Crain's Chicago Business by crainschicago

EQUITY: For businesses, diversity starts with getting the board on board. PAGE 13

NOTABLES: 27 minority leaders in commercial banking. PAGE 19

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The land rush is on at City Hall Ward remap pits power politics against demographics BY A.D. QUIG

ALYCE HENSON

A City Council ward map based solely on Chicago’s demographics would add two Latino-majority wards and one predominantly white ward while subtracting three Black-majority wards and creating three new wards with Asian American majorities. Demographer Rob Paral of the Great Cities Institute of the University of Illinois at Chicago arrived at those figures by dividing 50 council seats among the primary racial groups based on their proportion of the city’s population as reported in the U.S. Census Bureau’s 2019 American Community Survey. But that’s not how aldermen will

Husband-and-wife team Erik and Leah Thallemer operate Primrose, a locally owned shop that opened in 2019.

PLANT POWER PLAY

Venture capital targets a growing market

See PLANTS on Page 28

The cost of heat and electricity are set to rise. All sectors will feel it.

BY ALLY MAROTTI

ON THE WINDOW of recently opened plant shop The Sill on Roscoe Street, the words “Plants Make People Happy” greet customers in a bold, white font. Around the corner and down the street, in the window of a locally owned plant shop is this retort, spelled out in similar font: “Small Businesses Make People Happy.” The Sill is part of a six-store, New York-based chain backed by venture-capital firms and operated by founder Eliza Blank. The locally owned shop, Primrose, is run by husbandand-wife team Erik and Leah Thallemer. Roscoe Street is a front in the emerging faceoff between independent retailers and Wall Street-funded firms looking to build national chains in what has traditionally been a

The next inflation driver

MATT ALLEN

See REMAP on Page 28

HEATING UP Natural gas prices are on course to rise 50 percent over last year. If they stay that way, heating homes and businesses this coming winter will be pricey. MONTHLY COST OF NATURAL GAS AT HENRY HUB PIPELINE, LOUISIANA

In dollars per million British thermal units Actual data from 2020-21 $3.58 Futures* $2.62

$6 5 4 3

BY STEVE DANIELS

The Sill on Roscoe Street is part of a New York chain.

redraw ward boundaries over the next few months. City demographics are only one factor they’ll consider in redesigning wards for the next 10 years. It’s a mix of art and science: Voting populations, dividing lines like highways and rivers, traditional neighborhood borders and state and federal laws all come into play. Aldermen want lines that will protect their own incumbency and keep certain voting blocs or developments in their wards. Caucuses within the city council also work to empower major demographic groups by crafting wards where those groups represent a majority. The last map, based

The costs of heating and keeping the lights on are set to pressure household and business budgets at a time when the inflation squeeze already is in full force. The wholesale price of natural gas—in the Chicago area the key commodity that sets the price of power in addition to keeping homes and businesses warm in the winter—is double what it was a year ago. Futures contracts for delivery of the fuel months in ad-

2 1 0

J J A S 0 N D J F M

*June 2021 data is actual; July 2021 is actual month to date. Sources: U.S. Energy Information Administration; CME Group

vance show prices well above last winter’s persisting through the coming cold-weather months. See ENERGY on Page 32

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YOUR VIEW

BOOTH INSIGHTS

Why is Coke adding jobs in Georgia when it could be growing in Illinois? PAGE 10

COVID-19 forces innovation as companies fight to survive. PAGE 9

7/16/21 5:05 PM

2 July 19, 2021 • CRAIN’S CHICAGO BUSINESS

Katten faces historic malpractice lawsuit BY ELYSSA CHERNEY Chicago-based Katten Muchin Rosenman faces what could be one of the largest legal malpractice claims to date—up to $950 million, if a jury finds the law firm erred while advising a former client. But a spokeswoman for Katten says the figure was embellished to “draw negative media attention to our firm” and that Katten will “vigorously” contest the claims lodged by money lending company CashCall when the trial starts in California next month. A ruling issued this month by a California court opens the door for a historic sum if Orange, Calif.-based CashCall prevails in showing that Katten offered unsound legal advice, leading to the company’s demise. CashCall’s attorneys say the lawsuit represents “the most significant legal malpractice case ever.” The

ruling was reported by the National Law Journal. “We’re limited in what we can share due to pending litigation, but we can say that the allegations made against our firm are without merit,” says Katten spokeswoman Jacquelyn Heard, the onetime press secretary for former Chicago Mayor Richard M. Daley, who is currently of counsel at the law firm. “Furthermore, CashCall has presented no factual basis or credible expert analysis to support its wildly exaggerated damages claim.” The lawsuit accuses a partner in Katten’s Washington, D.C., office of advising CashCall to partner with a Cheyenne tribal businessman to skirt state and federal lending laws. That led to lawsuits and federal complaints when CashCall levied interest rates between 90 percent and 343 percent on borrowers. The Consumer Financial Protection Bureau sued CashCall

in 2013 for engaging in “unfair, deceptive and abusive practices, including illegally debiting consumer checking accounts for loans that were void,” and again in April for steering consumers into high-cost loans through affiliated lenders. CashCall stopped lending money in 2018, according to reports. The recent ruling held that California’s standard for negligence should apply—not D.C.’s more limited definition—since that’s where the alleged wrongful conduct occurred. “Here, CashCall was injured in California. CashCall allegedly sold its business at a loss in California, the CFPB action took place in a federal district court in California and CashCall incurred legal expenses . . . in California,” the ruling reads. By using California’s standard, known as the comparative negligence doctrine, the jury could find Katten liable for more damag-

COSTAR GROUP

One of Chicago’s largest law firms will defend itself at trial next month

Katten Muchin Rosenman headquarters at 525 W. Monroe St. es, even if it determines CashCall shares some of the blame for its fate. “California employs the much fairer comparative negligence doctrine, in which the trier of fact apportions blame between the parties,” CashCall attorney Jennifer Keller says in an email. The D.C. standard, called con-

tributory negligence, means a plaintiff cannot recover any damages if it’s found to be even 1 percent responsible for its own injury, Keller says. The lawsuit, first filed in Orange County Superior Court in April 2017, names Katten and one of its D.C.-based partners as defendants.

This is the kind of voting reform we really need

n June, Gov. J.B. Pritzker signed what he called landmark legislation that expanded the use of curbside and mail-in voting, made Election Day a state holiday in 2022 and more. “The legislation I’m signing today further expands access to the ballot box—ensuring all Illinoisans’ voices are heard,” he declared. But what good is increased ballot access when there are no choices to vote on? For millions of Illinoisans, casting a vote for state representatives provides no clear benefit. According to State Board of Elections data, approximately half of all state House of Representative races were uncontested between 2012 and 2020. Choice matters. The presence of only one candidate on the ballot left an average of 4.7 million voting-age Illinoisans who lived in those districts with no choices in elections that affect nearly every aspect of how they live life. As states around the country grapple with election rules, this lack of choice in Illinois has created a voting crisis that must be addressed. When politicians

multiple candidates on the ballot, by about 7 percentage points, according to recent analysis by the Illinois Policy Institute. And the same phenomenon has been reported across the nation: As the number of candidate options increases, so too does participation. The reason is easy to understand. Voters benefit from being able to choose among clearly differentiated options and have more reason to show up when their own policy preferences are reflected on the ballot. Across the state, this lower voter participation in uncontested races translates to roughly 1.7 million “missing votes” since 2012. In 2020 alone, an estimated 270,000 fewer Illinoisans cast a ballot in uncontested house districts. Low voter engagement hurts all Illinoisans and especially the poor, with whom participation already lags. Lawmakers are more likely to prioritize special interest groups when citizens aren’t engaged. Voiceless voters can’t influence policy or hold bad actors accountable. That’s why research shows more competitive elections reduce levels of public corruption. Decisions in favor of the WHAT GOOD IS INCREASED ACCESS powerful and well connected come at the expense of WHEN THERE ARE NO CHOICES? the state’s neediest residents and its middle class. Illinois’ can manipulate the boundaries of finances are an illustrative examelection maps to selectively beneple. From 2000 to 2021, Illinois fit partisans, it discourages potenspending on public sector pential challengers from running. sions has skyrocketed more than Just look at what happened 533%. Meanwhile, spending on under the most recent district map, core government services—such which was signed into law on June as public health and anti-poverty 3, 2011. On average for the followprograms—has decreased by 14%. ing decade, gerrymandered maps Lawmakers voted to hike income contributed to just one choice on taxes several times over the decade the ballot in half the districts. The worst instance was the 2016 general to fund the growing pension debt that threatens both the state’s election, where 67 of 118 House coffers and government workers’ races had only one candidate. Voter participation is significant- retirement security. Those tax dollars aren’t being invested in ways ly higher in House races that have

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that benefit regular Illinoisans, and voter suppression through gerrymandering is a big reason why. Independently drawn maps that enhance electoral competition would have gone a long way toward encouraging more candidates to run for Statehouse races and ultimately more voter engagement. But despite repeated promises not to, Pritzker signed into law another decade’s worth of gerrymandered maps earlier last month. As dozens of lawsuits unfold against the maps, a more pressing question must be answered: What can be done to combat the lack of

ORPHE DIVOUNGUY ON THE ECONOMY

choice at the polls? Could efforts be made to educate and help candidates access the ballot? Imagine competition in every Statehouse election driving up voter engagement and participation, particularly in areas that have historically just seen one option. The results would be a state gov-

ernment that truly represents the interests of the people who live here. Orphe Divounguy is chief economist for the Illinois Policy Institute. Adam Schuster, senior director of budget and tax research for the Illinois Policy Institute, contributed to this column.

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CRAIN’S CHICAGO BUSINESS • July 19, 2021 3

A bidding battle royale for Zell

His $3.4B deal for a prized warehouse portfolio could be upended by Starwood BY ALBY GALLUN

Weed cultivation centers grow jobs in rural Illinois

PHOTOS BY JOHN R. BOEHM

Cresco Labs’ cannabis marijuana cultivation facility in Lincoln.

Though Chicago has yet to see its share of marijuana grow sites, economically hard-hit small towns around the state are getting a boost from the industry BY JOHN PLETZ EVEN BEFORE YOU SEE IT, you can smell the Cresco Labs facility on the edge of Lincoln, where the company grows much of its marijuana in Illinois. To Heather Woolard and about 250 others who work there, the distinct, pungent aroma of weed is the smell of opportunity in this town of about 13,000 people along Interstate 55 between Bloomington and Springfield. “It’s one of the better-paying jobs in Lincoln,” says the 35-year-old single mother of two who worked as a waitress, a cosmetologist and in a paint store before landing a job early last year growing cannabis. Woolard started off making $15 an hour, 50 percent more than her previous retail job. Jenn Clark, 36, got a similar bump in pay from her nursing assistant job. “There are factory jobs that don’t pay as much,” she says. See WEED on Page 33

Emily Davenport, chair of the Logan County Board, likens the Lincoln facility to a “miracle.”

Like most dealmakers, Sam Zell loves a bidding war—as long as he’s selling. He was on the right side of one in 2007, when he led the $39 billion sale of Equity Office Properties Trust to Blackstone Group, a legendary deal that stands out as one of the best of the billionaire investor’s long career. More than 14 years later, Zell, now 79, may have to decide if he wants to engage in a bidding war on the buy side, by taking on another real estate Barry Sternlicht heavyweight, Barry Sternlicht of Starwood Capital Group. Their quarry: Monmouth Real Estate Investment. In early May, Equity Commonwealth, a Chicago-based real estate investment trust chaired by Zell, reached a $3.4 billion deal to buy Monmouth, a Holmdel, N.J.-based warehouse owner. Equity Commonwealth, an office landlord, would use its stock to buy out Monmouth, also a REIT, for a price that works out to $18.47 per share, based the July 15 closing price of Equity Commonwealth’s shares. On July 12, Monmouth disclosed it received a slightly higher unsolicited all-cash offer, $18.70 per share, from an unidentified buyer. Bloomberg News identified the mystery bidder as Starwood, citing people familiar with the matter. Now, REIT investors are See ZELL on Page 34

In housing boom, this neighborhood is ‘finally catching up’ Chatham, long a Black middle-class stronghold, is seeing sale prices climb BY DENNIS RODKIN In late 2019, real estate agent Monique Washington told the owners of a house on South Champlain Avenue in Chatham that they could get something around $215,000 for their home. Eighteen months later, a housing boom was on when the homeowners put their brick Tudor up for sale. It was on the market for seven days before going under contract to a buyer who in June

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paid $320,000, or about 50 percent more than Washington had estimated based on comparable properties less than two years earlier. Had they put the house on the market back in 2019, “they would have missed out on this good time we’re having in the market,” Washington says. As it was, “they were very excited that this sale price meant they could pay cash for their next place,” she says. Fueled by low interest rates and pandemic-driven trades for

bigger housing that accommodates working and schooling from home, the current housing boom has lifted many segments of the Chicago housing market to new levels. Homes have sold for new record prices in the Beverly neighborhood and several western suburbs. The once-slumbering Lake Forest mansion market has roared back to life. Here’s a measure of the lift in Chatham: In the year since the housing market turned up sharp-

ly, a dozen houses in the neighborhood have sold for $300,000 or more, a threshold that hadn’t been crossed in at least five years, according to Midwest Real Estate Data’s records. It’s about time, according to Ald. Roderick Saywer, 6th, whose ward includes Chatham. “It feels like Chatham is finally catching up with other markets,” says Sawyer, who owns a home in Park Manor, just outside Chatham. Chatham mostly lies between 79th and 95th streets and east of the Dan Ryan Expressway.

A longtime center of middle-class Black homeownership on the South Side, Chatham “has beautiful homes that you would see selling for twice as much, or more, in North Side neighborhoods,” Sawyer says. “That’s a discrepancy that has been consistent over the years, and we don’t need it to continue.” The median price of a single-family home sold in Chatham in the first five months of 2021 was $212,000, up 52 percent See CHATHAM on Page 33

7/16/21 4:32 PM

4 July 19, 2021 • CRAIN’S CHICAGO BUSINESS

ON BUSINESS

‘True ethics reform is not a priority’

commission to issue subpoenas or publish investigative findings. If you wonder why it takes a federal prosecution to tackle Illinois political corruption, look no further than this blatant conflict of interests. State legislators shouldn’t hold veto power over ethics investigations of state legislators. They have a strong incentive to go easy on fellow lawmakers, whose votes they may need on future bills and who may influence their chances of rising to powerful positions within the Legislature. Legislatures in other states have truly independent ethics enforcement agencies with full powers to open, conduct and publicize investigations. Even the inspector general for Illinois’ executive branch can initiate investigations and issue subpoenas without the governor’s permission. Pope and reform advocates had hoped that legislation introduced in Springfield this year would give the Illinois legislative inspector general similarly broad powers, making it a truly independent ethics enforcer. They were disappointed. The bill passed in the recently ended spring REFORM WILL REMAIN AN legislative session and ELUSIVE DREAM FOR ILLINOIS. now awaiting Pritzker’s signature does empower the inspector general to initiate action to tighten Springfield’s lax investigations independently. But ethics standards. (Madigan denies wrongdoing and hasn’t been it doesn’t allow the IG to issue subpoenas or publish investigacharged with any.) tive findings without approval New House Speaker Emanuel from the ethics commission. Welch and other legislative leadWorse, the bill would impose ers had an opening to put an end to practices that enabled Madigan new restrictions. The IG would only be allowed to commence an and so many other lawmakers to investigation after receiving a foruse public powers for personal mal complaint about a lawmakgain. Amid the glaring publicity er’s conduct. No longer would the of the ComEd bribery scandal office be able to launch a probe that forced Madigan to resign based on information from media as speaker and then to leave the reports or other sources. And the Legislature altogether—not to IG could investigate only conduct mention a series of recent federal prosecutions of other elected offi- directly related to a lawmaker’s official duties. This limitation cials in Illinois—it seemed a new could tie the IG’s hands in cases day might finally be at hand. involving tax evasion or various Welch, along with Gov. J.B. external activities that might vioPritzker and others, sounded the late ethical rules against conduct right notes, publicly declaring unbecoming of a legislator. their commitment to reform. Without a fully independent Words, though, are cheap. Only legislative ethics enforcer, true actions would show politicians’ reform will remain an elusive true willingness to clean up Illidream for Illinois. Unlike federal nois politics. A crucial test of their intentions prosecutors, who swoop in when corrupt schemes reach a certain came in the form of legislation scale, an independent inspector affecting Pope’s office. Created general can improve the overall in 2003 as prosecutors closed ethical tone of Springfield by in on former Gov. George Ryan, snuffing out small abuses before the legislative inspector general they become big ones. has been hamstrung by an array Apparently that’s more reform of restrictions. The office can’t than Illinois legislators can stominitiate investigations of alleged misconduct by legislators without ach. Their refusal to accept ethics oversight with real teeth reinforcpermission from a legislative es a painful truth: Madigan was a ethics commission composed of lawmakers. The inspector general creature of Springfield’s corrupt culture, not its creator. also needs approval from the he resignation of Springfield’s top ethics cop underscores the failure of Illinois’ political class to fully embrace reform despite a cascade of high-profile corruption scandals. Legislative Inspector General Carol Pope is stepping down in protest of the Legislature’s refusal to give her the powers she needs to do her job effectively. A hopedfor expansion of her authority fell far short, she said in her resignation letter. Calling her office a “paper tiger,” Pope said “this last legislative session has demonstrated true ethics reform is not a priority.” Well said. And a bitter pill for those of us who hoped the time might finally be ripe for Illinois to put aside the pork-barrel politics that made our state a national byword for corruption. When encroaching federal investigators forced longtime Springfield potentate Michael Madigan to step aside last year after three decades as House speaker, his exit created a rare opportunity for a fresh ethical start. Lawmakers no longer needed to fear his retribution for supporting

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Feeling clumsy in a crowd nowadays? You’re not alone. Now that we’re entering the post-pandemic era, Guild Row offers space to practice skills that atrophied during lockdown, including working side-by-side with others 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 Elyse Agnello, cofounder of Guild Row, located in the Avondale neighborhood and billed as “a place to come together around the hands-on making of things.” Guild Row opened and launched in the pandemic, which turned out to be a blessing to its mission. EMILY DRAKE: We’ve been thinking a lot about how each of us had an individualized pandemic experience. If you had the privilege and took the opportunity, it was a chance to determine more of who you are. That presents a challenge to leaders on how to reopen while honoring that. How do you think Guild Row can help with that challenge? ELYSE AGNELLO: I think of Guild Row as a post-pandemic club. It’s a place to help people re-emerge and reconnect, to remember how to do those things. We’ve had organizations in our space the past few months to do their first-ever reconnection meeting. In and amongst that incredible energy, we’re all a bit . . . clumsy. Internally. So, we host pasta-making classes, or fitness classes, that allow people to bond and work on something together. It takes the pressure off. TODD CONNOR: I get that. I find myself feeling clumsy, and I didn’t have a word for it. I always say “disoriented,” but I think “clumsy” is actually in some ways a better word. How do you help people move beyond that? What does that look like? EA: Guild Row was conceived of as a place to meet new people and try new things. So, we decided to keep our doors open throughout the pandemic. We have a 300-person membership community so far, and people needed space—in so many ways. During the pandemic, we were able to evolve as an organization to allow for clumsy—i.e., it’s not a bad thing, to be hyper-casual yet still refined. ED: Last week we explored how we’re now bringing home to work as we reopen. Your mission of using your hands and your heart to craft a better world speaks to that—especially “crafting” or handiwork. In other words, using our bodies in this process. EA: From my vantage point, people learned a lot of new things during the pandemic: how to make sourdough or how to brew the perfect cup of coffee. But they were doing it solo or they were doing it through a screen. And we

ISTOCK

JOE CAHILL

CHICAGO COMES BACK

were also kind of laughing about it, but it’s powerful to try new things. Spaces like Guild Row offer the opportunity to hone those skills further. No one needs to be an expert here—we were really clear on that. But instead, this is a club of passionate and interested and curious people. Some of us may be experts in certain things, like I know how to weld, but we are different people with different skills who can teach each other. My co-founders and I created the slogan, “Your hands were made for more than typing and swiping.” I personally believe your ability to create, tangibly, is a very powerful thing. TC: Coming out of the pandemic, then, what do you think this means for the future of urban behavior or urban belonging? I think about this in contrast to co-working, maybe, and relationships with business and space. Our need for community at work. What are the trends going to be moving forward? EA: We’ve thought about it about 100 different ways. Initially, we thought we’d see people wanting to go out and try a million new things, but it goes back to clumsiness and people wanting some guidance: a chance to reacclimate while experiencing new things. I think of reopening like concentric circles. For urban and public spaces, it could mean a slower willingness to re-enter. We may not be cognitively or emotionally

ready for crowds, but I’m seeing a lot of people being ready to be with people with whom they feel safe. A few weekends ago, we did a memorial service for a family that had deferred doing one during the pandemic, and it was the most people that I think anyone had been with in a single space. By the mid-point of the event, it looked as though the pandemic never happened. There are these sort of trends transitional moments that I think need some care. ED: Going back to this balance of individual and organization, let’s also talk about equity. I know that’s a core focus of yours and of the city’s as we navigate reopening. Can you speak to how your mission addresses equity and inclusion? EA: I’m so excited that you asked that question. The pandemic allowed us to launch a little bit differently than we would have launched otherwise. It was slower—a roller coaster, yes, but intentional, too. It allowed us to thoughtfully build a diverse and talented staff that is woman-centric. And it allowed us to build a membership model that pulls from all over Chicago. Our city is so huge, it’s easy to think of and experience it as separate neighborhoods, but we worked really hard at making sure that we are not just a local to Avondale. We wound up building something that has surpassed what we were hoping for.

7/16/21 3:35 PM

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6 July 19, 2021 • CRAIN’S CHICAGO BUSINESS

THE TAKEAWAY

Jeffery Beckham Jr. Beckham is CEO of Chicago Scholars, a nonprofit that helps first-generation and low-income students get into college and land jobs when they graduate. The 40-year-old ex-tech worker also does social justice work, leads youth Bible studies and recently got into painting. He opened a gallery, 3262 Media Studio, last month in Bridgeport, where he lives. By Ally Marotti

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Instead, you launched digital marketing agency Black Box Creative in 2010. Have we seen its work anywhere? We did a lot of work with all of the churches. We did the whole rebranding process for Trinity United Church of Christ after the Obama/Jeremiah Wright thing in 2008. We created a new website, new content, a new logo. We built a blog and a YouTube channel.

Does being a first-generation college student drive your work? I literally am our scholar. I went to school, first in my family. I picked the University of Missouri because I visited on a warm winter day. It was 60 degrees in Missouri but it was minus 10 in Chicago. Got into Princeton. Mizzou gave me a full ride academically, but I picked it because of the weather. Chicago Scholars helps people pick the right school from a myriad of factors. Not the weather.

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Going from tech to nonprofit work isn’t a traditional career path. Was that always in the cards? I never would have expected that I would be leading a nonprofit. I used to tell everybody that I was going to be the Black Bill Gates. That was always my thing. Whatever company I’m going to build, it’s going to rival Microsoft.

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What was your first painting like? The first piece was really bad. I was doing acrylic abstract stuff. YouTube taught me 90 percent of what I know. As I stuck with it, I got better. I have more than 900 pieces of artwork across the globe, in places I’ve never been. Germany, Poland.

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How did you get into painting? I had a friend pass away from an aneurysm. Our last conversation was around how to manage stress. As I get older, basketball and running every day isn’t great for the knees. Art was something I always wanted to try. He said, ‘You should do it.’

How do you find the time to paint and the inspiration? I get up early on Sundays. Oftentimes, I’ll dream about a piece of art. I’m a sci-fi guy anyway. My mind functions that way.

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What are the kids you work with shocked to learn about you? I’m a sneakerhead. Most people see me in suits, but I have a massive sneaker collection, and I love shoes. I’ve got on my Viotech Nike Air Maxes now. They’re super colorful.

7/16/21 3:38 PM

CRAIN’S CHICAGO BUSINESS • July 19, 2021 7

Demand drop fuels record-high downtown vacancy While some effects of the pandemic are fading, the numbers reflect the brutal reality office landlords face Companies left behind more downtown office space during the second quarter than they did in any full year on record, pushing the share of vacant workspace in the central business district to a record high for the third straight quarter, new data shows. The downtown office vacancy rate rose to 19.4 percent during the three months ending June 30 amid a slew of moves from companies that recently went to other buildings and others that have shed space amid the COVID-19 pandemic, according to a report from real estate services firm CBRE. That’s the highest rate CBRE has tracked in 15 years of data collection, topping the previous high of 18.6 percent at the end of the first quarter. While some effects of the pandemic are fading, the numbers reflect the brutal reality facing downtown office landlords 16 months into a crisis that has gutted demand for downtown workspace as tenants have rethought their workspace needs. With many professionals planning to work remotely for good or more frequently than they did before the pandemic, most companies held off on new leasing decisions last year and are now trying to shrink their office footprints. That eroding demand is represented by net absorption, a metric that measures the change in the amount of space leased and occupied compared with the prior period. During the three months ending June 30, tenants moving

out outpaced those moving in by more than 1.3 million square feet, CBRE data shows. That dwarfs the previous negative net absorption record for a single year CBRE has tracked, set in 2010 when downtown lost 760,000 square feet of tenants.

SCOPE

A portion of that drop-off was expected, as Bank of America moved the needle by formally vacating almost 700,000 square feet at 135 S. LaSalle St. The company’s move to its new namesake tower at 110 N. Wacker Drive was accounted for in CBRE’s numbers when the company occupied the new space during the fourth quarter of 2020. The same goes for accounting firm RSM, which vacated 170,000 square feet at 1 S. Wacker Drive and had already moved across the street to the CME Center at 30 S. Wacker Drive, according to the CBRE data. But the staggering scope of lost occupancy underscores the leverage held today by tenants looking for office space and the challenge facing landlords, many of whom are shelling out ballooning levels of incentives like free rent and cash to build out space. CBRE leasing agent Kelsey Scheive says she’s been encouraged by a recent uptick in building tours and leases getting signed, but acknowledged the extra-competitive environment she and her peers are facing. “Deals are hard to make and (landlords) are getting really aggressive to make them,” says Scheive, who represents landlords at buildings including 150

DANNY ECKER

BY DANNY ECKER

Bank of America formally vacated almost 700,000 square feet at 135 S. LaSalle St. during the second quarter. N. Michigan Ave.—where Crain’s Chicago Business’ offices are— and 125 S. Wacker Drive, among other properties. Landlords willing to offer a mix of concessions as well as flexible lease terms for companies that are still trying to figure out how much space they will need moving forward will be the ones who have early leasing success, she says. “The buildings that are willing to do that and play ball are the ones that are certainly going to benefit,” she says.

SIGNS OF LIFE

Leasing activity picked up during the second quarter as companies started calling workers back to offices with pandemic-related restrictions waning. Consumer products giant Kimber-

ly-Clark, research firm Ipsos, dairy products maker Lactalis Heritage Dairy and business service and technology provider Impact Networking all inked deals for new or expanded offices downtown. Trucking company U.S. Xpress signed a 40,000-square-foot lease at 306 W. Erie St.—five times the size of its current office—leading a charge of local transportation logistics and freight tech firms growing rapidly and hunting for more offices. Those deals are promising signs that the vacancy rate may flatten or fall during the second half of the year and in 2022 as those companies move in. But some of the recent activity has slipped from landlords’ hands into the sublease market, where companies rushing to shed office space

have found eager takers snapping up bargain deals. Lactalis, TikTok, Farmers Business Network and the Healthcare Information Management Systems Society are on the list of companies that have signed or are finalizing downtown subleases over the past few months. The sublease activity is a mixed blessing for landlords, who are happy to see any leasing activity again to validate the importance of in-person work but grappling with a surge of sublease inventory that poses stiff competition. With a slowdown in new sublease listings and some secondary-market deals getting inked, the sublease vacancy rate downtown has now dropped for two straight quarters to 1.7 percent from a 2.5 percent peak at the end of 2020, according to CBRE. Another headache on the horizon for landlords is that there’s still more supply coming, most notably at BMO Tower next to Union Station and Salesforce Tower at Wolf Point. About 3.9 million square feet of offices are under construction downtown, just a third of which has been preleased, according to CBRE. Scheive declined to predict whether she thinks the vacancy rate has peaked but expects more clarity about the road ahead during the second half of 2021, with many employees expected to return to offices more frequently after Labor Day. That’s when companies will start getting a much better grasp on their workspace needs. “Once people are back in the office, we’ll really be able to understand what it looks like,” she says, noting worker occupancy at her buildings right now is about 20 percent on the high end.

Taxis, Lyft hype sweeteners as commuting gears back up Cab-ride app Curb now will tell its riders in advance what a trip will cost, and Lyft is tweaking its shared-rides option after suspending it early in the pandemic As commuters and travelers return to the streets of Chicago, taxi app Curb and ride-hailing service Lyft are tweaking programs they say will make pricing and trip lengths more certain for riders. The number of drivers is still far from pre-pandemic levels. According to the city’s Department of Business Affairs and Consumer Protection, active ride-hailing drivers—those with at least four rides a month—fell 56 percent in May compared with May 2019. This May there were just 1,126 active cabbies, compared to 5,405 in 2019. The taxi app Curb says it’s aiming to end the “guessing game” of the final price of a ride by piloting a program that lets riders know their final tab before the trip begins. Starting Wednesday, the app is providing “flat, upfront fares in Chicago for all taxi rides booked

P007_CCB_20210719.indd 7

on demand through its mobile app.” The move, Curb says, gives it a competitive price advantage during the ride-hailing driver shortage, which is leading to longer wait times and surge pricing for companies such as Uber and Lyft. “Because upfront fares are designed to be similar to that of metered fares without demand-driven surge pricing, Curb rides are often cheaper than those offered by ride-sharing services,” the company says, mainly for short trips. The prices are calculated on estimated time and distance of the trip “as well as historical metered fares.” The company says it offers more consistent pricing, while apps like Uber and Lyft vary based on demand. Curb launched upfront pricing in New York City last September, which fueled a doubling in New York bookings on the app, the

company says. “The feedback we’ve received from riders in NYC has been overwhelming, so expanding (upfront pricing) to more cities like Chicago was a natural next step,” Jason Gross, vice president of mobile at Curb, said in a press release. “With the Chicago rollout of upfront fares, we’re continuing to improve the rider experience with features that make riding in a taxi not only comparable to other forms of transportation but also appealing to today’s consumer.”

BOOK AHEAD

Trips can be booked on demand or scheduled in advance, and the app lets riders make contactless payments. Lyft, meanwhile, is relaunching its shared-ride option, its cheapest offering to get around. The feature was halted during the COVID-19 pandemic, and it will still have some safety measures: Riders and

BLOOMBERG

BY A.D. QUIG

The number of ride-share and cab drivers around the city is still far from pre-pandemic levels. drivers are still required to wear masks, and only two riders can be in the car at a time—meaning riders can’t book a shared ride for two people. In a release, Lyft says it’s “getting rid of unexpected route changes and surprise pickups—when

riders request a shared ride in advance, the route will be fixed, they’ll know the number of pickups along the way and the ETA will be more accurate—a win for both riders and drivers.” Uber’s service for shared rides, UberPool, is still suspended.

7/16/21 3:40 PM

8 July 19, 2021 • CRAIN’S CHICAGO BUSINESS

Big Streeterville complex sells as market turns around hit the market in February, but people familiar with the sale say A San Francisco investment the price fell well short of that firm has acquired McClurg target. The Redwood executive, Court Center, a 1,061-unit David Foos, and FPA represenapartment complex in Stree- tatives did not respond to reterville, the biggest local mul- quests to comment. A spokestifamily deal of the year in a man for BentallGreenOak, a quickly recovering downtown Toronto-based investment adviser that manages the MEPT Chicago market. FPA Multifamily completed fund, confirms the sale but deits acquisition of the two-tow- clines to disclose a price. Still, no apartment sale in er property at 333 E. Ontario St. from the Multi-Employer Prop- the city or suburbs so far this erty Trust, a real estate fund, on year comes close to the size July 9, according to a LinkedIn of McClurg Court deal. The downtown apartment market PEOPLE FAMILIAR WITH THE SALE investment went into hibernation during the COVID-19 SAY THE PRICE FELL WELL SHORT pandemic, as rents and occupancies OF THE $200 MILLION TARGET. plunged. Facing an uncertain future, inposting by an executive at FPA vestors pulled way back, wary affiliate Redwood Construction. of overpaying in a market with It’s unclear what FPA paid so many unknowns. Most landfor McClurg Court, the sec- lords saw no reason to sell ond-biggest apartment proper- during such a severe downturn. ty in downtown Chicago. The The few that tried wound up property was expected to fetch taking their properties off the more than $200 million when it market in the end.

BY ALBY GALLUN

But the volume of deals could pick up in the second half of the year amid a remarkable turnaround in downtown occupancies and rents. Several big buildings, including the Bernardin in River North, the Shoreham, the Tides in Lakeshore East and 1407 on Michigan in the South Loop, have gone up for sale in recent months, another sign of optimism among landlords. “There’s a lot more certainty in the market right now about where rents are going to be headed,” says Ron DeVries, senior managing director in the Chicago office of Integra Realty Resources, an appraisal and consulting firm. “The path is getting pretty clear.”

BIG DEAL

The sale of McClurg Court ranks among the biggest Chicago-area apartment deals over the past two years, joining a group that includes Marquee at Block 37 in the Loop, which sold for $265 million in December 2019; Essex on the Park, a tower next to Grant Park that

COSTAR GROUP

The sale of McClurg Court Center ranks among the biggest Chicago-area apartment deals over the past two years as the downtown multifamily market bounces back

McClurg Court is the second-biggest apartment property in downtown Chicago. fetched about $190 million last October; and Prairie Shores, a housing complex on the Near South Side that sold for $168 million in November 2019. The MEPT has owned McClurg Court since 2006, when it paid $126 million for the property. BentallGreenOak has spent about $35 million over the past five years on improvements to McClurg Court, including its mechanical systems and amenities, according to Real Estate Alert, a trade publication. Chicago is familiar turf for FPA, which has acquired multiple properties here in recent

years, including the Lex and Terrazio in the South Loop and ReNew on York in Bensenville. FPA has already changed McClurg Court’s name to Arrive Streeterville, using branding it has applied to other FPA properties, including the Lex and Terrazio. Built in 1972, McClurg Court is considered a Class B property in a downtown dominated by newer and fancier high-rises. Its average apartment rents for $2,006 per month, or $2.70 per square foot, according to CoStar Group, a real estate data provider.

Record sale in Fulton Market erty, where it relocated its Chicago offices, showroom and retail An Australian family that made space last year after eight decades its fortune in the hospitality and at theMart. A source with knowlcasino industry is buying a bou- edge of the deal says Zagame is tique Fulton Market District prop- poised to get a first-year return, or erty in a deal that will set the new capitalization rate, of just under high mark for a Chicago office 5 percent of its purchase price. Herman Miller has 2.5 percent anbuilding. Melbourne-based Zagame nual rent escalations in its lease, Family Group has an agreement according to a marketing flyer for to pay nearly $42 million for the the property from real estate sernewly built 45,380-square-foot vices firm Cushman & Wakefield. Buildings tied to single tenbuilding at 1100 W. Fulton Market, according to sources familiar with ants with good credit and longthe deal. A sale at around $925 term lease commitments have per square foot would top the been especially popular among $879 per square foot that a Ger- real estate investors during the COVID-19 pandemic as stable places to park capiPROPERTIES LIKE HERMAN tal while the crisis blurred the future of other types of MILLER’S BUILDING OFFER commercial properties. In addition to the STEADY, RELIABLE CASH FLOW. Mondelez deal, buyers paid premiums over the past man investor paid in May 2020 for year for the McDonald’s global Mondelez International’s head- headquarters building in Fulton quarters building at 905 W. Fulton Market and third-party logistics firm C.H. Robinson’s office buildMarket. Much like that sale, Zagame is ing along the North Branch of the buying a property occupied by Chicago River. Those transactions a single tenant with a long-term belied a mostly frozen market for lease. Zeeland, Mich.-based fur- downtown office building sales niture company Herman Miller during the pandemic, as many signed a 15-year lease at the prop- companies have rethought their

BY DANNY ECKER

P008_CCB_20210719.indd 8

workspace needs. A combination of eroding demand and new supply, meanwhile, has pushed downtown office vacancy to its highest mark on record. Against that backdrop, properties like Herman Miller’s building offer steady, reliable cash flow. The furniture company is said to have spent more than $10 million out of pocket to build out its showroom, a signal of its long-term commitment to the building.

PROFITS

Zagame’s pending purchase stands to net a tidy profit for Chicago developer Fulton St. Cos. and Oak Brook-based Huizenga Capital Management, whose venture bought the property in March 2018 from Chicago developer Sterling Bay for $6 million, according to Cook County property records. It’s unclear how much it cost to build the new building—which included retaining the facade facing Fulton Street and building a new structure behind it with a two-level rooftop deck—and Fulton St. co-founder Alex Najem declines to comment. But property records show a Fulton St. venture took out a $25 million construction loan on the property.

FULTON STREET COS.

The deal is the latest example of investors willing to pay a premium for office buildings that generate long-term, reliable cash flow from single tenants

Zagame Family Group has agreed to pay nearly $42 million for 1100 W. Fulton Market. The Herman Miller building won’t be the first bet on Fulton Market for the Zagame family, which has been in the hotel and gambling sector in Australia for 50 years. Another Zagame venture paid $14 million in 2018 for a 22-unit luxury apartment building at 1342 W. Randolph St., according to property records. A Zagame spokesperson couldn’t be reached. True to its name, Fulton St. has been one of the most active developers in Fulton Market over the past couple of years. It is developing a 150,000-squarefoot office building that is under construction at 1045 W. Fulton St. and has proposed a larger, 373,000-square-foot office building at 917 W. Fulton St. Recent leasing activity in Ful-

ton Market has given the developer reason to feel good about the prospects of those projects, with companies including Kimberly-Clark, Tock, Calamos Investments, TikTok and others reaching deals for new offices in the neighborhood. Farther west in Fulton Market, Fulton St. has pitched plans for a 433-unit apartment building on the southern edge of the 1200 block of Fulton and a mixed-use complex on the north side of the 1200 block that would include 1.1 million square feet of apartments and offices. Cushman & Wakefield capital markets brokers Cody Hundertmark, David Knapp and Tom Sitz are representing Fulton St. in the sale of the Herman Miller property.

7/16/21 3:46 PM

CRAIN’S CHICAGO BUSINESS • July 19, 2021 9

Are you innovative enough for the post-pandemic era? declined during the 2008 recession, and national business growth rates were steady at around 4 percent from 2010 to 2019. Much of these increases came from sole proprietorships, people opening so-called lifestyle businesses either because they lost their jobs or wanted to take control of their futures. But a significant part of the increase came from innovation-driven companies that have plans to grow. “High propensity” business applications, which the census defines as businesses that have hired workers or are likely to, were up by nearly 16 percent nationally and 30 percent in Illinois. Compare this to double-digit declines from the 2008 recession and a mere 1 percent growth rate from 2010 to 2019.

Advice for small businesses and entrepreneurs in partnership with the University of Chicago Booth School of Business.

pared to Q1 2020, and total venture-capital dollars invested in seed- and early-stage companies nearly doubled in this same time frame. Since venture-capital money follows innovation once companies gain traction, the uptick in 2021 investment activity is a good indicator that entrepreneurial innovation accelerated in 2020.

If you’re a business that has weathered the storm—but only weathered without considering how to innovate in this new landscape—you should consider the threat posed by new companies. As Jack Welch famously said: “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.” These entrepreneurs have an advantage. They get to start their businesses in the new normal, while long-standing companies have to adapt after having suffered the financial consequences of the

pandemic-induced downturn. As a company that has gotten this far, you should be thinking about the number of new business or growth ideas on your company’s agenda for the coming year. You need to consider how your customers’ needs, expectations and behaviors have changed and how you can deliver new solutions. Then develop tangible plans to invest in and execute these new ideas. Someone is going to do those things. Will it be you, or a hungry new entrepreneur?

ded n e t x

lin d a e D

COMPETITION

All this means that you probably have competition coming, and it’s well-funded. After a slight yearover-year decline in seed-stage and early-stage venture-capital deal flow from 2015 to 2020, deal count increased in Q1 2021 com-

Lindsey Lyman is a clinical associate professor of entrepreneurship at the University of Chicago’s Booth School of Business. GETTY IMAGES

aybe we’re not at the end of the COVID-19 tunnel just yet, but many business leaders can see at least a faint glimmer of light. Americans are being vaccinated, restrictions on travel and gatherings are falling and the economy is showing signs of life. For the past year and a half, many businesses went into survival mode—cutting costs, laying off workers and doing whatever it took to keep the doors open or stay in a position to reopen later. Congratulations if you made it this far. It certainly wasn’t easy. There’s some bad news, however. While you were trying to keep your head above water, entrepreneurs and innovators used the pandemic as an opportunity. According to U.S. census records, there has been an explosion in new ventures. Nationally, entrepreneurs created 24 percent more new businesses than in the previous year, and new startups in Illinois grew by more than 46 percent. Those are big and surprising numbers: New business formation

2021

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NOMINATE NOW!

Deadline Extended to July 23 Now is the time to nominate Chicago-area’s rising stars in law—professionals who are setting legal precedents, winning significant cases, and giving back to their communities.

Nominate at ChicagoBusiness.com/NotableLaw21 Nomination deadline is Friday, July 23. Section publishes September 6. To view Crain’s Notable Executives nomination programs, visit chicagobusiness.com/notablenoms.

P009_CCB_20210719.indd 9

7/16/21 3:49 PM

10 July 19, 2021 • CRAIN’S CHICAGO BUSINESS

E EDITORIAL

Better late than never

hen Illinois embarked on the process of legalizing adult-use recreational marijuana years ago, one of the stated goals was to leverage the creation of an entirely new, state-regulated industry to remedy at least some of the damage done by the last century’s ill-conceived “war on drugs.” The idea was to allow people who for too long have been economically disadvantaged to get in early on a business that promised to be very, very lucrative. Illinois had hoped to be seen as a model for the rest of the country by weaving social-equity measures into its legalization statute. The law gave extra points to applicants for licenses to run dispensaries and other operations who had lived in places disproportionately affected by the war on drugs as well as those who had been arrested or imprisoned for minor marijuana offenses. A year and a half after recreational marijuana went on sale in Illinois, however, the state’s cannabis industry is still predominantly white and male, and some of the biggest investors in this nascent industry are political insiders and deep-pocketed financiers who hail from Chicago’s richest clans. A new law signed by Gov. J.B. Pritzker on July 15 seeks to rebalance the scales. After the first round of the competition for marijuana licenses caused an uproar by falling woefully short of the legislation’s original social-equity goals, the state took a long, hard look at the process—taking advantage, in part, of the pause forced by the COVID crisis to rethink the next phase of a process that was supposed to commence in May 2020.

C a

ness will come when we see who actually winds up winning this next wave of licenses and who succeeds in getting viable businesses up and running after that. Until then, Illinoisans can at least be glad the Legislature’s Black caucus took the lead on retooling the lottery process and that the governor got behind it.

A YEAR AND A HALF AFTER RECREATIONAL MARIJUANA WENT ON SALE IN ILLINOIS, THE STATE’S CANNABIS INDUSTRY IS STILL PREDOMINANTLY WHITE AND MALE.

JOHN R. BOEHM

C er p

The measure Pritzker just signed authorizes the state to award 185 new licenses to open pot shops via lotteries scheduled to be held July 29, Aug. 5 and Aug. 19. The measure also tweaks the application scoring process, coming up with a way for applicants who didn’t receive perfect scores to qualify for lotteries that would issue 110 additional licenses, authorized to be issued this year, rather than forcing them to start over. Two-thirds of those now qualifying for craft-grow, infuser and transport licenses are nonwhite, according to the governor’s office.

“This latest piece of legislation helps move us even closer to our goal of establishing a cannabis industry in Illinois that doesn’t shy away from the pain caused by the war on drugs but instead centers equity and community reinvestment as the key to moving forward,” the governor said in a statement. Added Toi Hutchinson, Pritzker’s senior adviser on cannabis control: “It’s an exciting next step. Having 67 percent (of winning applicants) as nonwhite is better than I expected.” Even so, the hard work is yet to come. The real proof of this measure’s effective-

The need to equitably distribute licenses to diverse stakeholders throughout the state took on greater urgency July 14, when a group of Democrats in the U.S. Senate unveiled a discussion draft of legislation to remove marijuana from the federal list of controlled substances and to tax and regulate it on the federal level. It was a small step toward what many in the business see as an inevitable if distant outcome: federal legalization. If and when that happens, the cannabis industry, now a balkanized patchwork of state-by-state players, will be primed for consolidation. And those who hold licenses in established markets like Illinois will be positioned to cash out at that point if they like, creating the sort of transformative wealth that will make owning and operating one pot shop look like small potatoes indeed.

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YOUR VIEW

Hey, Coke. We’ve got the real thing right here.

has a special appeal, with metrot the end of 2020, Copolitan amenities and the presence ca-Cola closed a dozen of Northwestern’s Kellogg School locations to consolidate of Management. Skeptics may say their responsibilities in Atlanta, Coca-Cola is entrenched in Atlanta including the office of the Coand wouldn’t budge, but a quarter ca-Cola Foods division, which century ago, people thought the includes Minute Maid. Its funcsame of Boeing in Seattle and Cattions were quietly transferred erpillar in Peoria. Both have since from Texas to Georgia, a move acknowledged months later fol- Charles Orlowek has relocated head offices to the Chicago area. lowing media inquiries. taught marketJ.I. Case, a maker of farm and Texans working from home ing at Columbia construction equipment, was are apparently staying put for College Chicago now, but given retrograde leg- and is a graduate founded in Racine, Wis., and maintained headquarters there islation enacted in Georgia and of Northwestfor a century and a half. After acthat state’s abysmal COVID-19 ern University’s vaccination rate—45th out of Kellogg School of quisitions and reorganization, it became CNH Global, and de facthe 50 states and D.C.; Illinois is Management. to headquarters quietly moved 25th—how hard will the beverto suburban Chicago, an easier sell for exage giant find it to attract new talent? And what efforts are being made to re- ecutive talent. Following the addition of cruit Coca-Cola teams to the Chicago area other assets in 2013, the company became and position it as the parent company’s fu- known as CNH Industrial. In 2019, the company was “registered in the Netherlands” ture home? For consumer marketing talent, our area and “headquartered in London for tax pur-

P010-P011_CCB_20210719.indd 10

poses,” while its CEO and hundreds of man- company’s agenda.” ConAgra products include Ro-Tel toagers and staff worked in Burr Ridge. The current CEO, Scott Wine, lists the Chicago matoes, Vlasic pickles, Birds Eye frozen foods and Hebrew National hot dogs. area as home on his LinkedIn profile. After 94 years in Omaha, ConAgra Coca-Cola markets Dasani, Smartwater, Foods’ headquarters moved to Chicago in Topo Chico, Schweppes sparkling bev2016, its CEO noting the action “places us erages, Fairlife milk, Gold Peak teas and in the heart of one of the world’s business coffees, Minute Maid juices and scores of capitals and consumer packaged goods additional lines. centers, enhancing our ability to attract and reFOR CONSUMER MARKETING TALENT, OUR AREA HAS tain top talent.” Years earlier, the comA SPECIAL APPEAL, WITH METROPOLITAN AMENITIES pany relocated some marketing teams from AND THE PRESENCE OF NORTHWESTERN’S KELLOGG Omaha to Naperville and in 2010 added snack SCHOOL OF MANAGEMENT. foods brand manageConAgra’s gradual migration to Illinois ment to the suburb. “Chicago offers an outstanding workforce,” snacks business unit offers a template for others. Atlanta will always be the historical cenpresident David Palfenier said at the time, adding that ConAgra does a lot of recruiting ter of Coca-Cola, its heritage celebrated at at the Kellogg School. Palfenier also noted the city’s World of Coca-Cola attraction. Successful companies competing for talour area’s “incredibly diverse workforce,” stating “that’s got to be at the forefront of any ent, however, cannot afford to look backward.

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.

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.

7/16/21 4:00 PM

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CRAIN’S CHICAGO BUSINESS • July 19, 2021 11

Elyssa Cherney joins Crain’s to cover higher ed, philanthropy Elyssa Cherney has joined Crain’s Chicago Business as a reporter covering higher education, nonprofits, philanthropy and law. Cherney comes to Crain’s from the Chicago Tribune, where she had been a reporter since November 2016. Prior to the Tribune, Cherney was a reporter at another Tribune Publishing newspaper, the Orlando Sentinel, where she guided coverage of the 2016 Orlando nightclub mass shoot- Cherney ing, earning recognition as a Pulitzer Prize finalist. At the Tribune, Cherney led a major investigation of the state’s security guard in-

lile ne d at

dustry, highlighting poor oversight and training standards. Cherney hails from Skokie and earned a bachelor’s in journalism from Northwestern University in 2014. “Elyssa comes to Crain’s with serious investigative chops and a strong track record of breaking news on some of the most competitive beats in the city,” says Crain’s Editor Ann Dwyer. “We are delighted to add her to our award-winning team of journalists who produce hard-hitting news and analysis for our readers every day.”

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12 July 19, 2021 • CRAIN’S CHICAGO BUSINESS

Experts aren’t worried about a Surfside-style disaster in Chicago Report of long-delayed structural repairs at a high-profile Gold Coast condo complex kindled fear in residents, but the situation here is different City officials moved quickly to shut down a Gold Coast garage this month, reassuring residents of the condo tower above it. Nevertheless, Chicago condominium experts say jitters about a condo catastrophe like the one in Surfside, Fla., are widespread, though largely unfounded, in Chicago. “There’s solace knowing that (officials) will manage the progress of the necessary repairs,” says Tamara Pagel, a resident of the 57-story 111 E. Chestnut St. tower. “I’m definitely feeling better than I was last week.” Pagel was among the residents concerned for their safety when news first surfaced in early July that owners of the eight-story garage at the building’s base had failed to make repairs to concrete pillars and slabs that a consultant reported in 2018 “must be performed as soon as possible, as the conditions pose an imminent hazard to the facility users and to the structure itself.” Two days after Crain’s July 7 report on the long-delayed repairs, the city’s Department of Buildings sent inspectors to the garage and shut it down that afternoon. On July 12, the city posted citations that it issued to the garage owners for “fail(ing) to maintain building or structure in a structurally safe and stable condition” and will require the owners to “make repairs to building rapidly becoming dangerous, and to

bring and maintain in good and safe condition, or wreck part that endangers life and property.

RISK ASSESSMENT

A Department of Buildings spokesperson says in an email that the citations will be referred to the city’s law department “for potential enforcement action.” If a court finds liability, it would then determine whether to assess fines or call for legal sanctions. The spokesperson did not directly respond to Crain’s question about whether the inspectors found there was any risk to the condo residents but provided a statement from the department that says it “received concerns about the parking garage and completed an inspection of the parking garage only.” The department is requiring the owners not only to make the delayed repairs but to “immediately hire a structural engineer to complete a new critical exam of the parking garage to evaluate the structural conditions.” The fact that the city did not shut down the residential floors suggests the inspectors did not see significant risk to that part of the building. “I’m glad the city took action immediately and is part of the process,” tower resident Tracy Ryniec says in an online message to a Crain’s reporter. “If they’re saying the tower isn’t at risk, then I trust that.” The tower contains two ownership associations: one that controls the parking garage and the

VHT STUDIOS

BY DENNIS RODKIN

Two days after Crain’s report on the long-delayed repairs at 111 E. Chestnut, the city sent inspectors to the garage and shut it down that afternoon. other an association of condo owners on the floors above the garage. On July 10, the condo owners association manager forwarded to Crain’s a letter from Kellermeyer Godfryt Hart, a Des Plaines architecture and engineering firm. “Please be aware,” the letter said, “while the parking garage structure is in need of immediate repairs, the residential association and management have diligently maintained the exposed structural concrete elements of the residential tower.” It listed projects that were completed in 1999, 2010, 2014 and 2020. Repairs on the garage will take an estimated three to five months, the residential association said in its letter. Angel Sarkissian, president of the garage owners association, did not respond to a request for comment. The 2018 report from Walker Consultants indicated that the urgent repairs would cost about $500,000 and the overall package would be in the $4 million to $6 million range. Condominium industry executives say that since a condomini-

um building in Surfside, Fla., collapsed June 23, killing at least 95 people, residents of Chicago towers have been anxiously inquiring about their own buildings. “Every condo board meeting I’ve gone to since Surfside has started with someone bringing up these issues,” says Jim Stoller, whose Chicago firm, the Building Group, manages about 6,000 condominiums in Chicago and Evanston.

DIFFERENCES

The specific situation of the Surfside structure, built on a sandy barrier island, has little parallel in Chicago, where lakefront buildings are anchored to solid subsurface rock, Stoller says, but “homeowners are asking for reassurance about their own buildings, and that’s good, because usually they don’t want to know anything about the back-of-thehouse issues.” In all cases he’s seen, Stoller says, the condo board has been able to reassure the person who brings up Surfside that maintenance issues are up to date on their site. The 111 E. Chestnut situation

developed because the garage owners board put off performing costly repairs for more than three years. “There will certainly be an uptick in, shall we say, enhanced due diligence,” says Michael Shifrin, whose Chicago firm, Shifrin Legal, specializes in condominium law. Condo board members are always expected to do their due diligence on financial matters relating to the building, but in the current climate, with one catastrophe in Florida and one briefly worrisome situation in Chicago, Shifrin says, “you’ll see these board members being much more vigilant about their role on the board. Surfside served as a painful and tragic reminder that your obligations as a volunteer board member go to every aspect, from your (association’s) financial stability to the structural integrity of your building.” Condo owners’ jitters have not translated into requests for city inspections, the spokesperson for the building department says, noting there have been no additional inquiries in the weeks following the Surfside collapse.

Amazon pays $35 million for Central Steel site in Gage Park BY ALBY GALLUN Amazon has confirmed that it plans a new warehouse on the current site of a Central Steel & Wire factory on Chicago’s Southwest Side after buying the sprawling 70-acre property last month. The acquisition is part of the Seattle e-commerce goliath’s continued push into the city as it expands its distribution network to keep up with surging online sales and speed up delivery times. The company also has been on a hiring binge, adding 15,000 people to its Illinois workforce in 2020 with plans to hire an additional 3,800 this year.

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The Chicago Tribune reported in March that Amazon had agreed to pay $45 million for the Central Steel property, at 3000 W. 51st St. in Gage Park. Amazon completed the acquisition in mid-June at a much lower price: $35 million, according to Cook County property records. Amazon bought the site from Chicago-based Ryerson Holding, which acquired Central Steel in 2018.

SITE PLANS

Amazon plans a delivery station on the site, a warehouse that serves as the last stop for packages ordered through the online retailer before they’re delivered in vans

to customers’ homes, an Amazon spokeswoman says. She didn’t provide details about the size of the building or how many people would work there. The facility will open in “a couple years,” she says. Ryerson will lease back the property, where it operates a 1.5 million-squarefoot factory, from Amazon for a short period. After gobbling up millions of square feet of The Central Steel & Wire plant on the Southwest Side warehouse space in the Chicago suburbs over the past delivery station in Pullman last several years, Amazon more re- October and pushing ahead with cently has been increasing its plans for one in Bridgeport. In footprint in the city, opening a June, the company paid more

GOOGLE STREET VIEW

The e-commerce giant plans a delivery station on the site, part of its push to expand its network to keep up with surging sales and speed up delivery times

than $30 million for a 26-acre site in Humboldt Park, where it plans a 140,000-square-foot delivery station that will open in late 2022.

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CRAIN’S CHICAGO BUSINESS • July 19, 2021 13

NONPROFITS: To diversify these boards, change the tried-and-true rules. PAGE 14 VIEW FROM THE C-SUITE: A big design-build firm on how it has prioritized diversity. PAGE 16

CRAIN’S CHICAGO BUSINESS BOARD DIVERSITY

COMMUNITY VOICES: Where are the white execs on boards of minority-owned firms? PAGE 17

GETTING THE BOARD

ON BOARD A handful of big area firms have assembled boards that reflect the community. Others can do it, too, if they commit to it. | BY LISA BERTAGNOLI

Illinois passed a law in 2019 requiring public companies to disclose board composition; the University of Illinois report is compiled from that data. Overall, the report found that 35 percent of the firms had at least two people of color on their boards, and 67 percent had at least two female directors. That falls short of matching the state’s ethnic and racial diversity, according to the report. On average, Latinos account for 2 percent of directors and 16 percent of the state’s population. African Americans account for 6 percent of board members and 13.8 percent of the population. Of the firms reporting, 70 percent have zero Asian or Asian American directors; that group accounts for about 6 percent of the population. The percentage of minority board members at Chicago’s top 50 companies moved to 16 percent in 2020, up from 12 percent in 2012. African Americans account for 9 percent of diverse board members, Latinos, 4 percent, and Asian Americans, 3 percent, according to Chicago United’s 2020 Inside Inclusion report. Some of the movement comes from directors identifying as diverse, when they had not in the past, the report notes. “This is a call to action to put effective plans See BOARD on Page 14

GETTY IMAGES

Dr. Charles DeShazer joined Adtalem Global Education’s board in March. DeShazer, who grew up and practiced medicine on the West Side, brings a “highly personal” perspective to board discussions of social, economic and demographic dynamics, says Adtalem Chief Operating Officer Stephen Beard. For instance, DeShazer pointed out that some diabetic patients might not have working Dr. Charles DeShazer refrigerators in which to store insulin injections. The physician’s observations drive “more equitable outcomes,” Beard says. “He brings that to our discussions to make sure our programs train professionals responsive to all kinds of patients.” Chicago-based Adtalem’s board is 44 percent women and 44 percent people of color; combined, it adds up to a board that is 67 percent diverse, thanks largely to the efforts of Adtalem CEO Lisa Wardell, board chair as of July 2019. Adtalem ranks among the top five firms in Illinois for both gender and nonwhite board diversity, according to a University of Illinois at Urbana-Champaign analysis of reports from 74 publicly held firms throughout the state. It’s one of several recent reports showing that many area firms need to improve board diversity, mostly because the current board makeup does not mirror area demographics.

SPONSORS

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14 July 19, 2021 • CRAIN’S CHICAGO BUSINESS

CRAIN’S CHICAGO BUSINESS

Want change on nonprofit boards? Change the rules.

Side by Side with the Chicago Philharmonic encourages students and community members to play alongside professional orchestra musicians in free park concerts.

Recruit outside of the usual circles and get rid of the 'give-or-get' BY LISA BERTAGNOLI About one-quarter of the city’s arts and culture organizations have boards that are more than 25 percent diverse. Only a handful, though, have boards that are more than half diverse, according to research from Enrich Chicago, an alliance established to boost diversity across all levels of arts organizations. “There is absolutely room for improvement,” says Nina Sanchez, executive director. Diversity across organizations “should not be the goal,” says Sanchez. Rather, diversity is the means to an end. “We are trying to change the culture of these spaces and build accountability with socio-economically and racially diverse boards.” To

BOARD

get to diversity, and ultimately that goal, she suggests upending two nonprofit board traditions. One is the amount nonprofit board members are expected to donate each year. These dues, sometimes called give-or-gets, “reflect a system that privileges access to wealth,” Sanchez says. “Outcomes won’t change until we understand that this is a fundamentally flawed system.” In 2012, the Chicago Philharmonic reorganized to become a completely musician-governed organization. The board, which has a musician majority, has 23 members. People of color account for 27 percent of the board and women, 21 percent. The board prior to the restructure

Continued from Page 13

together,” says Maria Wynne, CEO of Leadership Greater Chicago, a civic leadership development organization. Wynne gets many requests from nonprofits for help in finding board candidates; she can count on one hand the number of corporations that have called. “We would be happy to help,” Wynne says. On a bigger scale, the murder of George Floyd by a Minneapolis police officer and subsequent wave of civil unrest jolted corporate boardrooms into action. In 2020, Black directors accounted for 28 percent of all Fortune 500 board appointments, up from 10 percent in 2019, according to search firm Heidrick & Struggles’ 2021 U.S. Board Monitor report. Three-quarters of those appointments took place after Floyd’s murder. “The awakening has driven board diversity,” says Lyndon Taylor, regional managing partner for Heidrick & Struggles’ CEO and board practice. Prior to last year, “we had seen progress but not as rapid,” he says. Taylor notes another trend: Thirty-eight percent of board appointees had no prior board experience, compared with 28 percent the year prior, and the appointment of CEOs and CFOs to boards fell to 51 percent from 62 percent in 2019. The population of boardrooms, perhaps more than corner offices, plays a crucial role in the quest for true diversity and inclusion. “It all starts in the boardroom and then trickles down to the organization,”

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says James King, senior partner, chief quality officer and board services practice leader at Chicago-based executive search firm WittKieffer. “If your leadership doesn’t agree with (diversity) at the highest level, you won’t move off the dime,” he says. “You have to have a board that embraces diversity, equity and inclusion—not just giving it lip service—and holds the CEO accountable to that.” Diversifying boards is more complex than copying football’s Rooney Rule of offering one diverse candidate for each role open. “The business literature says that if you bring in just one minority into a group, that person will suffer lesser success than if you increase the population to more than just one,” says Dr. Deborah Wing, principal and co-leader, academic medicine and health sciences practice at WittKieffer. The path to board diversity: reworking the board recruiting and onboarding process to accommodate first-time board members, anticipating and preparing for board vacancies rather than filling them at the last minute, viewing the board and its composition as a work in progress and keeping the business benefits of diversity top of mind. At Adtalem, that meant recruiting executives with the right skills but no previous board experience, and revamping the orientation process to accommodate them. Each recruit receives a custom orientation process, and orientation takes place after their first board

was almost all white, says former Executive Director Donna Milanovich, herself a musician before becoming

executive director—Terell Johnson became the new executive director July 1. Recognizing the wide variety

w BOARD DIVERSITY MINORITY STATUS OF THE BOARDS OF CHICAGO’S 50 BIGGEST COMPANIES Caucasian

African American

Hispanic

Asian American

Unable to verify

100% 80

84%

85%

83%

2012

2014

2016

2018

2020

60 40 20 0

Source: Chicago United 2020 Inside Inclusion report

Dunkin Brands CFO Katherine Jaspon and Steven White, Comcast’s president and special counsel to the CEO, are W.W. Grainger’s newest board members. The Lake Forest-based firm is “more planful” about assembling a diverse board, says Chairman and CEO D.G. Macpherson.

John McCareins, left, head of Asia Pacific at Northern Trust Asset Management, has connected with director Don Thompson to discuss business. McCareins says that in his 20-year career at Northern Trust, he has never lacked coaching, mentorship, allyship or opportunity.

meeting so that they get a chance to take notes and ask questions, Beard says. The 13-member board at Lake Forest-based W.W. Grainger includes three Black men, a Latino woman and four women overall. Grainger has added six new board members over the last four or five years and during that time has become “more planful” about assembling a diverse board, says D.G. Macpherson, chairman and

CEO of the distributor of maintenance, repair and operations supplies. “With every new candidate, we look out to the future,” Macpherson says. “The process is always on.” Pre-pandemic, Grainger had begun the search to fill two seats that were to be vacated by retiring executives. Working with search firm Russell Reynolds, Grainger found Katherine Jaspon, CFO of Dunkin Brands, who joined the

of financial capability among board members, the organization allows, but does not require, donations

board in April, and Steven White, president and special counsel to the CEO at Comcast, who started last year. The two, like all new board members, traveled to facilities with team members to immerse themselves in the business. The “rigorous” onboarding process acclimates new board members to the company and its business. “We have been conscious of having a diverse perspective and an atmosphere where everyone is feeling comfortable contributing,” he says. Advocate Aurora inherited two diverse boards after the 2018 merger of Aurora Health Care and Advocate Health Network that created the present company. Board chair John Daniels Jr. and chair-elect Michele Baker Richardson are both Black; the board has two people of color and four women and is 33 percent diverse. “We each brought into this merger our own rich history and tradition of a commitment to DEI,” says Skogsbergh, Advocate AuroJim ra CEO, who came to the merger from Advocate Health Care. The pandemic, which revealed widespread health inequities, and the civil unrest of 2020 “highlighted the need for us to double down,” Skogsbergh says. “In today’s environment, we need courageous people who are willing to ask tough questions, who care deeply about the purpose and mission of organization and can take a critical look at organizational blemishes.” The board is short on Latino representation, a gap they say will be addressed when two board

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HONEYCOMB PROJECT

CRAIN’S CHICAGO BUSINESS • July 19, 2021 15

ELLIOT MANDEL

The Honeycomb Project helps 50 organizations across 93 percent of Chicago’s ZIP codes harness volunteer power. “I don’t know how we’d do what we do with an all-white board,” says Kristina Lowenstein, co-founder and executive director.

from board members. The board composition results in “pretty lively discussions” with

a strong social justice bent, Milanovich says. The range of voices “broadens the viewpoint of what’s possible and how we look at the community,” she says. All but one of its six programs to assist underresourced music teachers and students are on the South and West sides; the programs offer everything from internships for arts management to free concert tickets and opportunities to play along-

side professional musicians. Another is the source of new board members. Like for-profit boards, nonprofit boards tend to pull from their own circles, which results in homogeneity. In Chicago, “it is not an accident that we don’t move in different racial and socioeconomic circles,” Sanchez says. She suggests board recruiting beyond one-off networking events. “Demonstrate the way your organi-

teers in projects helping about 70 zation is working with the commuorganizations, Lowenstein says. nity and following the lead of the Tracy Lewis, a consultant to noncommunity,” she says. profits, adds two more hurdles orThe Honeycomb Project, which ganizations must overcome on the connects young people and families path to board diversity. One is “peowith volunteer projects around the ple not coming to terms with their city, launched a decade ago with a own diversity issues,” says Lewis, diverse board, says Kristina Lowenwho is based in Chicago. When she stein, co-founder and executive works with nonprofits on board dedirector. The organization helps 50 velopment, “we ask the tough quesorganizations connect with voluntions—how do they feel about their teers, who represent 95 percent of experiences dealing with groups the city’s ZIP codes. outside their own and how that Board diversity is critical, as the translates to decision-making,” she organization partners with nonsays. “Those can be emotional conprofits that serve diverse populaversations.” tions throughout the city. “It’s critiShe also balks when people say cal our board members understand “I don’t see color.” While Lewis unthe needs and perspectives of those derstands that the phrase is meant we help,” Lowenstein says. “I don’t to be equitable, “not seeing color know how we’d do what we do with doesn’t take into account the expean all-white board.” Board diversity was similarly critical in the “IT’S CRITICAL OUR BOARD MEMBERS formation of Honeycomb at Home, created UNDERSTAND THE NEEDS AND to keep volunteers active PERSPECTIVES OF THOSE WE HELP.” during the pandemic lockdowns. Volunteers, Kristina Lowenstein, co-founder and 46 percent of whom executive director, Honeycomb Project identify as people of colriences of people of color and how or, collected food donations, supthose experiences inform how they plied protective equipment, made move and think in the world,” Lewis thank-you videos for frontline worksays. “People should be more open ers, and delivered supplies to hometo at least learning about those exbound seniors. The board’s diversity periences.” helped mobilize about 2,000 volun-

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ADVOCATE AURORA HEALTH

oard lities merse The ocess mbers ness. havd an e is ting,” Advocate Aurora Health’s diverse board helped decide to place mobile COVID-19 testing units at community partners in eight neighborhoods, including one at Compassion Baptist Church in South Chicago. At right: Attending an event at Imani Village to encourage vaccinations in areas hardest hit by COVID were, from left, Rashard Johnson, president of Advocate Trinity and South Suburban hospitals; Illinois Attorney General Kwame Raoul; the Rev. Dr. Otis Moss of Trinity United Church of Christ; and Advocate Aurora Health Board Chair John Daniels Jr. seats become vacant this year. “We want to mirror the communities we serve” with both directors and C-suite occupants, Skogsbergh says. That is especially crucial for a health care organization, says board member Lynn CrumpCaine. “The communities we serve are diverse, so we need to be in touch with them in any way we can,” says Crump-Caine, former executive vice president of worldwide operations and restaurant systems at McDonald’s. The diverse board, she says, helped decide to put mobile care units in underserved communities and pushed for 10 units, rather than the originally planned eight. “The idea was ‘Hey, could we do more in the community?’ And we thought ‘Yeah, we could do more,’ ” Skogsbergh says. Another example shows up in the organizations’ DEI incentive plan, which sets goals for things

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such as diverse spending and patient engagement. When management brought the first draft of goals to the board, “they pushed us to go farther and felt we could do more,” Crump-Caine says. “We are on target to reach those goals, which shows it was the right call to raise the bar and double down on this commitment.” The organization’s DEI spend in 2020 was close to $200 million, exceeding its 6 percent goal; the goal for this year is 6.6 percent. At ADM, also in the University of Illinois report’s top five firms for nonwhite board diversity, 58 percent of board members are diverse; 50 percent are Black, Hispanic or Asian; and 25 percent are female. The Chicago-based food manufacturing firm has had women and minority directors on its board since the early 1990s, and a woman, Patricia Woertz, was CEO and board chair from 2007 to 2015, according to an emailed statement

from Juan Luciano, chair and CEO. “ADM recognizes that a diversity of personal and professional backgrounds and experiences helps to minimize unconscious bias, challenge long-standing frameworks, promote new ideas and results in better decision-making and thus always seeks people from different backgrounds and experiences as it identifies and recruits director candidates,” Luciano says. The company uses search firms, nominations from shareholders and suggestions from directors to find new board members that match “ADM’s strategy, current needs and the collegial culture of the board,” Luciano says. One example: The board recognized that it had a gap in knowledge of information technology and cybersecurity, and identified and recruited Boeing Executive Vice President Theodore Colbert III, “a talented executive with these skills,” he says.

Chicago-based Northern Trust’s 13-member board has three women, 10 men, three Black executives, one Asian American and one Latino. The composition, with women and ethnic minorities accounting for more than half the board, is “completely aligned with the founding and enduring principles of company: service, expertise, and integrity,” says chairman and CEO Michael O’Grady. The diverse board also helps better serve clients and meet the needs of institutional investors, more of which are demanding DEI from the companies with which they do business, O’Grady says. It’s not just the diversity and skill sets; it’s also a range of lived experiences. “We want a board that understands what it’s like to be a woman who works at a company, in addition to what it’s like to be an ethnic or racial minority,” O’Grady says. “My predecessors, (former chairmen and CEOs) Bill Osborn

and Rick Waddell, recognized this early on.” The diverse board also helps retain and inspire management-track employees. Executive vice presidents who want to advance see a board that looks like them. O’Grady adds that board members “can share back to me, ‘Here’s a challenge this person might have that you don’t have because you’re a white male,’ ” O’Grady says. During 20 years at Northern Trust, “I have never found myself wanting for coaching, mentorship, allyship or opportunity,” says John McCareins, head of Asia Pacific for Northern Trust Asset Management. McCareins, who is based in Hong Kong, recently connected with Northern Trust director Don Thompson to discuss “everything from investments to doing business in Asia to sustainability to diversity.” If Northern Trust, Advocate, ADM, Grainger and other big companies can assemble diverse boards, then every company should be able to. “ ‘I can’t find talent’ is just an excuse,” says Tiffany Hamel Johnson, CEO of Chicago United, which produces the biennial Inside Inclusion report. “People have to be intentional in finding candidates and creating pipelines,” says Hamel, adding that she is “extremely hopeful and really excited” about the future of diverse boards in Chicago. She sees a better grasp of the drawbacks of a nondiverse board and the benefits of a diverse board. “Companies are really understanding that it’s more than a moral imperative,” she says.

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16 July 19, 2021 • CRAIN’S CHICAGO BUSINESS

CRAIN’S CHICAGO BUSINESS

VIEW FROM THE C-SUITE

Your boardroom sets the tone O

Bob Clark is founder and executive chairman of Clayco, a Chicago-based design-build company. Clayco is a sponsor of Crain’s Equity.

ne of the best choices any company can make is to embrace and promote diversity in all areas and at every level of the business. It’s long been one of the most important values for me personally, and it’s something that is also woven into the culture at Clayco. We were the first to introduce a groundbreaking diversity and inclusion program into the building and construction industry over 25 years ago, and our diversity initiatives like Clayco Rising still stand as models for the future. I also believe that just advocating for diversity and inclusion isn’t enough and that there’s more all of us can do. That’s why it’s essential to incorporate diversity into all ranks and aspects of your company, especially in your boardroom. The people you choose to put into positions of leadership are responsible for building a more inclusive workforce for everyone and setting a powerful example for others in the business. Welcoming and empowering diverse team members needs to start from the very top.

There are many ways that leaders can go about increasing diversity in their boardrooms, and it’s something that is long overdue, especially in our country. To date, only 28 percent of board seats in the S&P 500 were filled by female directors. Change continues to be slow, despite united efforts to pave more pathways to leadership for underrepresented minorities. The only way to make a change on this front is for leaders to set an example for others to follow and take it upon themselves to make their boardrooms better, smarter and more equipped to handle challenges by including people who have traditionally been excluded from them. In addition to promoting more people from different backgrounds and opening opportunities for more women to hold leadership positions, it’s also important to have a greater diversity of thought, behavior and work experience among your boardroom ranks. My own board of directors is in the process of being reconstituted, and we’re working hard to create a new board that is going to

A.J. P foun of 54 548 D in Ch

be even more diversified and qualified than ever before. Expanding leadership opportunities for a more diverse workforce will only benefit businesses in the long run, and having a culture that values diversity and inclusion ensures that you have space for new perspectives, opinions and ideas to guide your company into the future.

I know that my unwavering commitment to diversity since day one has made my company stronger, and bringing these ideas into even more boardrooms is critical to achieving greater equality and acceptance on all fronts. It’s up to us to be the change we crave and give the leaders of tomorrow every opportunity to succeed.

INSIDER TAKE

Small and midsize companies need to prioritize diversity

Ryan Whitacre is a partner in Bridge Partners, a minority-owned executive search firm that specializes in inclusive searches.

year on from last summer’s protests against racism and police brutality that were sparked by the murder of George Floyd, some of Chicago’s biggest brands are making progress on their pledges for increased diversity, equity and inclusion in their own employee base and leadership teams—but what about the firms that fall outside the rankings of those largest companies? The latest Fortune rankings—which include 18 headquartered in Chicago—now also track the Top 20 firms on diversity. A full third of them hail from the Midwest, including Allstate and Walgreens Boots Alliance. This confirms studies showing the largest companies are currently the ones leading on DEI—and they’re also reaping the higher returns and competitive edge that come with diverse leadership teams and inclusive workplaces. Which means small and midmarket companies—the vast majority of Chicagoland firms—are being left behind in social and economic terms. One school of thought holds that leadership and employee diversity is more easily advanced by the biggest companies because they have larger budgets and greater pressure from being in the public eye. Yet activists, investors, regulators and regular people are aligning to compel companies large and small to tackle homogeneous

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workforces and leadership teams. Midmarket and small companies would be well served to set their own DEI terms before such terms are set for them. Activists and others seeking to hold corporations to their pledges from last summer are keeping track of company actions. Interestingly, the investor community has joined them, as seen from the latest proxy season. For example, ISS and Glass Lewis, two U.S.based proxy advisory services that provide governance and guidance regarding shareholder votes, both issued guidance recommending votes against directors without sufficient board diversity. BlackRock, the largest asset manager, received media coverage for its pressure on homogeneous corporate boards, as has Goldman Sachs, which will not take a company public without boardroom diversity. And Nasdaq has proposed a listing rule requiring corporate diversity. On the legislative front, at least a dozen states, including Illinois, Maryland and New York, have passed or are debating laws requiring greater transparency on diversity, with some, such as California and Washington, mandating female and diverse directors. The greatest pressure, however, may come from everyday people—customers, clients and employees. Employees

prize diversity because it makes them feel valued and leads to greater productivity. Customers and clients want to see companies that reflect themselves and can better tailor products and services to differing tastes. Diversity, equity and inclusion is not a flavor of the month but a value shared by the majority of the American workforce, which is now dominated by millennials and Generation Z who have grown up in the era of corporate social responsibility. Their demand for action is something all firms must face. While the largest companies have a leg up on DEI, it’s not too late for smaller companies to dive into diversity. Here are a few steps any company can take now. w Be the change you seek. True diversity means different perspectives. To tap into the benefits of diversity— creativity, innovation—ensure you include difference around the decision-making table. Seek outside views and experiences when filling new leadership posts, including the board. Instead of relying solely on candidate “fit,” think about skills and traits that are additive to your existing team. w Do some homework. Because big companies are putting resources into DEI, there’s an industry devoted to it. Examples abound about what works

and what doesn’t. Experienced professionals who dedicate their careers to helping organizations move the needle on diversity are valuable resources. w Treat DEI like another business issue. A familiar way to approach DEI is from a data perspective. Perhaps with help from an established diversity professional, assess where your organization is today. Survey employees, track their experiences, identify where your issues lie and create incentives to change. w Control what you can control. For an immediate impact on diversity, think about what is in your direct control, including hiring. Not just your leadership and full-time staff—which should be central to a DEI program—but also your vendors: consultants, tax advisers, lawyers, contractors, communications. Consider a supplier diversity program that awards work to firms owned by women and minorities, while also looking at hiring and onboarding functions, with the goal of creating a diverse and inclusive work environment. As market conditions improve and pandemic restrictions ease, it may be easy to let DEI fall to the bottom of your strategic priorities, but external forces are afoot that will ensure DEI remains front and center. All companies would be wise to keep diversity at the top of their priority list.

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CRAIN’S CHICAGO BUSINESS • July 19, 2021 17

COMMUNITY VOICES

MIA: White execs on boards of minority-owned firms

A.J. Patton is the founder and CEO of 548 Capital and 548 Development in Chicago.

ver the past few years, we’ve seen some progress regarding diversity on corporate boards. The attention to bringing on people of color to predominantly white boards provides a net benefit to companies and their shareholders, a much-needed broadening of perspective. However, these conversations are typically one-sided. What we’re not seeing is equal energy toward bringing white executives onto boards for minority-owned businesses. I believe that minority-owned companies would benefit greatly from the resources and assets provided by white executives with a board presence. There are few minority-owned firms that showcase boards with top white executive participation in our country. This situation is analogous to the stories my grandfather shared about the integration of school systems in our country in the mid-1900s, which was defined almost exclusively by minority students going to white schools while predominantly Black schools closed. Just as we need to see racial integration happen in both directions, there’s an imbalance right now in the onus be-

ing put on minority thought leaders to participate in the growth and success of homogeneous, mostly white-owned companies, yet there is almost no public pressure put back on the historical “powers that be” to intentionally use their resources and privilege to uplift marginalized business owners. I want to be specific in differentiating the lack of executive participation in businesses and the not-for-profit sector. Oftentimes marginalized groups are only seen as tax write-offs or philanthropic interests, and they’re only rarely valued as equal professional peers. While the participation of nonprofits is welcomed, it pales in comparison to the impact for-profit businesses can have on communities. Joining a board can be seen by some as a token gesture, but it’s actually a public declaration that you believe in a company, its leadership and its trajectory, as well as a willingness to lend your own expertise and resources to facilitate its growth. With larger public companies, adding top diverse talent can help an organization grow its market share, in addition to further serving investors and employees. When a

cades to come. It would further enrich white executive joins the board of a our business community and promote minority-owned company, there’s continued, inclusive growth and innoan opportunity to help change and vation far beyond Silicon Valley. shape a business’ trajectory, includIt would also signal to the market ing bringing the company to new that Chicago’s business establishment markets, raising valuations, creating is intentional about active engagebetter access to capital and potentialment and support of minority-owned ly creating new jobs. businesses and thus has the capabilBefore white industry leaders can ity to create attractive, meaningful reach out to make this offer, a first opportunities for minority entreprestep may simply be to increase awareneurs on par with cities like Atlanta. ness. I recognize that many of ChicaTo genuinely benefit from diversity go’s white influencers may not know and inclusion, it’s going to take more a single minority or female founder. than tokenizing a minority presence If you need a starting point, consider on an otherwise all-white board at engaging the Business Leadership major, established companies in Council or the Urban League for a list of minority founders and THERE’S ALMOST NO PUBLIC PRESSURE PUT ON businesses. For WHITE EXECS TO UPLIFT MARGINALIZED FIRMS. minority-owned businesses that Chicago. The reality is that while mahaven’t formulated a formal board, jority-white companies benefit from consider offering to lend support in a board diversity, white executives also mentorship capacity instead. have an opportunity to redistribute Imagine if every C-suite of Chicapower and assets by throwing their go’s top 50 companies announced weight behind minority-owned comthey were joining the board of one panies they believe in as well. When minority-owned business. The impact this happens, all of Chicago sees the of this type of change would ripple benefit. through our city and be felt for de-

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18 JULY 19, 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

CONSTRUCTION

LAW

NON-PROFIT

Lamar Johnson Collaborative, Chicago

Executive Construction, Chicago

Northern Builders, Inc., Schiller Park

Ice Miller LLP, Chicago

Executive Construction is proud to announce the promotion of Eric Bieda to Senior Superintendent. Throughout his 19-year career at the firm, that began as a laborer, Eric has built a robust portfolio of work focused on interior spaces and MEP infrastructure. As the go-to field leader managing 10+ renovation projects at any given time for one of Executive Construction’s longest client relationships, Eric’s attention to detail ensures a safe, secure, and timely delivery of each engagement.

Northern Builders, Inc. is pleased to announce the promotion of Mark A. Fordon to Senior Vice President of Construction Services. With over 30 years of experience in the construction industry, Mark’s construction leadership in directing all facets of construction has helped Northern garner the respect and appreciation from the firm’s clients. Mark has been an integral part of Northern’s team for over 8 years.

Mark Kromkowski has joined the Chicago office of Ice Miller LLP as a partner in the firm’s Business Group. Kromkowski represents investment funds and portfolio companies in all types of private equity and corporate M&A transactions. He also counsels fund managers in all aspects of fund formation and administration. Kromkowski is among the small group of lawyers with significant transactional and regulatory experience with SBIC Funds and RBIC Funds.

Skills for Chicagoland’s Future, Chicago

Lamar Johnson Collaborative (LJC) welcomes Michael Berger as Principal. In his new role, Michael will help lead business development initiatives for the firm’s rapidly growing workplace interiors practice. He previously held leadership positions with Chicago-based GREC Architects and Partners by Design. Michael holds an M. Arch from Tulane University.

Skills for Chicagoland’s Future, a nonprofit business intermediary that brings a jobsfirst approach to returning unemployed and underemployed job seekers to work, is excited to welcome Marcos DeLeon, Senior Vice President and Chief Human Resources Officer at Rush University System for Health to its Board of Directors.

NON-PROFIT ART Museum of Contemporary Art, Chicago The Museum of Contemporary Art Chicago announces the election of Cari B. Sacks as the new Chair of the Board of Trustees. Cari has served on the MCA Board since 2004 and is Vice Chair of the Executive Committee, in addition to serving on the Board’s task force committed to greater inclusion, diversity, equity, and accessibility. Cari is a trustee of Erikson Institute and served on City of Chicago’s Cultural Advisory Council and President Obama’s Advisory Committee on the Arts.

NON-PROFIT CONSTRUCTION

EDUCATION

Executive Construction, Chicago

Noble Network of Charter Schools, Chicago

Executive Construction is proud to announce the promotion of Michael Utter to Project Executive. He has played a key role in notable projects in both interiors and mission critical markets, with a specialization in technology coordination. Most recently, he was a significant collaborator on the Digital Crossroad Data Center in Hammond, IN. Michael’s expertise in data centers and complex infrastructure supports Executive Construction’s growth in the market, both in Chicago and across the country.

Dalonte Burns has been named Principal of UIC College Prep, part of the Noble Network of Charter Schools. He is a Chicago native, first generation college graduate, educator, leader, community relations coordinator, and advocate for education as a practice of freedom being a key lever to multi-generational transformation. Dalonte is excited to join the UIC College Prep community in actualizing the mission of creating positive change leading to students living out their greatest aspirations.

Compassion & Choices, Chicago / Washington, D.C. KidSnips CEO and Co-founder Jill Gordon has joined the board of directors of Compassion & Choices, the nation’s oldest, largest, and most active nonprofit working to improve and expand end-of-life care options. Gordon also is a board member of Planned Parenthood of Illinois, former board member and board treasurer of Tuesday’s Child, and co-chair of CARE Chicago Women’s Initiative. She has an MBA from Northwestern University’s Kellogg Business School.

CONSTRUCTION

Prairie Capital Advisors, Inc., Oakbrook Terrace

Skender, Chicago

EDUCATION

NON-PROFIT

Skender, one of the nation’s top building contractors, congratulates Brian Kane on his promotion to Project Executive. Brian joined Skender in 2008 and has 13 years of experience in the construction industry. As Project Executive, Brian is responsible for overall project quality, strategy and client experience. He works closely with Skender’s healthcare clients to understand their goals and then exceed them.

Noble Network of Charter Schools, Chicago

Dental Assisting National Board and the DALE Foundation, Chicago

JuDonne Hemingway has been named Principal of Gary Comer Middle School, part of the Noble Network of Charter Schools. She is a proud Chicago native, a parent, and a product of CPS schools. JuDonne has served Noble students as a teacher, Dean of Instruction, and Assistant Principal. She is a passionate leader eager to dedicate herself to continue the outstanding work being done at Comer Middle to intentionally affirm students’ identities and to prepare students for choice-filled lives.

Cynthia Durley, M.Ed., MBA, Executive Director of the Dental Assisting National Board and the DALE Foundation, has received the Special Recognition Award for Leadership from the Organization for Safety, Asepsis and Prevention. The award recognizes individuals who have significantly influenced and broadly shaped dental infection control. Ms. Durley’s achievements include cofounding the Infection Control Consortium and leading the Dental Infection Control Education and Certification initiative.

BUSINESS ORGANIZATIONS NACD, Chicago

CONSTRUCTION

National Association of Corporate Directors Chicago Chapter announced that Joan E. Steel has been elected board chair. She was vice chair and nomination/governance committee chair since 2019. Steel is founder and CEO of Alpha Wealth Advisors, LLC, a financial consulting firm. She is an independent director of the Mercer Funds, Rush University Medical Center trustee, Cuneo Foundation director and former Hershey Trust Company director and Loyola University Chicago trustee and Endowment chair.

Skender, Chicago

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Skender, one of the nation’s top building contractors, congratulates Alex Panici on his promotion to Project Executive. Alex joined Skender in 2016 and has 15 years of experience in the construction industry. As Project Executive, Alex is responsible for overall project quality, strategy and client experience on commercial construction projects. He works closely with Skender’s developer and end-user clients to understand their goals and then exceed them.

Buckley Fine Law, Barrington Buckley Fine Law is pleased to announce attorney, Caroline E. Hecht, has been promoted to partner. Caroline concentrates her practice in estate planning, estate and trust administration, prenuptial planning, and guardianships. Caroline also serves as a Guardian Ad Litem for the Lake County Circuit Court’s probate division. Practicing law since 2011, Caroline has extensive experience counseling high-net-worth clients in estate planning and in the administration of complex estates.

NON-PROFIT

Skills for Chicagoland’s Future, a nonprofit business intermediary that brings a jobsfirst approach to returning unemployed and underemployed job seekers to work, is excited to welcome Claudia Saran, Vice Chair of Culture at KPMG, LLP to its Board of Directors.

PUBLIC AFFAIRS Culloton + Bauer Luce, Chicago

Dental Assisting National Board and the DALE Foundation, Chicago

We’re excited to announce James Mendez has joined the Culloton + Bauer Luce team! His extensive experience working in policy development, issues management and community outreach will greatly benefit our clients and our campaigns. Mendez joins the public affairs and crisis management firm as an Account Supervisor following his tenure as budget analyst with Chicago Alderman Pat Dowell.

Laura Skarnulis has been named CEO of the Dental Assisting National Board (DANB) and its affiliate the DALE Foundation, effective Aug. 16. DANB is the national certifying board for dental assistants, and the DALE Foundation provides online education and conducts research to promote oral health. As CEO, Skarnulis will lead the organizations’ strategic direction and advance dental assistants and other oral healthcare professionals through innovations in assessment, education, and collaborations.

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

NON-PROFIT LAW

Skills for Chicagoland’s Future, a nonprofit business intermediary that brings a jobsfirst approach to returning unemployed and underemployed job seekers to work, is excited to welcome Sammy Patel, Vice President, Commercial at Vantage Airport Group & Chief Executive Officer of Midway Partnership to its Board of Directors.

Skills for Chicagoland’s Future, Chicago

BANKING / FINANCE

Prairie Capital Advisors, Inc., a leading corporate advisory and investment banking firm, is pleased to announce the promotion of Anthony Dolan to Managing Director. Mr. Dolan has significant experience advising middle-market companies and shareholders on mergers and acquisitions, capital raising, ESOP advisory and strategic advisory engagements.

Skills for Chicagoland’s Future, Chicago

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CRAIN’S CHICAGO BUSINESS • July 19, 2021 19

2021

MINORITIES INcover COMMERCIAL BANKING These 27 professionals the spectrum of commercial bankDOROTHY ABREU ing, from real estate lending to treasury management. The pandemic turned their world upside-down last year, and they quickly adapted by serving and guiding clients remotely. Many were able to extend credit that enabled organizations to remain liquid. And they assisted in the processing of thousands of SBA PPP loans. Following the murder of George Floyd and heightened awareness of systemic inequality, many joined resource groups and diversity and inclusion initiatives. They led online discussions on topics ranging from the broader challenge of discrimination to more granular issues of hiring and advancement. Some have taken on the tasks of designing mentorship and leadership development programs for minority colleagues. Outside the office, they are engaged in professional associations and nonprofit initiatives in health care, the arts, education and neighborhood development. Their efforts should provide a smoother path for the next generation of minority bankers. By Judith Crown and Lisa Bertagnoli METHODOLOGY: The individuals featured did not pay to be included. Their profiles were drawn from the nomination materials submitted. This list is not comprehensive. It includes only individuals for whom nominations were submitted and accepted after a review by editors. To qualify for the list, individuals must self-identify as part of a racial or ethnic minority and have at least 10 years of experience in commercial banking. They serve as role models, promote inclusive practices and assume leadership positions outside their organizations.

Senior vice president, PNC relationship manager public finance PNC Financial Services Group

Dorothy Abreu is a senior leader in PNC’s Public Finance Group and helps lead the provision of capital solutions and tailored financial services to public sector and notfor-profit entities, including the state of Illinois, the city of Chicago and its sister agencies, among other organizations. She also collaborates with community partners in various Midwest markets identified as “catalyst developments” in economically disadvantaged neighborhoods. Previously, she was the regional sales leader for PNC’s Community Development Banking team, guiding one of the largest and most impactful production units in the division. Her work with Community Development Financial Institutions intermediaries and community organizations helped fund projects valued in millions of dollars to enhance the quality of life and create economic empowerment for communities across the Chicago area, particularly underserved neighborhoods in the South and West sides.

MOHAMMED ABUNADA Senior vice president First Midwest Bank

Mohammed Abunada services private practices including physicians, dentists, veterinarians, surgery centers and hospitals. He is responsible for business development/ portfolio management, managing the Midwest market and specializes in practice expansion, new construction, practice acquisitions, start-up financing, practice buy-in and buyout, equipment financing and working capital lines of credit. The Professional Services team added nearly $100 million in loan commitments to the portfolio and last year originated more than 83 loans, far exceeding goals. In 2019, Abunada was appointed to the Governing Council at Advocate Christ Medical Center, and he has been named a President’s Circle Member at First Midwest. He is chairman of the Orland Park Prayer Center scholarship committee and is a member of Medglobal, an international medical nonprofit providing health services to people in need.

JAMEL ALIKHAN

JAVONNA S. BURTON

RAMÓN CEPEDA

PRAVEEN CHATHAPPURAM

Managing director, Illinois commercial banking CIBC Bank

Vice president First Midwest Bank

Senior managing director, commercial real estate banking & professional services groups Northern Trust

Senior vice president, division head, commercial banking Byline Bank

Jamel Alikhan is a group head responsible for growing CIBC Bank’s professional service-focused client base (lawyers, accountants, etc.) as well as helping to expand its middle market commercial banking business. In the last 12 months he brought in five new clients to the bank with more than $50 million in commitments. Alikhan recently took on the role as reverse mentor at CIBC; joined the board of Family Focus, which works to strengthen families in Chicago and northeast Indiana; and has become a board member of the Nora Project, which promotes disability inclusion by empowering educators and engaging students and communities. Prior to joining CIBC, he was an executive director and senior vice president at JPMorgan Chase and a vice president at National City.

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Javonna S. Burton provides team leadership, develops new account relationships and manages a portfolio of corporate/municipal clients. Her responsibilities include selling treasury management products to established corporate customers and prospects alongside the commercial lending staff. She is a member of the Association for Financial Professionals; the Alpha Kappa Alpha Sorority, most recently chairing its Global Impact Day; and a past board member for Growing Home, a nonprofit providing farm-based training for people with employment barriers. Over the years she’s held positions of increasing responsibility, starting at American National Bank in the loan operations department and being accepted into the Credit Analyst Program. Burton received her Certified Treasury Professional designation and has held positions at PNC Bank, Charter One/RBS Citizens and American National Bank.

Ramón Cepeda leads two commercial teams: Professional Services, which provides commercial corporate lines of credit, partner loan programs, treasury management and wealth management to legal, accounting and consulting firms, regionally and throughout the Northern Trust footprint, and Commercial Real Estate, which focuses on new and existing high net worth clients. On a combined basis, balance sheet growth for both teams was 15 percent. In 2020, the teams closed on $296 million in new business. At Northern Trust, Cepeda is also a senior lender and chairs the regional credit committee. He was recently reappointed by Illinois Gov. J.B. Pritzker for six more years to the Board of Trustees at the University of Illinois System. Other civic involvements include: LISC-Chicago, the National Museum of Mexican Art and the Latino Leadership Council.

Praveen Chathappuram is responsible for $225 million in commitments and $115 million in average deposits to owner-managed/ owner-operated middle-market companies. He has been the top producer at Byline Bank for the last four years in a row, managing the largest portfolio on the commercial banking team. During the pandemic year, he grew his loan portfolio by $30 million and his deposit portfolio by $45 million by helping clients with the PPP and navigating the crisis caused by the pandemic. Chathappuram has been a CFA Charterholder since 2011. He was on the board of DuPage PADS for six years; the treasurer and board member for Apna Ghar, a domestic violence shelter; the treasurer and board member for the US-India Chamber of Commerce; and is an active member of the CFA Society of Chicago.

7/15/21 3:46 PM

20 July 19, 2021 • CRAIN’S CHICAGO BUSINESS

MARIA CHAVEZ

MICHAEL CHIN

ERIC CHUNG

RON COLEMAN

Treasury services head, Midwest and Northeast region JPMorgan Chase

Senior vice president First Midwest Bank

Managing director, product and pricing for North American Commercial Bank BMO Harris Bank

Market president, Vernon Hills Bank & Trust Wintrust Bank

Maria Chavez, who leads the Midwest and Northeast Treasury Services teams for Corporate Client Banking and Specialized Industries, is responsible for delivering working-capital and cash-management solutions to corporate clients. She was a pioneer in building a center of excellence around the onboarding client experience as well as an intensive training program focused on specific skill sets. Chavez, who ascended at the firm with only a high school degree, now actively coaches and mentors more than 60 individuals annually. Prior to her current role, she oversaw the buildout of the Corporate Actions and Treasury Consulting teams. She is active across several committees within JPMorgan Chase as well as the Chicago Inclusion Action Committee, the Adelante business-resource group, the Hispanic Executive Forum and Women on the Move.

Michael Chin manages a $60 million portfolio for clients ranging from nonprofit organizations to wholesale distributors. He was part of the core First Midwest team that assisted 6,000 small businesses in accessing $1.2 billion to through the PPP, the Restaurant Revitalization Fund and the Economic Injury Disaster Loan program. Chin works with the Chicago Minority Supplier Diversity Council, is board president of the Chinese Mutual Aid Association and is a board member of the Loan Committee for the Wessex 504 Corporation. He is currently on the FBI’s Multi-Cultural Advisory Council, which tackles hate crimes. Before joining First Midwest Bank, he was vice president at BMO Harris Bank, where he organized the first Asian-affinity employee resource group, and senior vice president at TCF Bank.

Eric Chung leads the product, pricing and data-quality functions for the North American Commercial Bank, or NACB, a $100 billion segment of BMO. NACB did not have a formal pricing organization until Chung joined in the summer of 2018; since then, he built rigor into the function by focusing on analytics, banker performance feedback and targeted-pricing guidance. He also led key initiatives such as LIBOR cessation. Chung leads a diverse team where almost half identify as nonwhite minorities and two-thirds are women. He is on the leadership team for ACE, BMO’s Asian Coalition of Employees, and is a sponsor for BMO’s Summer Experience Internship, which targets minority candidates in their freshmen/sophomore years. Prior to joining BMO, Chung held various positions with GE Capital.

Ron Coleman develops commercial opportunities throughout the Chicago area, with an emphasis on community growth utilizing the SBA. He has focused on commercial loans that finance 15 to 20 projects a year, including new schools and multifamily housing units. Coleman was also on the PPP Quality Control team, helping to process more than 500 applications through the Libertyville charter, which resulted in $62 million in funding for local clients. He previously worked as a commercial sales team manager at Associated Bank. He’s worked with the Big Brother Big Sisters program and set a donation record as the executive account manager for United Way’s “Grow Up Great” program. He was a mentor for high school students on the West Side of Chicago and was on the CAN Executive Advisory Board.

CIBC proudly congratulates Lily Tow

Treasury Management Implementation Manager

Jamel Alikhan

Managing Director Illinois Commercial Banking

and all of the 2021 Notable Minorities in Commercial Banking.

COMMERCIAL BANKING | CAPITAL MARKETS | PRIVATE WEALTH

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Honoring diversity and inclusion.

Congratulations to Crain’s Notable Minority Leaders in Commercial Banking

Eric Chung

Juanita Hardin

Kimberly Merchant

Brett Sanchez

Managing Director Commercial Product & Pricing

Head, Risk and Compliance Treasury & Payment Solutions

Managing Director Commercial Middle Market

Managing Director Sponsor Fund Lending

We’re proud to recognize this year’s honorees for their tremendous contributions to help tackle barriers to inclusion. And, thank you to last year’s honorees Eric Smith, Carl Jenkins, Oscar Johnson, Guadalupe Marquez and Patricia Tyree for their ongoing efforts. Named by Forbes as one of the Best Employers for Diversity 2021 for the third year in a row, BMO is committed to fostering diversity beyond our organization as we promote equality in our communities. Through our BMO EMpower LQLWLDWLYH ZH DUH GHGLFDWLQJ ELOOLRQ RYHU ˂ YH \HDUV WR DGGUHVV NH\ EDUULHUV faced by minority businesses, communities and families in the United States. Together, we can create lasting change. Learn more at bmo.com/empower

®Registered trademark of Bank of Montreal. Banking products are subject to approval and are provided by BMO Harris Bank N.A. Member FDIC.

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22 July 19, 2021 • CRAIN’S CHICAGO BUSINESS

ZENA DIGGS

JUANITA HARDIN

MICHAEL HARRIS

FARHAAN HASSAN

Midwest market executive, commercial real estate banking global commercial banking Bank of America

Head, risk & compliance–Treasury & Payment Solutions BMO Harris Bank

Senior vice president Wintrust Bank

Senior vice president/team leader Fifth Third Bank

Zena Diggs leads a team of senior relationship managers, manages an $11 billion loan portfolio and serves real estate clients in the Midwest. Working remotely since March 2020, she’s also focused on issuing PPP loans. She led the recast of a private-equity investor’s maturing term loan that was oversubscribed with $729 million in commitments, sparking a return to normalcy in the local bank debt market. She is also a commercial banking advisor to the inaugural class of Yield Cohort, a program created by the Urban Land Institute and LISC Chicago. It supports diverse developers on projects with the potential to spur wealth creation in Black and Brown communities. Prior to joining Bank of America, she was with Citigroup and Deloitte & Touche.

Juanita Hardin oversees a risk management practice for BMO’s North American Treasury Management business, which comprises more than 600 employees and seven lines of business. She advises management on detective and preventive controls over key business processes. She was integral in establishing a TPS pandemic business continuity disclosure statement for clients along with instituting a pandemic register. She also led the business through multiple payments, financial statement and corporate card exams for regulatory agencies in the US and Canada. Hardin was recently re-elected as a Village of Matteson board trustee, chairs BMO’s Veterans Advisory Council, and is a member of the Third Party Payment Processing Association, the Association of Certified Anti-Money Laundering Specialists, and the Red Cross Heroes Nomination Committee.

Michael Harris oversees a $200 million construction, engineering and architecture portfolio, providing strategic financial solutions in the form of working capital, equipment, real estate and ownership transition. In 2020-21, he established relationships with two national contractors totaling $50 million in new credit facilities for the bank; was nominated as an external director for Alfred Benesch, a professional services firm; joined the bank’s diversity and inclusion efforts; and joined the board of the Black Contractors Owners & Executives organization. Harris is a member of the Construction Financial Management Association’s Chicago chapter, a former board member of the Illinois Road & Transportation Builders Association and an active member of Surety Association of Illinois and the Chicago Building Congress. He is also on the Youth Guidance Becoming A Man Advisory Council, the HFS Scholars Board and the Flossmoor Community Relations Commission.

Farhaan Hassan leads a team of bankers that manages a portfolio with $750 million in commitments and $250 million in deposits; his team earned trusted advisor status with six names in the middle of the pandemic. Hassan works to earn trusted advisor status with clients in order to enhance the bank’s presence in the Chicago area. During the last challenging 15 months, he made sure that the bank communicated frequently and proactively to address client and employee concerns. Prior to Fifth Third Bank, Hassan was a senior relationship executive for JPMorgan Chase and has worked in the United States and the United Kingdom for various top-tier firms. Over the last decade he has focused on giving back professionally by counseling high school students on career paths at After School Matters, providing consulting services via Taproot Foundation to Chicago-area nonprofits adapting to the pandemic and also volunteering with the Citizen’s Foundation and New Horizon Tutor Mentor Connections.

Congratulations Crain’s 2021 Notable Minorities in Commercial Banking Zena Diggs, Midwest Market Executive, Commercial Real Estate Banking

Amy Jo, International Treasury Officer, Global Transaction Services

Bank of America believes in the power of diversity and our leaders reflecting the communities where we live and work. Congratulations Zena Diggs and Amy Jo on being named to Crain’s Chicago Business’s 2021 Notable Minorities in Commercial Banking List. We are so proud of you. Visit us at bankofamerica.com/chicago.

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When you mean business, it makes a difference.

Daniel Short Vice President Senior Portfolio Manager

Farhaan Hassan Senior Vice President Team Leader

Congratulations to two of Chicago’s most influential minorities in commercial banking. Your leadership and involvement make a difference throughout commercial banking and our community. Fifth Third Means Business™

53.com/CommercialBank Fifth Third Bank, National Association. Member FDIC.

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24 July 19, 2021 • CRAIN’S CHICAGO BUSINESS

AMY JO

NADINE JOHNSON

JANET LEONG

JERRY LUMPKINS

International treasury officer Bank of America

Senior vice president, treasury management officer—public funds First Midwest Bank

Industry executive, managing director, commercial banking JPMorgan Chase

Chicago commercial real estate lead Bank Leumi USA

Nadine Johnson is responsible for a portfolio of government and municipal clients in the Chicago area. In the past 18 months, she increased deposits, fee revenue and profitability of the $1.5 billion public funds portfolio. She is part of the bank’s treasury management liquidity task force consisting of senior treasury management officers. Last year, she assisted clients in the closing of 6,700 PPP loans, a total of $1.2 billion, and guided clients in navigating the pandemic. Johnson was appointed chair of Illinois Government Finance Officers Association’s new DEI taskforce and also helped the bank enhance its diversity and inclusion strategy. She is on the board of Community Partners for Affordable Housing and a member of the finance committee of the Healthcare Foundation of Northern Lake County.

At JPMorgan Chase, Janet Leong is the industry executive for health care, higher education and nonprofits. During the pandemic, Leong’s team provided credit that enabled medical facilities to remain liquid. She is an executive sponsor for AsPire Illinois, the bank’s business resource group for employees of Asian and Pacific Islander heritage with 1,000 members. Leong also is co-chair of the JPMorgan Chase Illinois Market Leadership Team. She’s active in Ascend, the nonprofit PanAsian organization for business professionals in North America. For four years, Leong led the bank’s First Scholars Program, a selective training program in which participants worked for two and a half years rotating through a variety of jobs while pursuing their MBAs. The program reimbursed tuition at Northwestern University and the University of Chicago.

At Bank of America, Amy Jo delivers products in treasury, trade, foreign exchange and liquidity to middle-market clients in the Midwest. Jo has led best practice presentations in global treasury processes and led initiatives to break down silos between treasury functions. She created a global credit tool that enables associates to quickly assess credit requirements, expedite underwriting and correctly manage counterparty risks. During the pandemic, she assisted global clients with business continuity processes and ensured they could operate in countries impacted by lockdown where staff couldn’t access banking systems. She’s part of the leadership team for the Asian Leadership Network Chicago employee network. Before being named to her current role in 2017, Jo was based in the bank’s London office and most recently was an EMEA liquidity specialist.

Jerry Lumpkins specializes in multifamily, retail, office and industrial properties throughout the Midwest. He joined Bank Leumi last year from BMO Harris, where he was a director, also specializing in commercial real estate. Last year, Leumi’s Chicago office originated more than $115 million of commercial real estate loans. Over the past five years, Lumpkins closed near $400 million in loans. Before joining Bank Leumi he funded an apartment project in Englewood, enabling the borrower to purchase and renovate the property. He recently was re-elected board president of the nonprofit Bickerdike Redevelopment, which provides affordable housing in the Northwest Side. Lumpkins has become active in Leumi’s Corporate Social Responsibility initiative, which includes a commitment to better reach underserved client communities and engage more vendors of diverse backgrounds.

Congratulations and Thank You Praveen Chathappuram

SVP, Division Head, Commercial Banking Bringing a wealth of knowledge and experience to support business growth, Praveen leads by example. We’re proud of your recognition and thank you!

bylinebank.com

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‘I’m a real estate geek’ Rockford native and veteran banker Jerry Lumpkins joined Israeli-owned Bank Leumi USA last year. He spends 85 percent of his time on market rate loans and the remainder on community development projects, mostly on the South and West sides. His 25-year career has included stints at BMO Harris, JPMorgan Chase, Wells Fargo/Wachovia and US Bank. CRAIN’S: Why real estate? LUMPKINS: My dad invested in apartments. Real estate always was in my family. I love the commercial part because I can go see it. I can walk and drive it, learn the intricacies of the neighborhood, the history of the buildings. I’m a real estate geek. What kinds of projects do you typically handle? I do a lot of market-rate apartments. These are low-rise garden style buildings with 100 to 200 units. They’re called workforce housing because they’re rented to regular working folks such as mail carriers, teachers and firefighters. After the murder of George Floyd, you

got involved in the bank’s Corporate Social Responsibility program. What kind of initiatives are under way? We’re looking at minority owned businesses—can we offer credit or deposit services to that company or can it be a vendor? We want to fund nonprofits that can provide financial literacy and wellness training. We also can provide volunteer hours and serve on boards. Give the disinvestment and economic disadvantages experienced by Black and Brown folks; it’s not going to take a month to fix.

don’t we see more of these? These deals can take 10 years. You have to plan it, get approvals, finance it and get community input. In some cases, there are 10 financing components. They all have to close on the same day. I call it lasagna financing. When you have that amount of time and energy required to put a deal together, a lot of market-rate guys pass. They can get five or six deals done in that same period of time. What drives you to do these kinds of loans? I have family in Englewood, family that gets housing assistance, so it’s personal

Are banks loosening credit, requiring less equity? Perhaps but not that much less. We don’t want to get to SOMETIMES YOU HAVE TO TAKE A LEAP OF FAITH. a situation where PEOPLE IN BANKING HATE THE WORD FAITH. we’re financing 75 to 80 percent of the for me. Sometimes you have to take a project cost. If the market turns, then leap of faith. People in banking hate all of a sudden we have a 120 percent to 125 percent loan to value deal. That’s the word faith. For them, it’s all about facts and the merits. But you have not good for anyone. You now have an to know your borrower. You have to impaired loan on your books. believe in the vision. You have to have a passion for it. It can’t be 100 percent Developer Leon Walker has been sucprofit-driven. cessful in South Side projects. Why

PATRICK MCGEE Vice president, relationship manager for commercial banking PNC Financial Services Group

As vice president for commercial banking, Patrick McGee works with local and midsize companies with revenues of $5 to $50 million. Since 2016, he’s originated an average of five to seven major commercial loans annually. In addition, he supported PNC’s PPP loan program in which the bank registered 118,000 loans with the SBA, totaling nearly $18 billion. As a member of the PNC Chicagoland Diversity and Inclusion Council and African American Employee Business Resource Group, he helped facilitate mentoring for minority employees and helped advance initiatives on race and equity. McGee has led lending for companies with up to $10 million in revenue in low and moderate-income neighborhoods and Community Reinvestment Act-eligible businesses. McGee is on the board of the DuSable Museum of African American History.

OUR TEAM PROUDLY INCLUDES CHICAGO’S VERY BEST We know our best asset is our people. And, we wouldn’t be the company we are today without them. We’d like to thank Michael, Umar, and Ron for their expertise in the industry, dedication to serving our communities, and leadership set by example. We’re proud to call you part of the Wintrust family.

Congratulations to some of Wintrust’s most notable in Commercial Banking! MICHAEL HARRIS

UMAR RIAZ

RON COLEMAN

Senior Vice President Wheaton Bank & Trust

Vice President Old Plank Trail Community Bank

Market President Vernon Hills Bank & Trust

Banking products provided by Wintrust Financial Corp. banks. Vernon Hills Bank & Trust is a branch of Libertyville Bank & Trust Company, N.A.

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26 July 19, 2021 • CRAIN’S CHICAGO BUSINESS

KIMBERLY MERCHANT

SHERWIN PATIDAR

MARCO V. QUINTANA

UMAR RIAZ

Managing director, portfolio leader BMO Harris Bank

Vice president, SBA lending Merchants Bank of Indiana

C&I lead Bank Leumi USA

Vice president, Old Plank Trail Community Bank Wintrust Bank

M BM

At BMO Harris, Kimberly Merchant leads portfolio management for the commercial middle-market team in Illinois. She manages 20 portfolio managers and analysts and handles recruiting, training and talent development. Merchant and her team are responsible for originating more than 100 new client relationships annually. She developed a survey to enhance the transparency of the year-end performance review process. During the height of the pandemic, she authored training materials on cash flow and liquidity, which was rolled across BMO’s platform in North America. Merchant is active in the bank’s Asian American diversity efforts. She joined BMO Capital Markets in 2007 from Citigroup’s Corporate Investment Bank and was named to her current position in 2017. She’s an incoming board member for the nonprofit Prevent Child Abuse America.

During the past 18 months, Sherwin Patidar has been integral in helping Merchants Bank build a nationwide SBA program. Last year, the bank funded more than $100 million in SBA loans including PPP loans. He’s assisting the bank in building an originating, underwriting, closing and servicing platform for SBA and Department of Agriculture programs. Patidar joined Merchants Bank in 2019 from First Colorado National Bank, where he was a senior vice president based in the Schaumburg office, which processed about $50 million in SBA loans annually. Last year, Patidar also helped facilitate PPP loans, dispersing funds to businesses hardest hit by COVID. Patidar is on the bank’s diversity, equity and inclusion committee and has been active in helping facilitate new diversity initiatives.

At Bank Leumi, Marco V. Quintana is responsible for growing Leumi’s middle-market commercial and industrial practice in the Chicago area. Last year, Quintana led Bank Leumi Chicago’s PPP initiative—the Chicago office was the second-largest provider of PPP loans across Bank Leumi USA. Quintana joined Bank Leumi in early 2020 from BMO Harris, where he was senior vice president, managing director. At BMO Harris, Quintana’s team consistently grew its portfolio of $550 million in the core lower-middle market by 8 to 10 percent. He helped increase revenue per relationship manager to $2.5 million from $1.3 million. Quintana is treasurer of the LEARN Network of Charter Schools and led the rating process to earn an investment grade designation from S&P Global Ratings.

Congratulations to Marco Quintana and Jerry Lumpkins for their selection to the 2021 Crain’s Chicago Business Most Notable Minorities in Commercial Banking.We are proud of our diverse culture at Leumi, which inspires us to be bold, speak openly, and empowers us to connect, grow, and try new things.

Umar Riaz is a commercial real estate lender at Old Plank Trail Community Bank, a Wintrust bank in Mokena. In the past 18 months, Riaz closed nearly $30 million in new commercial real estate commitments and manages a portfolio of more than $100 million. Riaz participated in Wintrust’s PPP lending program as part of the quality control team for the initial program, most recently as part of the underwriting team. Riaz has been in a lending role for nearly five years at Wintrust, averaging $15 million to $20 million in loans annually. Recent loan growth has come from northwest Indiana as well as South Side suburbs. He joined Wintrust in 2014 as a commercial underwriter from United Central Bank, where he was a special assets officer.

Marco V. Quintana, Chicago, C&I Lead

THROUGH THE HIGHS AND LOWS, WE ARE HERE FOR THE LONG TERM, BANK LEUMI.

Jerry Lumpkins, Chicago Commercial Real Estate Lead

Bank Leumi USA ® is an FDIC insured, New York State chartered bank. Leumi and Bank Leumi are marketing brands operated by Bank Leumi USA. Bank Leumi USA is a subsidiary of Bank Leumi le-Israel, B.M. and part of the Leumi Group.

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A te in to

p ad m C w gr b al in U o ex Si

CRAIN’S CHICAGO BUSINESS • July 19, 2021 27

BRETT SANCHEZ

DANIEL SHORT

ABDULLAH Y. TADROS

LILY TOW

Managing director BMO Harris Bank

Vice president, senior portfolio manager Fifth Third Bank Chicago

Vice president, commercial banking First Midwest Bank

Treasury management implementation manager CIBC Bank

At BMO Harris, Brett Sanchez leads a team of bankers originating, executing and managing a portfolio of loans to private-equity funds and portfolio companies owned by private-equity sponsors. Over the past five years, Sanchez contributed to the growth of BMO’s fund-lending business, adding new names and expanding relationships. He was directly involved in approximately 40 percent of the new loan growth and advised on other transactions. As a member of Commercial Bank Talent Committee, he recently was charged with designing and co-leading a program to develop employees from diverse backgrounds for leadership roles. He is also on BMO’s undergraduate recruiting team for the University of Illinois at Urbana-Champaign and is a member of BMO Latino Alliance. He is on the executive board of the literacy nonprofit SitStayRead.

A team lead in the Middle Market Commercial Lending Group, Daniel Short supports commercial and industrial companies with revenue between $20 million and $500 million. Short’s team manages more than 50 relationships with total credit commitments of $600 million. During the pandemic, Short was on the bank’s leadership team for the PPP and provided support to a lending group that processed more than 250 first-round applications. Last year, Short’s team originated more than $25 million in loans. He joined predecessor bank MB Financial in 2005 as a credit analyst and transitioned to sales and portfolio management. He is on the bank’s leadership council for the Chicago African American business resource group and is charged with establishing a mentorship program scheduled to start next year.

At First Midwest, Abdullah Y. Tadros manages a $355 million portfolio composed of 23 relationships. In the past 12 months, he underwrote and recommended approval for $98.6 million in new lending commitments. He also serves in a player-coach capacity for 12 underwriters. He worked with colleagues to process SBA PPP loans, funding $1.2 billion to local companies. Tadros developed a monthly commercial underwriting lunch and learn series and invited companies to discuss COVID’s impact on asset valuations and related issues. He also led a mock loan committee for recent hires. Tadros joined First Midwest in 2014 through the bank’s acquisition of Banco Popular’s Illinois division, where he was a vice president for commercial banking. He then helped integrate First Midwest’s integration of Standard Bank in 2017.

Lily Tow manages a team of specialists in commercial treasury implementation. Last year under Tow’s leadership, treasury management fees grew 11.3 percent. She was part of the advisory group to roll out a new commercial online banking platform. When the bank moved to remote work last year, Tow transitioned her team, which quickly adapted to client requests for more digital products and processes. By using more online training tools, the team grew the number of implementations by 9 percent. Also last year, Tow joined the steering committee for the CIBC Asian Employee Network to promote diversity and inclusion. She joined CIBC in 2009 following a long career at JPMorgan Chase. She’s held positions as receivables product sales specialist, small business product manager and treasury management client services manager.

BUILDING COMMERCIAL BANKING MOMENTUM Congratulations to our 5 commercial bankers who were named to Crain’s 2021 Notable Minorities in Commercial Banking list. Thank you for serving our clients and communities exceptionally well.

Mohammed Abunada

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Javonna Burton

Michael Chin

Nadine Johnson

Abdullah Tadros

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28 July 19, 2021 • CRAIN’S CHICAGO BUSINESS

Remap: Representation, power and politics REMAP from Page 1 on 2010 census data, increased the number of Latino-majority wards to 13 from 11 and reduced the number of Black-majority wards to 18 from 20, after the city’s Black population had declined 17 percent during the previous decade. White-majority wards rose to 15 from 13. The process kicks off with the opening of the map room on the second floor of City Hall later this month. At stake is the relative influence among Black, Latino and white voters amid divergent population trends, the balance of power within the council and the future prospects of individual politicians. The outcome will determine if Latinos gain City Hall representation in line with their rising numbers and whether African Americans can hang on to council seats as their numbers fall. For aldermen, new ward boundaries could mean victory or defeat in 2023 re-election campaigns. Mayor Lori Lightfoot also has plenty to gain or lose. The remap could change the number of allies and adversaries she’ll face in the City Council if she seeks and wins re-election in 2023. State law dictates the basic rules for drawing new maps. Wards must be compact, contiguous and equal in size—about 54,000 people per ward. That number can shrink or swell by about 10 percent and still pass legal muster. Wards must also comply with the federal Voting Rights Act, which is designed to protect the rights of people of color. Dramatic population shifts across Chicago will challenge the ability of mapmakers to strike a politically acceptable balance. Data analysis provided exclusively to Crain’s by Paral shows sharp

declines in many majority-Black wards, rising population in mostly white wards on the North Side and largely level numbers in majority-Latino wards. Paral’s calculations are based on American Community Survey figures from 2015 through 2019. Growing wards were in and near downtown—the majority-white 42nd (+29%) and 11th (+9%) and the majority-Black 4th (+12%) and 3rd (+9%). Other majority-white wards on the North Side saw growth as well, including the 47th (+10%), 43rd (+9%) and 50th (+9%). Most of the wards that shrank dramatically are majority-Black, including a pair around Englewood—the 16th (-17%) and 20th (-15%). The Far South Side 34th and the West Side’s 24th each saw their numbers shrink by 10 percent. Those drop-offs reflect a broader decline in the Black share of Chicago’s total population, which fell to 29.6 percent from 36.3 percent between 2000 and 2019.

PROTECTING WARDS

The City Council’s Black caucus has vowed to protect the wards that are majority-Black. In a statement, the caucus said it would work with “Brown leadership . . . to undo” the harm of years of racial segregation while ensuring “maximum representation.” They could find themselves at odds with Latino aldermen seeking to give their community more representation at City Hall. Although Latino population growth edged up less than 1 percent since 2010, advocates argue that the current number of majority-Latino wards doesn’t fully account for the group’s growth over the long term or its rising share of the city’s overall population as the African American share declines.

Latinos now make up 28.8 percent of the population, up from 26 percent in 2000. “They always thought they were playing second fiddle to African Americans when it came to government and exercising power in city council,” says Jaime Dominguez, an associate professor of political science at Northwestern University who focuses on urban and Latino politics. The numbers are there for Latinos to “flex their muscle,” he says. The Latino caucus agrees. “We think that the data will reflect that there’s an opportunity to have additional representation,” says caucus chairman Gilbert Villegas, 36th. An allocation of wards based on Latinos’ share of the population in 2010 would have created 15 majority-Latino wards. By the same measure, the decline in Black population would have resulted in the number of Black-majority wards falling to 16. Instead, the two caucuses reached a compromise in 2011, with 18 African American wards and 13 majority-Latino wards. Reaching another such agreement could be difficult this time around. Any addition of majority-Latino wards would likely come at the expense of Black ones, because the white share of the population is up since 2000. If a map passes with fewer than 41 votes, a coalition of at least 10 aldermen with an alternative map in hand can file to hold a referendum and let voters choose, possibly during the June 2022 primary. The Chicago Advisory Redistricting Commission—a citizen panel backed by good-government group Change Illinois and others—is drawing up an independent map. But there’s little appetite among aldermen, at least so far, to take it up.

10% Ward 47

WARD BOOMS AND BUSTS There’s been big growth on the North Side and around downtown in the last 10 years. The biggest drops have been in majority-Black wards. 6% or more 1% to 5% -4% to 0 -9% to -5% -10% or less

29% Ward 42 -10% Ward 24

12% Ward 4 -15% Ward 20

-10% Ward 15 -17% Ward 16

Source: Analysis of 2015-19 U.S. Census American Community Survey data

A growing Asian American population will be difficult for mapmakers to ignore. According to ACS data, that population has grown 22 percent since 2010 to more than 175,000. That’s enough to create majorities in three wards. While it would be difficult to draw contiguous wards encompassing Asian neighborhoods scattered around the city’s North Side, activists are pushing for one in and around Chinatown, perhaps by piecing together parts of the 11th, 25th and 3rd wards. Grace Pai, the executive director of Asian American Midwest Progressives, says her group and others have lobbied successfully for stronger Asian representation in the General Assembly. But she notes there aren’t any Asian American aldermen, so “we don’t have a voice in the room behind those closed doors advocating for our community.” Lightfoot has not said what she expects out of the remap. During

-10% Ward 34

her campaign, she called for a nonpartisan, independent redistricting process. She also said neighborhoods like Logan Square and Englewood shouldn’t be split between multiple wards. Inserting herself into the process may carry as much potential risk as reward. She could worsen her already strained relations with some aldermen by pressing for boundary changes that threaten their incumbency. Plus, every boundary change triggers others, with unpredictable results. Yet she could wield influence more subtly though her floor leader, Ald. Michelle Harris, 8th. As Rules Committee chair, Harris is overseeing the remap process for the first time. Past redistricting was steered by machine fixtures like former Ald. Richard Mell, 33rd, and Ald. Ed Burke, 14th, often with the tacit understanding of what the mayor wanted.

Mom-and-pop plant stores facing new rivals backed by venture capital PLANTS from Page 1 local business. The new competition comes amid booming demand for houseplants from homebound customers in need of greenery. Still, the Thallemers worry about competing with a company backed by venture-capital dollars. “Why did they have to come park right here?” Leah Thallemer grouses. Houseplant purchases exploded during the pandemic, driving nationwide sales up 31 percent to $1.7 billion last year from $1.3 billion in 2019, according to a survey estimate from the National Gardening Association. More than 29 percent of American households—or 37.6 million—participated in indoor houseplant gardening last year, up from 26 percent in 2019. “It’s a completely unprecedented year,” says Dave Whitinger, executive director of the National Gardening Association. “There’s never been any kind of jump like that.” Venture-capital investors noticed. According to deal tracker PitchBook, venture firms have plowed a record $293 million into plant companies so far this year, up 325 percent from the roughly $69 million invested throughout 2020.

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Of that total, $212 million went to brick-and-mortar stores and just $81 million to e-commerce plant startups. Online plant sales have been slow to take off, representing only about 4 percent of the market, according to NPD Group. That has given traditional plant shops like Primrose a measure of protection from e-commerce giants that have steamrolled brick-and-mortar retailers in other sectors. Customers often prefer to pick out fiddle leaf figs in stores, where they can eyeball a plant’s color, size and health and get advice on plant care from knowledgeable shopkeepers.

MARKETING MONEY

Venture-backed chains pose a more immediate threat to momand-pop plant shops. Erik Thallemer says venture-funded competitors have more money to spend on marketing than Primrose and better know-how in the social media realm. Primrose has social media accounts and has noticed a recent uptick in engagement as more consumers seek to support local businesses post-pandemic. But he still feels it’s a stacked competition. “We really can’t grow beyond our revenue,” he says. “They’ll lose

money until they have complete dominance.” The Thallemers opened their store in 2019. The Sill opened its Chicago location last month. The Thallemers say it’s too early to tell what impact the Sill will have on their revenue, but they have seen customers who come into their store carrying items purchased from the Sill. They have also posted their concerns about competing with the Sill on Instagram and are working to organize other local plant shop owners. Social media helped fuel the recent houseplant boom, particularly among millennials and members of Generation Z, says Alex Frederick, a senior emerging tech analyst at PitchBook. “Knowing how to market to those audiences is definitely key,” he says. That often means having the right funding and media savvy. Andy Robledo, owner and founder of Plants Delivered Chicago, sells plants online and delivers them. He credits a lot of his sales to Google and online ads. “It’s hard to stay competitive,” he says. “As a small-business owner, I may not be able to outspend them, but what can I do to get a little more creative?” The Sill launched online in 2012

and opened its first store in New York City’s Chinatown in 2014. Blank bootstrapped the business for five years before raising its first round of venture capital in 2017, she says. Investors include San Francisco-based Raine Ventures, Portland, Ore.-based Color Capital and Austin, Texas-based Brand Foundry Ventures, according to venture-deal tracker Crunchbase. Blank won’t disclose financial information, but PitchBook says the company has raised a total of $13 million in venture funding. That’s less than some competitors, such as Bloomscape, which has raised $24.2 million. The Sill plans to open more stores, but Blank says there is no target number or time frame. The company is actively looking at two spaces outside of Chicago. Blank says she proposed a few ideas for immediate collaboration with Primrose, such as co-hosting a floral workshop and featuring Primrose on its Instagram story for Small Business Saturday. The Thallemers say they declined. “We’ve sort of done what we can to extend an olive branch, and I think we just have to prove over time that we are here to be respectful neighbors and part of

the community,” Blank says. To be sure, the number of local plant shops in Chicago grew during the pandemic, and some industry operators say there is plenty of demand to go around. Mike Langhammer, general manager at plant supplier Chicago Foliage, says he sells to 41 florists and mom-andpop plant shops in the city, a number that has increased about five times since pre-pandemic. He expects demand will shift a bit as the world continues reopening and even out over time—he already has noticed a decline in sales recently. But local shops are right to fear venture-capital-backed competitors, says Andee Harris, adjunct lecturer of innovation and entrepreneurship at Northwestern University’s Kellogg School of Management. Venture-capital firms typically are more concerned with top-line growth in their portfolio companies than profitability. That approach sometimes allows the companies to spend more freely on marketing or cut prices to win customers. Smaller local shops can compete by playing up their origin stories and local roots, she says. “They’re right to be concerned,” Harris says. “What they can do is try to get ahead of it.”

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