factors, shippers and technology providers—are engaging in to work together, faster and more efficiently. We’ve built integrations with our TMS partners to help brokers manage their payables and create a great payment experience for their carriers. We’ll continue to build integrations with all industry stakeholders to automate the freight invoicing and payment process.

Tilgner: As more software platforms integrate with each other through application programming interfaces and other technologies, we’ll see more accuracy and accountability, greater visibility, shorter loading and unloading times, and smoother settlement processes.

HALEY EVANS

VP – Broker & 3PL Services TriumphPay hevans@triumphpay.com 214-458-1129

How has real-time shipment status for consumer shipments, aka the Amazon effect, changed how freight is managed?

Tilgner: Throughout the industry there’s a growing expectation that we know exactly where our customers’ shipments are located at all times.

The trend is pushing logistics companies and technology providers toward further integrations of freight management systems. However, it hasn’t fundamentally changed how we manage freight. While we’ve always made sure that our customers know where their freight is, the technology available today has made it much easier for us to track shipments and provide more options for our customers to see that information.

Horvath: The visibility that Amazon provides consumers regarding shipment status and location has set expectations for movers of commercial freight to provide the same visibility. We see shippers demanding 15-minute updates on their shipment status along with pickup and delivery notifications.

The challenge for logistics service providers and freight brokers is connectivity. It’s not uncommon to have more than 10,000 carriers in a network that the TMS must communicate with in each carrier’s preferred method. Then the incoming tracking data needs to be normalized for the shipper. So, if the customer’s freight is moving from a ship to a train to a truck for final delivery, the customer is expecting a seamless tracking experience across all three carriers.

Evans: People’s expectations have changed. Our customers want immediacy, transparency and convenience. We recently acquired HubTran so that we can continue to deliver on these expectations and provide the industry with easier opportunities to execute payments and grow their businesses through automatic presentment, settlement and payment of invoices.

MICHAEL HORVATH

EVP & CMO Revenova mhorvath@revenova.com 312-319-5422

WES TILGNER

VP - Information Systems OpenRoad Transportation west@openroadtrans.com 503-687-1370

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REAL ESTATE

After more than doubling its global workforce since March 2020, Project44 is now looking for a downtown office as large as 120,000 square feet.

Landlords see demand from logistics firms LOGISTICS from Page 3 hunting spree fueled by both headcount growth and the need for employees at such firms to collaborate more quickly than they can when working from home.

The activity is one of the few bright spots of the pandemic for downtown office landlords and belies the downsizing trend in the tech, banking, legal and other sectors that has pushed office vacancy in the central business district to its highest mark on record.

“The vast majority of my clients are implementing workplace flexibility and hinting at downsizing and giving back space. This is the one subset that universally says they need more and that in-office culture is paramount to their business,” says Dan Persa, a first vice president at CBRE who represented U.S. Xpress on its recent lease for 40,000 square feet at 306 W. Erie St.—five times the size of its current office.

Long a major freight hub, Chicago has burnished its reputation over the past decade as a transportation logistics capital with the growth of companies like Coyote Logistics and Echo Global Logistics, as well as tech-focused companies that help them and retailers ship and track things more efficiently like ShipBob, FourKites and Project44. That trio alone has collectively announced half a billion dollars in new venture-capital funding over the past four months.

COVID’s assault on supply chains has supercharged the growth of those companies as more businesses have sought their expertise and software, driving meteoric hiring runs. Such growth in other industries no longer means an automatic need for more office space now that remote work has become more prevalent, but the level of employee interaction for logistics companies calls for face-to-face work, says Project44 CEO Jett McCandless.

One example: His firm processes around 60,000 messages transmit-

ted between shippers and carriers each second, and information about each load is synthesized by customer support workers, account managers and software engineers, among other roles.

“They have to figure out what’s a noise and what’s a signal,” says McCandless, whose company has roughly tripled its annual recurring revenue since the start of the pandemic to more than $60 million. “If our system goes down . . . it could mean a plant shutdown for a major manufacturer. So it’s important to have those folks gathered where they can walk over and talk.”

MORE SPACE

Companies like Chicago-based Redwood Logistics that rely heavily on freight brokerage business—connecting shippers and carriers for a fee—can oversee more than two dozen steps in the life cycle of a load from a shipment order to delivery, says Redwood Chief Operations Officer Tim Zelasko, whose company recently added 15,000 square feet to its 35,000-square-foot office along the North Branch of the Chicago River. Technology is helping streamline that shipment process, “but it can’t just be done with technology alone because it is such a fragmented industry,” he says, noting there are “hundreds of thousands” of trucking companies. “Most of our customers don’t want to deal with the headaches that happen after a load goes onto the road. . . .That’s where a lot of the on-site collaboration is beneficial, as opposed to having to jump on five or six different phone calls. You can actually just walk up to a human and say, ‘Hey, here’s the issue I’m dealing with.’ ” Also helping companies in transportation logistics expand

After more than doubling its global workforce since March 2020 to about 600 people, Project44 is now looking for a downtown office as large as 120,000 square feet. That’s roughly twice the size of its current footprint at theMart, where it still has close to seven years left on a sublease from Motorola Mobility.

Helping drive the need for more workspace is that many roles at logistics software and freight brokerage companies are filled by “YOU CAN ACTUALLY JUST WALK UP younger, tech-savvy TO A HUMAN AND SAY, ‘HEY, HERE’S workers who prefer the office to working from THE ISSUE I’M DEALING WITH.’ ” home.

Freight tech firm Tim Zelasko, COO, Redwood Loadsmart, which is looking for as much as 40,000 square feet downtown as it their workspace is that office relocates its headquarters to Chi- landlords are more eager to have cago from New York, has a work- them in their buildings than beforce that skews toward employ- fore, when it was less certain that ees in their 20s with less than five a freight brokerage tenant would years of work experience. Those make it, says Adam Pines, vice employees can support each oth- president at Chicago office leasing er with sales or address customer agency Madison Rose.

“Ten years ago a lot of these issues when they’ve built a rapport with each other in an office, companies were still considered says Loadsmart Chief People Offi- gambles for ownership groups to invest in,” he says. “But a lot of cer Brad Wilkins.

“That was the biggest gap that companies have stabilized to the people saw during COVID. It’s point where they can be looked at hard to build trust when someone in parallel with a more corporate is a two-dimensional, shoulder-up user with a longer-standing credit history.” version of themselves,” he says.

7/9/21 4:05 PM

CRAIN’S CHICAGO BUSINESS • July 12, 2021 21

NURSING HOMES from Page 1 residents at long-term care facilities in Illinois and killed more than 10,000. Though vaccines and infection control measures have lately helped prevent the sort of outbreaks that marked the darkest days of the lockdown era, health care providers are now grappling with a new and more contagious COVID variant. Add in the lingering fear of contagion among families weighing the pros and cons of caring for elder loved ones at home versus in a facility, and it’s little wonder that nursing homes report that they are on life support.

“Our census is recovering, but it’s recovering so slowly,” says Donna Sroczynski, president of operations at Symphony Care Network, which has 28 facilities in Illinois, Indiana, Michigan and Wisconsin.

Sroczynski says the average number of people that Symphony serves per day is down about 20 percent, compared with pre-pandemic levels. At the same time, expenses are up at least 30 percent due to hiring additional staff, testing requirements and securing personal protective equipment.

“It’s a recipe for disaster,” Sroczynski says.

While COVID-19 brought new challenges, it also exacerbated long-standing issues facing an industry tasked with caring for some

vey reported they are operating at a loss.

According to a separate analysis by the trade groups, the nursing home industry has projected that it will lose $22.6 billion in revenue this year and that 1,670 facilities will close or merge.

Meanwhile, publicly traded Brookdale Senior Living posted a net loss of $108 million during the first quarter of 2021, compared with net income of $369 million during the same period a year earlier. And revenue fell 26 percent to $749 million in the quarter. Brentwood, Tenn.-based Brookdale is the largest senior living company in the country, with about 700 assisted living, skilled nursing and other locations in 41 states, including 11 communities in the Chicago area.

DECLINES

Occupancy rates at nursing homes have steadily declined for decades, as assisted living facilities and home health have become more popular among individuals requiring a lower level of care. But nursing home occupancy dropped sharply during the pandemic as hospitals postponed elective surgeries, which meant fewer referrals for post-acute care.

Meanwhile, to prevent outbreaks when COVID tests were scarce, many nursing homes refused to admit people “THE PANDEMIC REALLY SORT OF LAID BARE who might have been exposed to JUST HOW PROBLEMATIC THE STAFFING the virus during a hospital stay.

SHORTAGE IN NURSING HOMES IS.” And people with Tamara Konetzka, health economist, University of Chicago access to homebased services of the nation’s most vulnerable avoided high-risk congregate living residents. settings for fear of infection.

In fact, only one-quarter of Even before COVID-19 started nursing homes and assisted living spreading, the number of longcommunities nationwide are con- term care facilities in Illinois had fident they’ll last a year or more, declined nearly 10 percent to 913— according to a recent survey of 738 alongside a 14 percent drop in adfacilities by the American Health missions—from 2015 to 2019, acCare Association and National cording to the latest state data.

Center for Assisted Living. While Today, nursing homes in Illinois most nursing home operators are are 63 percent full on average— privately held and therefore keep about 10 percentage points below their revenue and profit margins pre-pandemic levels, says Matt under wraps, more than half of Hartman, executive director of the those who responded to this sur- Illinois Health Care Association,

which represents about 500 senior care facilities in the state.

Hartman says that four association members have shuttered in the last few months alone and that even more facilities are expected to close through the end of 2021, particularly as federal COVID relief funds run out.

Further complicating matters for nursing home operators is a nationwide staffing shortage. During the pandemic, nursing homes saw workers leave the industry in search of higher-paying jobs with less exposure risk.

The shortage has created a bidding war for talent. To attract Chicago-area workers, some nursing home operators say they’re raising pay and offering signing bonuses.

“The pandemic really sort of laid bare just how problematic the staffing shortage in nursing homes is because it has been there for decades, but it just got worse during COVID,” says Tamara Konetzka, a health economist at the University of Chicago. The “physically and emotionally demanding” jobs often come with no benefits or sick pay, she adds.

Many operators say they’re having to dig deep to incentivize workers, noting that low Medicaid rates don’t cover the cost of doing business. However, lawmakers and advocacy groups have called for more transparency during the pandemic around just how much facilities are spending on staffing and quality. For example, many nursing homes keep operations under a separate entity than real estate and other valuable assets, which can shield the companies from liability.

To prevent nursing homes from profiting while staffing levels remain low and three or more residents are packed into each room, lawmakers are looking to link new funding to specific safety and quality metrics that benefit residents and reduce racial health disparities.

SUPPORT

The Illinois Department of Healthcare & Family Services, which spends more than $2.5 billion annually on nursing home services for about 45,000 Medicaid beneficia-

JOHN R. BOEHM

Post-COVID financial toll threatens to drive some nursing home operators under

Smith Senior Living CEO Kevin McGee says his firm has been approached to acquire two local facilities. ries, supports the proposal. The government health insurance program for the poor and disabled covers the majority—about 60 percent—of nursing home care provided in the state each year.

Nursing home operators are also bracing for a flood of COVID-related lawsuits.

Law firm Levin & Perconti is representing families affected by the COVID-19 outbreak at the state-run LaSalle Veterans’ Home late last year, during which more than 200 veterans and staff tested positive for the virus and 36 veterans died, according to an April report by the Illinois Department of Human Services’ Office of the Inspector General.

And an estimated 1,000 lawsuits against nursing homes are in the works, according to Healthcare Heroes Illinois, an advocacy group raising awareness around immunity and liability issues.

“This is an existential threat to the industry,” says Healthcare Heroes spokesman Paul Gaynor. “And the pandemic isn’t over.”

Sroczynski declines to say whether any lawsuits have been filed against Symphony, which is among operators that experienced outbreaks during the pandemic.

But she notes that “the whole industry in Illinois is being stalked by predatory lawyers.”

Amid all the uncertainty, COVID relief funds have been a lifeline for nursing home operators during the pandemic.

HFS last year distributed $359 million in CARES Act funding to long-term care facilities, which also got about $520 million directly from the federal government. And an additional $75 million was recently allocated to the facilities.

“As those dollars run out, you’ll start to see more operators close their doors,” says Hartman. Even though pre-pandemic occupancy rates in Illinois hover below the national average, facility closures in certain areas prevent residents from getting care close to home and family, he says.

Some struggling facilities will look to find a partner that can help keep them afloat. For example, Kevin ­McGee, CEO of two-community Smith Senior Living, says the company has been approached by two local facilities looking for a buyer.

At Smith Village and Smith Crossing, “we have support for nursing at the corporate level, we have support for purchasing, we have support for business office functions,” McGee says. “Those single-site organizations that are by themselves, they’re putting their hands up and saying, ‘We can’t do this again. We need to join a system.’ ”

Crime could dampen demand for downtown condos, real estate agents worry DOWNTOWN from Page 3 Gwen Hughes, a Berkshire Hathaway HomeServices Chicago agent, agrees. “Crime is on everyone’s minds, both buyers and sellers,” Hughes says an in email. As a result, she writes, “The downtown recovery has been slower than I expected. We are all hoping that the crime situation gets taken care of, and the market will start to improve.”

Many of the buyers of high-end downtown condos are suburban people either moving into the city as empty-nesters or buying weekend in-towns, and people from other parts of the Midwest who want a foothold in the dynamic city they love to visit. “If they keep seeing this news,” Farra says, “they’ll stay closer to home.”

P021_CCB_20210712.indd 21

The violence certainly doesn’t only threaten condo sales in pricey neighborhoods; it’s undermining daily life throughout Chicago.

Efforts by Mayor Lori Lightfoot and the Chicago Police Department to get violence under control have had little effect, to the point that frustrated aldermen called a special City Council meeting in early July to push for better solutions to a frightening spate of shootings around the city.

And the Illinois Retail Merchants Association wants more police patrols in the Loop to prevent violence from convincing downtown workers to stay home and work remotely.

It’s too soon for any data that would indicate whether recent spasms of disorder downtown have led to a falloff in the area’s condo sales.

Gail Spreen, a Jameson Sotheby’s International Realty agent and longtime Streeterville resident, says she doesn’t expect to see the market’s recovery slow down, for two reasons: All the great amenities downtown, such as restaurants and entertainment venues, outweigh violent incidents in buyers’ perception of the lakefront neighborhoods. And violence has become, essentially, white noise in the background of Chicago.

“We’ve been hearing about crime for so long, every weekend for years,” Spreen says. “It’s just another weekend.”

Spreen says she showed two suburban couples downtown condos on July 6 and 7 and neither expressed any concern about violence. “It didn’t come up,” she says.

Because of the long history of vio-

lence, Spreen says, “people are more careful when they go out. I’m more careful when I go out. But they want the energy of downtown living.”

The strongest sign yet that the appetite for downtown condos is back was the $11.25 million sale of a Lake Shore Drive penthouse last week.

The sale price was the highest anyone has paid for a downtown condo since early 2019. That is, since long before the pandemic and episodes of social unrest punctured the downtown condo market.

Restaurants are reopening, theaters are getting ready to, and the lakefront path and parks beckon.

“With everything opening up, people are seeing that downtown is where they want to be, where they have the opportunity to be with other folks and connect,” says Kimberly Bares,

CEO of the Magnificent Mile Association, which boosts that area’s retail, entertainment and tourism options.

While she’s not involved in residential real estate, Bares says what she expects to see in the market is “people who didn’t buy during the downturn trying to get in before the prices go back up.”

Farra says she’s hoping for the same thing, although she’s surprised not to have seen more buyers flowing into the market when “the inventory is priced so aggressively” thanks to a giant backlog that built up during the two crises of 2020. And she attributes that, at least in part, to an overriding sense that downtown isn’t as safe as it once was.

“We have to turn around the perception that there’s no control,” Farra says.

7/9/21 4:13 PM

22 July 12, 2021 • CRAIN’S CHICAGO BUSINESS

Pat Ryan’s initial public offering plan calls for frowned-upon dual class structure Whether that applies to Ryan Specialty is debatable.

Rick Fleming, the SEC’s investor advocate (an office that represents the interests of retail investors but has no regulatory authority), is a fierce opponent of dual-class shares.

“It is true that a few well-known companies have thrived with long-term founders,” he said in an October 2019 address at a corporate-governance conference in Miami. “But less noticeable are the hundreds of public companies that now have entrenched management. A growing body of research suggests that, over the long term, entrenchment of founders produces lower returns for investors. Specifically, companies with dual-class structures tend to underperform companies with dispersed voting power.”

A spokeswoman for Ryan said the company couldn’t comment because it’s in a quiet period while the IPO is pending.

Ryan launched his firm in 2010, two years after exiting Aon, the commercial insurance brokerage he founded and built into the world’s second largest through multiple acquisitions. The initiative was a bit surprising for a man who then was 73, but it represented a second chance for Ryan after

Aon’s board took the initiative five years before to recruit his successor and the firm’s second CEO in its history. That man, Greg Case, remains Aon’s CEO today.

Ryan chose a far smaller niche in the insurance world for his second act—wholesale brokerage, where specialty firms find insurers to cover exotic or hard-to-insure risks for clients of conventional brokers like Aon and Marsh McLennan. Indeed, Aon is a client of Ryan Specialty now.

But the playbook is the same as in his Aon days. Lots and lots of acquisitions. The firm has grown to $1 billion in revenue, and a publicly traded stock will give it currency to finance more deals. Ryan Specialty is the nation’s second-largest wholesale insurance brokerage, behind Charlotte, N.C.-based AmWins Group, and the two compete regularly for acquisitions in what remains a fragmented business.

A key question, though, is Ryan’s staying power. In the section of the IPO’s prospectus laying out investment risks, the first one listed is the need for a succession plan given Ryan’s age.

“Our success depends in a large part upon the continued service of our senior management team, including our founder, chairman and chief executive officer, Patrick G. Ryan, each of whom are critical to our vision, strategic direction,

culture, products, and technology,” the document states.

The firm says it has a succession plan but doesn’t hint at who would follow Ryan. Most prospectuses don’t offer up such information, but given Ryan’s age, this case is highly unusual. Investors may well want more insight into that.

ROLE OF ONEX

Another wrinkle is Toronto-based private-equity firm Onex’s minority ownership of Ryan Specialty. Onex, which has $45 billion in assets under management, first invested in Ryan Specialty in 2018 and added to its stake last year, plowing nearly $300 million in total into the firm. The SEC document doesn’t detail what Onex’s stake is. But the firm is treated in the IPO like a small-scale investor.

Onex gets one seat on what is a 12-member board. Three board members are executives. One of those, Ryan, is chairman. The remainder are familiar Chicago business names, most of whom were Aon executives or on its board when Ryan was there and are longtime allies of his. They include Andrew McKenna, former chairman of McDonald’s, who is 91 and is expected to be the independent members’ lead director on the board.

Moreover, even if the Ryan investors’ stake in the firm falls to as low as 10 percent, they will contin-

RYAN SPECIALTY GROUP

RYAN from Page 3

Pat Ryan launched Ryan Specialty Group in 2010, two years after exiting Aon. ue to have the right to nominate the chairman.

If Ryan dies or otherwise has to exit his role, the Class B shares lose their supermajority status after 12 months and his group of investors lose their guaranteed overrepresentation on the board. They do continue to get one member so long as they collectively hold at least 10 percent of the shares.

Onex? It gets one member so long as it keeps at least half the shares it holds upon completion of the IPO. An Onex representative didn’t respond to a message seeking comment.

With such a late-in-life gambit, Ryan emulates another notable Chicago business story— McDonald’s founder Ray Kroc.

Kroc famously was in his 50s when he happened upon the McDonald brothers and their hamburger restaurant in California. He opened the flagship in Des Plaines under a franchise agreement, and the rest is history.

Kroc’s age at the time of McDonald’s IPO in 1965? Sixty-two.

He retired from McDonald’s in 1974, in his early 70s. Ryan already has outlived Kroc, who died at 81.

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CRAIN’S CHICAGO BUSINESS • July 12, 2021 23

Restored Prairie Style mansion hits the market Demolition was a possibility before the current owners bought the Hinsdale house in 2013 and did a total renovation The couple who restored an early 20th-century Hinsdale mansion, built in the Prairie Style with influences of Austrian and Scottish artistic movements of the same era, have it on the market at just under $5 million.

In 2013, when Rob and Amanda Miller bought the home, designed

by Prairie Style architect E.E. Roberts in 1908, “it needed a lot of help,” Rob Miller says.

Many of the home’s utilities were dated, and the historical wood-andtile look of the interior was obscured by shag carpeting, floral wallpapers and metal light fixtures, Rob Miller says. As he told Better Homes & Gardens magazine last year, “It had been 1980s-ized.”

Demolition was a possibility, says Dawn McKenna, the Coldwell Banker agent representing the house in its restored condition. Back in 2013, before the Millers bought it, “I suggested to a few of my clients that they take it down and build something new,” she says.

The Millers believed the old house should be saved and bought it for $2 million in July 2013. They undertook a total renovation and expansion, working with noted preservation architect John Eifler and interior designer Donna Mondi, both based in Chicago.

The team’s research found in the original design elements of the Vienna Secession and the work of Scottish architect Charles Rennie Mackintosh, which were both roughly contemporaneous with the Prairie Style. In the rehab and the addition, they played up those elements, such as in the casual dining room off the kitchen, where panels that depict elongated flowers evoke both a Prairie Style stained-glass window and Mackintosh’s designs.

The house is now almost 7,500 square feet, with five bedrooms and six full baths, with much of its historical woodwork and floors intact, a new roof and new utilities including environmentally friendly geothermal heat. The Millers built a swimming pool on the property, which is four-fifths of an acre.

In the end, “it would have cost less to have John Eifler do detailed drawings of the old house, tear it down and build a new replica of it,” says Rob Miller, CEO of the Miller Cos., a private-equity firm that finances, builds and manages casinos in the U.S. and the U.K. Even so, Miller says, they’re glad they went restoration route, retaining the house as “a historic asset of the community.”

With their three children grown, the Millers are moving to a downtown Chicago condominium.

As in many suburbs, the upper end of Hinsdale’s market has been very active in the current housing boom. So far in 2021, there have been two sales at $6 million or more, after an 11-year stretch when nothing in town sold for $5 million or more.

MORE PHOTOS ONLINE: ChicagoBusiness.com/residential-real-estate

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