Crain's Chicago Business by crainschicago

HARRIS POLL: Chicago execs back mandatory vaccines for office workers. PAGE 7

THE TAKEAWAY: Meet the new head of the U of C Medical Center. PAGE 6

CHICAGOBUSINESS.COM | AUGUST 16, 2021 | $3.50

MINORITIES IN BIG TECH

TACKLING

THE TECH TALENT

IMBALANCE

JOHN R. BOEHM

Companies scramble to expand recruiting channels in the lucrative and dynamic technology sector, where minorities in leadership roles number in the low single digits PAGE 13

Ulta faced with a location dilemma

Bluhm fends off threats and chases opportunities in a changing industry BY A.D. QUIG Neil Bluhm, the longtime king of legalized gambling in Illinois, isn’t much of a gambler. While he might hit the craps tables every few years in Las Vegas, his big bets, he says, are “when I try to do one of these deals.” Bluhm means the bidding for Chicago’s first casino. His Rush

Street Gaming is widely considered by industry insiders to be the leading contender, but Bluhm says he hasn’t decided whether to submit a bid. That’s not the only vexing question facing the real estate billionaire turned casino mogul. His expanding gambling empire confronts an array of new challenges: the rise of mobile sports betting companies like FanDuel and DraftKings, the emergence of potentially lucrative stadium-based sportsbooks and the possibility that the new city casino would draw customers away

JOHN R. BOEHM

Casino royal defends his crown Neil Bluhm from his successful Rivers Casino in Des Plaines. The trends underlying these challenges also represent potential opportunities for Bluhm. Positioning Rush Street for success See BLUHM on Page 20

Beauty retailer’s absence in communities of color raises questions about continued growth prospects BY ALLY MAROTTI As Ulta Beauty prepares to open hundreds of new stores inside Target locations around the country, the Bolingbrook-based retailer is faced with an opportunity that could determine its bottom line: locating in communities of color. Ulta has 1,290 stores in the U.S. and nine in Chicago. All but one of those Chicago shops are

in majority-white communities, based on demographic data from the Chicago Metropolitan Agency for Planning. The two Chicago locations set to open this fall in Target stores are also in majority-white communities. Of Chicago’s 77 neighborhoods, only 26 are majority-white. That is a major oversight for a See ULTA on Page 18

P001_CCB_20210816.indd 1

GREG HINZ

JOE CAHILL

The throughthe-looking glass world of Illinois sales tax law. PAGE 2

Local firm is a poster child for a crackdown on SPACs. PAGE 4

8/13/21 4:05 PM

2 August 16, 2021 • CRAIN’S CHICAGO BUSINESS

Amazon sparks sales tax envy in Illinois W GREG HINZ

intentions eventually goes south. At the heart of the matter is—you guessed it—Amazon, the retailer whose ability to upset the normal course of business almost everywhere continues to amaze. Specifically at issue is what Taxpayers’ Federation of Illinois President Carol Portman dubs “sales tax sourcing,” a mild and wonky sounding term, but one which according to her has caused bitter “where’s-mine” disputes in nigh every state. “It’s a of contention WELCOME TO THE THROUGH-THE-LOOKING bone across the counGLASS WORLD OF ILLINOIS SALES TAX LAW. try,” Portman says, “although Illinois is probably the most complex.” recently put it in an email to state Once upon a time, you paid legislators, Crete in June took in sales tax at the store or shop where $142,490 in sales tax receipts, while you got your product. Some of the the smaller Monee got $1,231,115. Crete and other towns “are starving money went to the state or other regional governments, such as the to death,” wrote Einhorn. county. Other funds went to the What’s up? Welcome to the municipality where the store or through-the-looking glass world shopping mall was located. That’s of Illinois sales tax law, a staggercalled point-of-sale collection. ingly complex maze of rules and Enter Amazon and the internet. regulations where even the best of ith populations of 5,100 and 8,100, respectively, south suburban Monee and Crete have a lot in common. Located just a couple of miles from each other in Will County—University Park separates them—both are home to a lot of professionals, many of them minority. They even share a high school district. But there is one huge difference. As Crete Mayor Mike Einhorn

For a while, Amazon and other internet vendors often refused to pay local sales taxes, giving them a leg up on local merchants and outraging needy mayors. Their argument was they had no physical location or “nexus” in a state, so they couldn’t be dinged. Eventually, though, Amazon figured out that its customers wanted their goods delivered today, not tomorrow, so they had to have warehouses—“wish fulfillment center” in Amazon-speak—almost everywhere. And then the U.S. Supreme Court in the 2018 Wayfair case effectively tossed out the nexus rule, holding that companies had to pay. In the wake of Wayfair, the Illinois Legislature and Department of Revenue adopted new rules to allot money. But as Illinois Municipal League chief Brad Cole puts it, those changes moved the state away from a point-of-sale distribution to point-of-delivery, as in your home address. In the case of Amazon, if you buy something through them

ON POLITICS

call back this week. Perhaps she is busy tallying sales tax receipts. Cole’s group is staying neutral, since it’s got members on both sides of this issue. But one of the legislators contacted by Einhorn, Rep. Anthony DeLuca, D-Chicago Heights, says that the mayor has a point and that he’s interested enough that he’s asked legislative staff to draft language for a cleanup bill he may introduce later this year. The likely answer according to him: some form of revenue sharing. Them’s fighting words. But then big money is at stake here. I remember a few years ago when Northwestern University bought Evanston a new fire truck in lieu of paying property taxes. Perhaps Bogs could see if Einhorn needs some nice new equipment as a peace offering.

but they’re just an intermediary, the address of your home—the point-of-delivery—determines who gets the sales tax. If you live Crete, Crete gets the tax. On the other hand, if Amazon fills its order out its stock at one of its wish fulfillment centers, the village in which the center is located gets the dough. And Amazon just happens to have a wish fulfillment center in Monee. Now, I suspect Monee Mayor Therese Bogs likely has a different take on this. A former president of the Monee Chamber of Commerce, she could, for instance, argue that Crete ought to lure its own Amazon outlet. Or liken the current flap to the days when some towns had big shopping malls and others didn’t. But she didn’t call back, emailing that she was too busy to possibly

Blame bad policy for Illinois’ sluggish jobs recovery

s of June, nearly 1 of every 2 Illinoisans who lost a job due to COVID-19 were still not back at work, and the number of employed Black Illinoisans was still declining. Amid the national employment recovery, the employment-to-population ratio of Black Illinoisans fell from June 2020 to June 2021, according to the monthly Current Population Survey. The decline in employment is entirely concentrated among Black workers without a college degree. A deeper dive reveals labor force participation of Black non-Hispanic and Hispanic women without a college degree has fallen drastically. At the start of the COVID-19 pandemic, labor economists correctly predicted a L-shaped recovery. That’s because workers most affected by the pandemic—those with fewer available options in the labor market—often take years to find stable employment. Unfortunately, bad policy could be exacerbating the problem. The generosity of federal unemployment programs and the absence of job search requirements helped support struggling families. Yet workers whose unemployment income was larger than their lost earnings may be discouraged from actively looking for work, pushing down labor supply. Pre-existing racial and gender wage gaps mean Black non-Hispanic and Hispanic women with no college education would be more likely than other groups to receive benefits that exceeded their lost earnings. According to the Current Population Survey, the labor force participation of Black non-Hispanic and Hispanic women with no college degree declined by 10 percent and 15 percent respectively in the past 12 months. On the demand side, Illinois lagged behind the rest of the

P002_CCB_20210816.indd 2

country before the pandemic, and COVID-19 increased the gap. This is because states with more severe COVID-19 restrictions also faced higher unemployment rates on average during the past year, according to data from the University of Oxford’s COVID-19 Government Response Tracker. While COVID-19 and the state’s mandated business restrictions disproportionately harmed workers in occupations deemed nonessential, they also largely contributed to the slower employment expansion in Illinois. Data from the most recent American Community Survey shows that before the pandemic, Black Illinoisans who did not possess a college degree were more likely than other groups to be employed in job sectors that saw the biggest pandemic job losses—leisure and hospitality, retail trade, educational and health services. Nearly 81 percent of Black Illinoisans without a college degree were employed in industries that shed 657,700 of the 833,200 total employment decline from January 2020 to April 2020. This is compared to only 76 percent of Hispanics and 69 percent of whites with no college degree. As of June 2021, these sectors of Illinois’ economy had only regained 55 percent of the pandemic job losses compared to 85 percent in the rest of the country on average. Since May 2020, the rate at which unemployed Americans find work each month exceeds that of unemployed Illinoisans by nearly 18 percent. Suggish labor demand in Illinois relative to the rest of the country combined with the absence of job search requirements have contributed to lower employment growth. While federal stimulus checks to households substantially reduced hardship, getting people back to work is the only sustainable way to help struggling Illinoisans.

While there isn’t much to be done about the uncertainty surrounding COVID-19, Illinois’ policy climate should adjust to promote increases in employment. That starts with getting out of the way of job creators as they try to regain their footing. The expiration of extended unemployment benefits in September should serve to increase labor supply. However, the state should also support workers in gaining the skills needed to be more competitive in a post-COVID economy—that means increased spending on higher education, training programs and apprentice-

ORPHE DIVOUNGUY ON THE ECONOMY

ships without counterproductive demand-reducing tax hikes. Illinois could do that if the state prioritized those who suffered most during the pandemic, but the latest state budget reveals no increase in state investments in higher education. Instead, Illinois’ big priority is

to spend $11.6 billion, more than 27 percent of the state’s budget, on public employee pensions. The result is heavy investment in past labor, with little available to invest in the future. Orphe Divounguy is chief economist at the Illinois Policy Institute.

GET ASSURANCE. LET US GET TO KNOW

G E T CO M M I T M E N T. YO U R B U S I N E S S .

G E T AT T E N T I O N . Be your banker’s top priority. W I N T R U ST.CO M / P R I O R I T Y

Banking products provided by Wintrust Financial Corp. banks.

8/13/21 3:04 PM

CRAIN’S CHICAGO BUSINESS • AUGUST 16, 2021 3

Investors souring on local bank hookups

“The Office Experience,” based on the TV show, is coming to 540 N. Michigan Ave. this fall.

The deals are losing value amid doubts they’ll deliver the upside execs predict BY STEVE DANIELS

See MAG MILE on Page 21

See BANKS on Page 21

Can King Tut and Dr. Seuss help the Mag Mile come back?

JOHN R. BOEHM

new energy—and more tourists—to the Mag Mile, which needs to reinvent itself for the e-commerce era. The boulevard was slumping even before the coronavirus pandemic, but now it’s awash in vacant retail space after the departure of several prominent tenants. “It’s an alternative that brings money in and excitement to the street, which is a big plus,” says broker Lee Dixon, managing director at Chicago-based Baum Realty Group, who represents

Wall Street isn’t cheering Chicago’s latest transformative bank mergers. Chicago-based First Midwest’s pending sale to the parent of Evansville, Ind.-based Old National Bank is worth $260 million less to First Midwest shareholders than it was when the all-stock transaction was announced on June 1. The stock market price of the Old National shares they’ll get in exchange for their First Midwest stock has dropped 11 percent, reducing the total value of the deal to $2.2 billion from $2.5 billion. That still makes it the largest local bank deal since Cincinnati-based Fifth Third’s $3.5 billion purchase of Chicago’s MB Financial in 2019. It isn’t working out any better so far for local banks that are on the buying side. Aurora-based Old Second has seen its stock price fall 2.2 percent since the July 26 announcement that it’s doubling in size via a $297 million acquisition of privately held West Suburban Bank, based in Lombard. In both cases, the local lenders have substantially underperformed their peers during those time periods. Chicago has been a hotbed of bank M&A since 2000, but most of the deals have entailed successful midsize local players selling to out-of-town banks building regional or nationwide franchises. JPMorgan Chase’s 2004 acquisition of Bank One was the first and biggest domino. Then came

A herd of entertainment concepts is scouting North Michigan Avenue and its environs for space, bringing with them the promise of a new phase in the evolution of the struggling shopping strip BY ALBY GALLUN “IT’S AN ALTERNATIVE THAT BRINGS MONEY IN AND EXCITEMENT TO THE STREET, WHICH IS A BIG PLUS.” Lee Dixon, managing director at Chicago-based Baum Realty Group

AFTER SAYING GOODBYE to Macy’s, Crate & Barrel and the Gap, the Magnificent Mile might soon say hello to King Tut, Harry Potter and Dr. Seuss. A herd of entertainment concepts is scouting North Michigan Avenue and its environs for space, bringing with them the promise of a new phase in the evolution of the storied but struggling shopping strip. Instead of peddling clothes, jewelry or electronics, they traffic in what one real estate broker calls “ticketed experiences,” often delivering a new twist on a popular brand or cultural icon. In an ideal world, the shows could bring some

Adtalem changes CEOs mid-makeover New boss takes the reins as for-profit education company bets it all on medical and nursing schools BY ELYSSA CHERNEY Adtalem Global Education is turning to a new leader at a critical point in its bid to dominate for-profit health care education. Stephen Beard, the current chief operating officer, will become the Chicago-based company’s top executive next month. And on Aug. 12, Adtalem closed a $1.5 billion acquisition of competitor Walden University, making it the largest provider of graduate and undergraduate nursing degrees. The corporation already runs two medical schools in the

P003_CCB_20210816.indd 3

Caribbean, a veterinary school in the West Indies and Chamberlain University, a nursing and health professionals’ school in the U.S., which collectively generated about 82 percent of its revenue this year. But the CEO shift comes at a precarious time for the company, remembered by many as the previous owner of scandal-tainted DeVry University, and Beard will have to prove himself quickly. He replaces Lisa Wardell, who took over in 2016, just after the Federal Trade Commission sued DeVry over allegations it misled

students about the value of its degrees and their ability to find jobs. Adatlem paid $100 million to settle the suit in 2016, agreeing to accurately convey the success of its graduates in future marketing. Beard, 50, credits Wardell for getting Adtalem back on track. In addition to overseeing the settlement and initiating the name change from DeVry to Adtalem in 2017, Wardell streamlined the company’s portfolio. During her five-year tenure, Wardell, 51, sold off DeVry and other business lines while shifting the company’s revenue model to reduce

reliance on federal student loans and grants, Beard says. “I take the helm of a business that is tremendously more healthy, that is more thriving and that is more impactful than the one Lisa inherited,” Beard told Crain’s in an interview. Still, Beard faces challenges. Over the last three years, Adtalem’s stock price plummeted by more than a third and continues to trail top rivals Strategic Education and Grand Canyon Education. And the sector’s longterm success is threatened by the prospect of increased regulatory

Steve Beard scrutiny from Democratic President Joe Biden’s administration. Adtalem swung to a loss of $85.8 million in fiscal 2020 from a profit of $95.6 million in 2019, as revenue rose 3.8 percent to $1.05 billion. Shares have rebounded slightly in recent See ADTALEM on Page 18

8/13/21 4:32 PM

4 August 16, 2021 • CRAIN’S CHICAGO BUSINESS

ON BUSINESS

A poster child for a crackdown on SPACs attractions has been a belief that they offer growing private companies a quicker, cheaper route to public markets. This seems to have spawned a false sense of security with regard to potential liability under securities laws, particularly when it comes to financial forecasting. SPAC companies have acquired a reputation for overly optimistic projections like ATI’s. “We have some concerns (as does the SEC) revolving around the broad leeway SPACs are currently given in projecting future results,” Petusky wrote in an earlier report. “One investment professional whom we respect called the SPAC space ‘the wild west with fewer guns but just as dangerous’—a pretty good line and mostly accurate.” That leeway may never have been as broad as some SPAC promoters believed. Gregory Mark, a professor at DePaul University College of Law, points out that public companies are required by law to provide investors with “all material information” about their business whether they go public via a SPAC merger or the traditional route. SPACs ignore that SPAC BUYOUTS DESERVE THE requirement at their peril. Battalions of plaintiff’s SAME SCRUTINY AS IPOS. lawyers are massing for an assault on ATI, as they would million to $70 million. The comwith any public company that pany blamed unexpectedly high flubbed a forecast so badly. “attrition” among therapists at its 900 locations around the country. Meanwhile, newly appointed SEC Chairman Gary Gensler In what might be charitably recently told Congress the agency called a rookie mistake, ATI is considering new protections dropped the bad news on Wall for SPAC investors. Earlier this Street without warning ahead year, another SEC official said of time that a forecast revision SPAC mergers should get “the full was coming. Adding to the panoply of federal securities law impression of disarray, ATI’s protections, including those that second-quarter earnings release apply to traditional IPOs.” lacked such basics as an earnThat should worry anybody ings-per-share figure, a balance who considers SPACs to be a sheet, a cash flow statement or, cost-effective workaround for inas analyst Michael Petusky of convenient securities regulations. Barrington Research put it in a The ATI situation also lends note to clients, “a good defense credence to concerns about the for why the company’s original dealmaking frenzy unleashed guidance (which was officially by SPACs. Investors who buy maintained up until yesterday) SPAC stock trust the sponsors to ever made sense.” identify and acquire companies Reaction was swift: ATI shares that are ready for public markets. fell more than 50 percent over That trust may not be entirely two days. At $4.33 late Aug. 11, justified, as ATI’s mishandling of the stock had lost 58 percent of its first earnings report illustrates. its value since the SPAC merger With better due diligence, the in June. staffing issues that undermined Amid the blowback, ATI CEO ATI’s forecast might have come to Labeed Diab stepped down Aug. light before SPAC investors were 9. Board member John Larsen asked to approve the merger. But will run the show as executive as hundreds of SPACs scramble chairman until ATI finds a new to find deals, temptation to skimp CEO. ATI didn’t answer queson due diligence may increase. tions for this column. The lesson is that SPAC buyThe breakdown at ATI highouts deserve the same rigorous lights some risks that may not scrutiny from regulators and have been fully appreciated as investors as companies going SPAC offerings surged to 401 so through traditional IPOs. Without far this year, up from 248 in 2020 it, expect more ATIs. and 59 in 2019. Among their A local physical therapy chain just helped the case for a regulatory crackdown on Wall Street’s latest craze. ATI Physical Therapy bombed in its first earnings report to investors, slashing 2021 financial projections far below the forecast it issued before going public in June through a merger with a special-purpose acquisition corporation, or SPAC. Known for years as “blank-check companies,” SPACs raise money from investors to buy private companies. Mergers with SPACs are seen as a shortcut to public markets for privately owned businesses that want to avoid the traditional initial public offering process. But as SPACs hunting buyout targets have proliferated, so have concerns that the companies they’re taking public aren’t ready for prime time. Bolingbrook-based ATI’s second-quarter earnings fiasco adds fuel to those criticisms. ATI reduced its full-year revenue projection from $731 million to a range of $640 million to $670 million and its earnings forecast from $119 million to range of $60

P004_CCB_20210816.indd 4

The leadership challenge of division

It’s crucial to hear and consider the truth, but also revise and improve your beliefs. To do just that, it might help to get away from the workplace and get refreshed. 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. TODD CONNOR: Lately, leadership can feel like an exercise in conflict negotiation. I suppose that was always the case, but divisiveness feels like a leadership challenge as we head into August. Whether it’s around how to reopen or how being vaccinated plays into company policies, it can be challenging for leaders to hold the space for personal needs while also making decisions and creating clarity. So, how do we build consensus on issues like vaccinations in the workplace when individuals are so entrenched? More and more it feels impossible, and we’re witnessing people on both sides of any discussion unwilling, or unable, to understand each other’s thinking. EMILY DRAKE: I think it can seem like individuals are making their own decisions, but when it comes to the truth, in some ways we all deceive ourselves. In large part that’s because we’re all under social contract to “reference groups,” according to sociologists. Dr. Brooke Harrington cites these groups as “the neighborhoods, churches, workplaces and friendship groups that help people obtain the income, information, companionship, mutual aid and other resources needed to live.” The price to access those resources, she goes on to say, is conformity to group norms. So, even when the truth is presented—say about vaccine effectiveness or that flexible work weeks contribute to productivity—some leaders will still say, “no”—probably because their peers, their reference group, are saying the same. Stepping out is risky at best, seemingly impossible at worst TC: Right. This reminds me of one point Adam Grant makes in “Think Again,” one of our favorite books of 2021: that leadership is really improving ourselves versus proving ourselves. In other words, expanding our aperture, taking in new information and revising our previously held beliefs over and over again. The truth matters, of course, but not enough. And if making a choice for the good of the group goes counter to what a leader is affirmed for in their “reference group” it really feels

GETTY IMAGES

JOE CAHILL

CHICAGO COMES BACK

like a brave move to, say, be the person at the board room table who vouches for a four-day work week, or who says vaccine mandates infringe on freedom. Pick your point of view—but if it’s counter to the group of people who are most influential, it’s going to cost you. ED: That improvement process takes time, and for me, time away. I recently got back from a personal retreat in the north woods of Wisconsin. I didn’t realize how much I needed it until I was leaving to come home. Not just for a chance to replenish, but for a chance to reflect—a practice we advocate for regularly. One of the questions I asked myself is what matters most to me? I was feeling burned out, and witnessing the examples of tennis player Naomi Osaka and gymnast Simone Biles so publicly defending their mental health, at great cost, inspired me to get radically honest. More on that in a future column. But the setting mattered: Away from others, I could hear myself. Pushing back from the board room table may feel hard, but it’s an essential practice for leaders to hear and consider the truth but also revise and improve their beliefs. TC: If leaders have not already, now is a good time before summer fades away to get restored. And as you say, part of being restored is getting mentally clear

on our work, our relationships and our values, which is not always something we can just sit down and decide. Journalist and NPR science correspondent Shankar Vedantam says in his book “Useful Delusions: The Power and Paradox of the Self Deceiving Brain” that logic is actually a relatively new evolution in our mental faculties; belief and storytelling are far more ancient. Creating a personal narrative for the time that we are in, the growth and grief that has been experienced, and a forecast for what comes next can be a powerful leadership tool. ED: Yes! Vedantam goes on to say, “Life, like evolution and natural selection, doesn’t care about what’s true. It cares about what works.” I can hear our right-brained readers rejoicing, but even that is an oversimplification—what works is nuanced. There were many paths to the goal, for example, of getting 70% of Americans vaccinated—there were also many hurdles. We met the goal, the data says—but the truth doesn’t squash beliefs, so though we’re there so to speak, we’re still in conflict. Beliefs are, all at once, what drive us (e.g., give us hope that our work matters, give us purpose in our dayto-day pursuits) and sometimes deceive us (e.g. falling into a con of some kind). Instead of dismissing beliefs in favor of logic, then, perhaps we ask how we use both.

8/13/21 2:56 PM

RESTOCK & RENEW

for a successful return

We have solutions to help you create a clean, comfortable, productive environment for you, your employees and customers.

We’ve got everything Chicago needs to #KeepBusinessGoing!

Now in 30 minutes† or get $5 off your next qualifying purchase.**

*Curbside pickup is available in most stores, subject to state and local regulations. Orders must be placed 2 hours before store closing. **$5 coupon excludes tax. No cash back. Other restrictions apply. See email for coupon terms and conditions. Visit officedepot.com/pickup for details. †Same-Day Print Services are excluded from 30-minute pickup.

FREE Next-Business-Day Shipping on qualifying orders of $45 or more within our local delivery areas. See below for details. Free Shipping/Delivery: Minimum purchase required after discounts and before taxes. Orders must be placed by 5:00 P.M. local time (in most locations) via phone/online or 3:00 PM via fax. Orders outside our local delivery area and most furniture, oversized, bulk items, cases of bottled water and other beverages and special order items do not qualify. Non-qualifying orders incur a delivery charge. Delivery fees will be noted prior to purchase. Other restrictions apply. See officedepot.com/delivery, call 800.GO.DEPOT or ask a store associate for details.

RU072621

Free In-Store & Curbside Pickup.*

We reserve the right to limit quantities sold to each customer. We are not responsible for errors. Office Depot® is a trademark of The Office Club, Inc. OfficeMax® is a trademark of OMX, Inc. ©2021 Office Depot, LLC. All rights reserved.

RU072621_Chicago.indd 1

tab doc.indd 1

7/27/21 5:23 PM

21cb0325.pdf

RunDate 8/2/21

FULL PAGE

Color: 4/C

7/28/21 9:42 AM

6 August 16, 2021 • CRAIN’S CHICAGO BUSINESS

THE TAKEAWAY

Tom Jackiewicz

Any self-funded plan can claim it lowers costs, but with the right blend of customized, data-driven strategies, employers can more effectively manage long-term trend. Our Platinum agencies know how to use our resources to manage your total cost of care.

Helping control costs to drive more health care value

Ja c k ie w ic z , 6 3 , b e c a m e p r e s i d e n t o f t h e U n i v e r s i t y o f C h i c a g o M e d i c a l C e n t e r a n d c h i e f o p e r a t i n g o ffi c e r o f t h e U n i v e r s i t y o f C h i c a g o M e d i c i n e h e a l t h s y s t e m i n A u g u s t 2 0 2 0 . T h e H y d e P a rk a c a d e m ic m e d ic a l c e n te r w a s a m o n g th e fi rst lo c a l h o sp ita ls to m a n d a te th a t w o rk e rs b e v a c c in a te d a g a in st C O V ID -1 9 . Ja c k ie w ic z , a C o n n e c tic u t n a tiv e , p re v io u sly le d K e c k M e d ic in e o f U n iv e rsity o f S o u th e rn C a lifo rn ia . H e liv e s in S tre e te r v ille w ith h is w ife , D r. C a ro l P e d e n . By Stephanie Goldberg

A r e y o u a t a p o in t w h e r e y o u c a n s t a r t p la n n in g b e y o n d t h e p a n d e m ic ? O n e o f th e th in g s th a t re a lly a ttra c te d m e a b o u t th is jo b w a s th e a b ility to m a k e a d iff e re n c e o n th e S o u th S id e . I th o u g h t th e U n iv e rsity o f C h ic a g o w a s in c re d ib ly w e ll p la c e d to m a k e a d iff e re n c e . A n d b rin g in g to g e th e r th e S o u th S id e H e a lth y C o m m u n ity O rg a n iz a tio n , w h ic h th e sta te ju st fu n d e d , is a tre m e n d o u s o p p o r tu n ity to im p ro v e h e a lth a c c e ss a n d h e a lth c a re o n th e S o u th S id e .

> H o w h a s t h e p a n d e m i c a ff e c t e d y o u p e r s o n a l l y ? M y m o th e r p a sse d a w a y in Ja n u a r y. N o t d ire c tly fro m C O V ID , b u t th e q u a ra n tin e a n d th e iso la tio n re a lly to o k its to ll o n h e r. W e c o u ld n ’t g o o u t a n d v isit h e r. It ’s b e e n a to u g h tim e . W e ’re p la n n in g h e r m e m o ria l se r v ic e fo r th is S e p te m b e r.

I ’m s o r r y f o r y o u r l o s s . H o w w a s it b e in g s o f a r a w a y a n d d e a lin g w it h th a t? I p u t o u t a le tte r to sta ff ta lk in g a b o u t so m e o f th e lo ss a n d th e g rie f issu e s, a n d th e re sp o n se s I g o t b a c k fro m p e o p le w e re so to u c h in g . It m a d e m e te a r u p b e c a u se y o u re a lize a ll th e th in g s p e o p le a re d e a lin g w ith th ro u g h th e p a n d e m ic .

> W h a t le d y o u t o h e a lt h c a r e ? M y g ra n d m o th e r h a d c o n g e stiv e h e a r t fa ilu re w h e n I w a s g ro w in g u p a n d sp e n t a lo t o f tim e in th e h o sp ita l. A s a k id , I g o t to g o to th e h o sp ita l m u c h m o re th a n ju st a b o u t a n y b o d y e lse . It re a lly m a d e a n im p re ssio n o n m e a b o u t th e d iff e re n c e s h o sp ita ls c a n m a k e in p e o p le ’s liv e s.

> Y o u r w i f e i s a d o c t o r. I c a n o n l y im a g in e w h a t d in n e r c o n v e r s a t io n s a r e lik e a t y o u r h o u s e d u r in g a p a n d e m ic . W e re a lly ta lk a b o u t h e a lth c a re a ll th e tim e . A fe w o th e r th in g s o c c a sio n a lly, lik e w h a t ’s o n N e tfl ix . B u t m o st o f th e tim e it ’s a b o u t h e a lth c a re .

> S o w h at a re yo u g u y s w a tc h in g ? “F la c k ” is a n in te re stin g o n e . T h e o th e r o n e w e ju st sta r te d is c a lle d “H u g e in F ra n c e .”

> I d o n ’t k n o w t h a t o n e . N o b o d y k n o w s h im , b u t h e ’s b ig in F ra n c e .

P006_CCB-20210816.indd 6

8/13/21 3:22 PM

CRAIN’S CHICAGO BUSINESS • AUGUST 16, 2021 7 SPONSORED CONTENT

talking

HEALTH DAVID PAUL MORRIS/BLOOMBERG

IT’S ALL CONNECTED, FROM YOUR TEETH TO YOUR TOES How can dental care help lower medical costs and improve health outcomes? A person’s oral health speaks volumes about their overall health — both mind and body. From chewing to smiling to talking and even breathing, our mouths and the impact our oral health has upon overall health stretches well beyond our teeth. At Cigna we like to say ‘It’s all connected, from your teeth to your toes’ and it is through this “connected” approach that Cigna Dental has been able to deliver average total medical cost savings of 4.4% per year for otherwise healthy individuals, and cumulative savings of 10.2% over three years for customers treated for gum disease.1

Chicago execs agree: Mandate vaccinations for office workers

The latest round of the Crain’s-Harris Poll also finds that 29 percent of decision-makers surveyed are prepared to wait a year or longer to return to the office if necessary BY GREG HINZ

It’s going to take awhile for the trickle of workers back into Chicago offices to turn into a flood— and even then a total recovery might never happen. But to even get to a partial recovery, requiring COVID-19 vaccines for office workers is going to have to be part of the mix. That’s the bottom line of the latest findings of the Crain’s-Harris Poll Chicago Executive Pulse, a survey of 200 area businesses.

REQUIRED VACCINATIONS Question: COVID-19 vaccination should be required for employees returning to work in a physical office unless they are medically unable to do so (e.g., allergic to vaccine ingredients, immunocompromised).

11.0%

Somewhat disagree

13.0%

Strongly disagree

43.0%

Strongly agree

Somewhat agree

P007_CCB_20210816.indd 7

FULL RETURN TO THE OFFICE Question: When do you plan to have all of your employees return to the office? 30 Days or fewer

Midwest Dental Sales Manager Cigna Brianna.Damich@Cigna.com

Brianna Damich is the market lead for strategic alignment, new business development and existing client management for Dental products at Cigna, a global health services company.

Surprised? Consider: • Gum disease can impact cardiovascular health leading to a heart attack or stroke; • Diabetes can increase the risk of gum disease, mouth ulcers, infections and tooth decay; • Conversely, gum disease can complicate diabetes, altering the way the body absorbs insulin; • Changing hormones during pregnancy can lead to inflammation of the gums. Between 6070% of pregnant women have gingivitis, which if left untreated can result in tooth loss and gum infections that could lead to preterm birth.2

Dental health also impacts mental and emotional well-being. Your perception and other’s perceptions of your smile carries more weight than most will admit. Self-confidence, stress, productivity, and even overall job performance can all be linked to the health of your smile. A Cigna study shows that 75% of employees with two or more preventive dental care visits a year report “excellent” self-confidence. That percentage drops to just 49% of those who never go to the dentist.3

34.0%

A whopping 77 percent of execs surveyed believe that vaccination should be required for workers returning to a physical office, unless they are allergic to the shot or otherwise medically compromised. That view is intensely held. A total of 43 percent of those replying said they strongly agree vaccination should be required, with another 34 percent somewhat agreeing. In comparison, just 11 percent somewhat disagreed and 13 percent strongly disagreed. Coming back appears like it will be a slow process, consistent with a Crain’s report that the delta variant is slowing down the recovery in the office and retail sectors. Just 41 percent of large companies, defined as those with more than 1,000 employees, expect to operate their offices at 50 percent of capacity within a month or are already doing so, with an additional 22 percent shooting for bringing 100 percent of workers back within three months. Still, a hefty 29 percent won’t bring their full staff back on-site for at least a year, if at all. Midsize companies are getting back to the office somewhat faster, but, even in that group, almost a quarter, 23 percent, say it will be at least a year, according to the survey. There’s another piece of bad

Brianna Damich, MSHA

2-3 months

23.1%

9.9%

4-6 months

7-11 months

1 year+ or never

14.6%

17.4% 29.3% 2.3%

27.3%

Mid-sized companies

7.3%

24.4% 24.4%

Large companies

Source: The Harris Poll

news for the city’s beleaguered office-building owners. The share of business leaders who expect to maintain their pre-pandemic workspace when COVID finally passes continues to drop, moving from 32 percent at this time last year to just 23 percent now. Perceptions as to whether business conditions are improving are somewhat more positive for Illinois a whole as opposed to Chicago proper. But 56 percent of the company owners, chairs, officers and other C-level personnel surveyed say they’ve seen a significant increase in revenues in the past month, and 61 percent of Chicago business leaders are satisfied with the quality of life in the city, up from 52 percent in the comparable 2020 quarter.

Among other findings:  An overwhelming 83 percent

want children of K-12 age to return to in-classroom learning in the fall term. An even bigger 86 percent say they feel comfortable doing so.  Eating out or visiting a bar has been the top recreation choice of late, with 67 percent saying they’ve done so in the past month, compared to 39 percent who went to the movies.  Seventy-nine percent have been fully or partially vaccinated for COVID. Another 12 percent say they intend to be, with just 10 percent indicating they do not plan to get the vaccine. The survey was conducted online from July 9 to July 28. The previous round came out in April.

The pandemic exacerbated the problem as workers postponed routine care due to dental office closures early in the pandemic. These closures are why we launched Cigna Dental Virtual Care which connects customers with dental concerns to licensed dentists 24/7 to answer questions, prescribe certain medications and even guide further care. This anytime, anywhere access helped reduce dentalrelated ER visits saving employers an average of $1,389 for each ER claim.4 Looking ahead, as workers return to offices, employers can take advantage of innovative on-site dental programs sponsored by their carrier. Dentists and their support staff conduct exams, cleanings and x-rays at the workplace. The clinics also bridge the gap for employees who could not otherwise access care. Employers have a big role to play. Now, more than ever, is the time to review benefit plans to ensure they include the latest in dentistry with services that can lower overall costs and help keep employees healthy and productive. A comprehensive benefits package can help employers stand out in a tight labor market, too. Ask questions. Can your dental insurer deliver better medical outcomes and savings, even if the medical plan is with another carrier? What services and providers are included in the dental network? Is a dental HMO available, offering a rich set of benefits at lower costs? Can the carrier partner with you to educate employees about the importance of dental health, especially among those most at risk for problems? Is customer support available 24/7? The best advice: Educate. Engage. Empower. Educate yourself on the impact of oral health on the overall health of employees. Engage with a carrier that can partner with you to empower employees to be proactive about their own health. It’s all connected, from their teeth to their toes. Sources: 1. A “connected” approach focuses on preventive care and customer engagement. “Preventative Dental Treatment Associated with Lower Medical Utilization and Costs.” National study of Cigna customers with dental and medical coverage, updated December 2020. 2. Centers for Disease Control and Prevention (CDC), ‘Pregnancy and Periodontal Disease’, https://www.cdc.gov/oralhealth/publications/features/pregnancy-and-oralhealth.html, last accessed July 30, 2021. 3. “Exploring the relationship between oral health and mental wellbeing.” Cigna research study, October 2019. 4. Cigna internal reporting on average cost for ER claims submitted for dental-related concerns 2018-2019. Product availability may vary by location and plan type and is subject to change. All group health insurance policies and health benefit plans contain exclusions and limitations. For costs and details of coverage, contact a Cigna representative. All Cigna products and services are provided exclusively by or through operating subsidiaries of Cigna Corporation, including Cigna Health and Life Insurance Company (CHLIC) or its affiliates.

8/13/21 3:09 PM

8 August 16, 2021 • CRAIN’S CHICAGO BUSINESS

What entrepreneurs need to do to grow you don’t have the money to hire a dozen or more specialists. Salaries are tied to results or include shares of the company. The risks are big because they have to be. Being bold gets you to market first, attracts early adopters and offers a thrill that serves as strong motivation to succeed. But once you’re past that and the company moves into the growth stage, things change. Along almost every element of organizational design, what works well in a startup or small company does not work well once the company grows in size and complexity.

Michael Gibbs is a clinical professor of economics at the University of Chicago’s Booth School of Business.

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

EVOLUTION

Jobs must become more formalized and specialized. There’s a hierarchy that has to be followed. You might even develop an organizational chart, something many entrepreneurs would likely scoff at. The culture becomes more corporate, in other words, with risks becoming more calculated and ac-

tions following company policies. Entrepreneurs often fall into the trap of believing that the things that got them this far will continue to bring success through

GETTY IMAGES

once gave a talk at the University of Chicago’s Polsky Center for Entrepreneurship & Innovation to an audience full of alumni entrepreneurs and venture capitalists. I summed up the main point like this: “As you hit the growth stage, your business needs to become more bureaucratic, dull, conservative, process-oriented, slow, less innovative and take fewer chances.” The entrepreneurs were stunned, but the VCs were all nodding their heads in agreement. That’s because entrepreneurs, especially those who have not scaled up a business before, don’t know what they don’t know. Scaling up a business is hard to do, and doing so requires changes that aren’t easy for entrepreneurs to make. If you’re an entrepreneur, think about the early days of your company, the kinds of people you worked with and the culture of the workplace. There isn’t a ton of structure. You hire people who can do a little of everything because

A fo

the growth stage. But the spirit that got them through the early years can become a liability and keep the company from adopting workflows and strategies necessary for future successes. As hard as it is to accept, entrepreneurs find out that they might not be the best people to lead their companies after a while. It’s why VCs often see the need to replace the founder with a new CEO or to appoint a COO who can help the founder/CEO navigate this new paradigm.

If you’re an entrepreneur who finds yourself in a situation in which you’re being asked to change, your instinct might be to fight. But consider that your whole goal when you founded the company was to make it successful, and the VCs or board members who are agitating for change want the same thing. Don’t look at this as losing control so much as playing to your own strengths and leaning on the strengths of those around you.

2021

NONPROFIT BOARD LEADERS

NOMINATE NOW! Deadline is August 20

Have you or someone you know advanced the cause of a nonprofit organization, contributed to organizational success significantly, assisted in fundraising in a meaningful way, and served as a board member mentor? Does this person have a minimum of five years of board member experience? If so, we encourage you to nominate this outstanding individual to be featured as a Crain’s Notable Nonprofit Board Leader. Nominations must be received by Friday, Aug. 20, 2021 at 11:59 p.m. CDT to be considered. Selected nominees will be highlighted in a special editorial feature on Oct. 11 in a print issue and online.

Nominate at ChicagoBusiness.com/Nonprofit21 Nomination deadline is Friday, Aug. 20. Section publishes Oct. 11. To view Crain’s Notable Executives nomination programs, visit chicagobusiness.com/notablenoms.

P008_CCB_20210816.indd 8

8/13/21 3:08 PM

CRAIN’S CHICAGO BUSINESS • August 16, 2021 9

Funding source for Cabrini-Green work gets boost Plans to redevelop land once occupied by the Cabrini-Green public housing project moved a step closer to reality last week, when a city panel voted to extend the life of a special taxing district on the Near North Side. The move, if approved by the Chicago City Council, would provide $600 million in funding over the next 12 years for projects in the neighborhood, including the construction of new housing on the former Cabrini-Green site, north of Division Street and east of Halsted Street. Private developers, in partnership with the Chicago Housing Authority, have already built new mixed-income housing on much of the property, but large chunks of land there have sat fallow for years. Demolition of the notorious housing project began in 1995 under the Chicago Housing Authority’s Plan for Transformation, and the last of its towers came down in 2011. The long wait has tested the patience of housing advocates and Ald. Walter Burnett, 27th, who represents the neighborhood. The city and CHA committed to replace the public housing that was torn down, teaming up with developers to build projects with a mix of public, affordable and market-rate housing. A federal consent decree mandates the construction of about 700 more public housing units on the Near North Side. “I’m very frustrated,” said Burnett, who grew up in Cabrini-Green. “I’ve had to reassure people that housing was going to come back.” But a proposal approved Aug. 10 by the Community Development Commission could give redevelopment efforts a boost. The commission voted unanimously to extend the life of the Near North Tax Increment Financing District for 12 years.

TIF LIFE

TIF districts are a popular but controversial economic development tool, diverting property tax revenues from the city, schools and other taxing bodies to pay for projects within their borders. The districts expire after 23 years, and the Near North TIF, created in 1997, was set to end last year. The commission voted to keep the TIF through 2033, generating an additional $600 million in tax revenue for projects within its boundaries. The full City Council must approve the measure as well.

P009_CCB_20210816.indd 9

Several years ago, the CHA unveiled a plan for the neighborhood that called for the construction of 2,340 housing units on about 65 acres of land it controlled there, with at least a third reserved for public-housing residents. In 2017, city officials picked a team led by El Paso, Texas-based Hunt Development Group to develop 482 units of mixed-income housing on a 6.9-acre site at Larrabee Street and Clybourn Avenue. But progress has been slow. In 2018, the CHA approved funding to demolish Near North High School on the development site. Crews are in the process of tearing down the school and should wrap up their work in the next 60 days, said Torrey Barrett, principal of Chicago-based Imagine Group, Hunt’s partner in the project.

will be asking developers for more money,” Burnett said. “It would be hard for the CHA to sell this to developers, to get developers to come to the table.” The CHA still has to pick a developer for another Cabrini-Green site, a 7-acre parcel at Division and Halsted. The authority began the selection process but decided to halt it in 2017. Burnett, who has represented the 27th Ward since 1995, wants to see the redevelopment wrapped up soon. “It’s been over 20 years for me and Cabrini,” he said. “I’ve been trying to encourage them to hurry up and get started.”

Royal Bank offers commercial loans with attractive rates and terms. Contact Richard Nichols, Senior Vice President 2IƓFH Ř 0RELOH (PDLO UQLFKROV#UR\DO EDQN XV Putting community first since 1887.

royal-bank.us Member FDIC

/RFDWLRQV LQ &KLFDJR :HVWPRQW DQG 1LOHV

DELAYS

The development has taken longer than expected because of the coronavirus pandemic, rising construction costs and the looming expiration of the Near North TIF, Barrett said. Hunt and Imagine will need subsidies provided through the TIF district to finance the project, which could cost about $250 million, he said. The commission vote “is great news for us, absolutely,” Barrett said. “Without the TIF being extended, there is no project.” Once they finish demolition of the high school, Imagine and Hunt can begin talks with the CHA to work out an agreement on the construction phase of the project, he said. Barrett wasn’t sure how much TIF funding the developers would seek for their development. In a statement, the CHA confirmed its plans to move forward with the redevelopment on the high school site without providing specifics. The authority also said it and its development partners have built more than 3,500 mixed-income homes on the former Cabrini-Green site and highlighted the recent completion of 102 units within the Parkside of Old Town project south of Division Street. The CHA is also in the process of picking a partner to redevelop 438 vacant rowhouses in the Frances Cabrini development, also south of Division, according to the statement. Though developers can finance traditional market-rate housing through banks and other private-sector lenders, it’s a lot trickier when it comes to projects with a combination of public housing, affordable and market-rate units. “If we don’t have the TIFs, CHA

LUXURY HOME OF THE WEEK Advertising Section

Exceptional condominiums providing privacy, service, wellness, refined living.

Your curated city lifestyle, awaits.

BY ALBY GALLUN

ERIC ALLIX ROGERS/FLICKR

The city wants to preserve a special taxing district so it can finish redeveloping the site of the former housing project

O N E B E N N E T T PA R K .C O M Sotheby’s International Realty® and the Sotheby’s International Realty Logo are service marks licensed to Sotheby’s International Realty Affiliates LLC and used with permission. Jameson Real Estate LLC fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. Each franchise is independently owned and operated. Any services or products provided by independently owned and operated franchisees are not provided by, affiliated with or related to Sotheby’s International Realty Affiliates LLC nor any of its affiliated companies.

8/13/21 2:59 PM

10 August 16, 2021 • CRAIN’S CHICAGO BUSINESS

in h n d w tu ed in B em o

EDITORIAL

Moratorium on CPS closings is an unfair move

JOHN R. BOEHM

n the world of sucker punches, the one quietly tucked into the new law creating an elected school board in Chicago was quite the doozy. We are talking about the ridiculous provision written into the legislation that prevents the city from closing any schools until January 2025, which is when the first elected members of the board are seated. If you’re keeping score, that’s two major setbacks for Mayor Lori Lightfoot’s administration in one law. First was the fully elected board provision. And now the city must continue to operate nearly empty buildings. The hits just seem to keep on coming from Springfield, don’t they? We certainly are not advocating for closing schools for the sake of closing schools. But faced with rapidly falling enrollment and the increasing number of empty schools, the cash-strapped Chicago Public Schools system now finds its hands tied. As reporter A.D. Quig pointed out correctly in her recent story, this is yet another clear victory for the Chicago Teachers Union and activists who have pushed back on closing any schools, no matter how empty the hallways. Already hundreds of city school buildings—many of them outdated with costly, inefficient designs and space—are underutilized. CPS enrollment has dropped more than 15 percent since 2010 and shows no sign of reversing, despite a small increase in the city’s population overall in the last decade. The mismatch in buildings versus enrollment is a price of doing business the old way—a blast from the past that the city can no longer afford.

Charles Sumner Math & Science Community Academy in North Lawndale. Simply put, the provision will cost the school system millions of dollars to keep up empty or near-empty buildings—money that is sorely needed to hire more teachers and add resources so that real improvement in educating our city’s kids can scale at a faster clip. According to data analyzed by Quig, CPS currently operates 638 schools. Of the roughly 500 non-charter and non-alternative schools the district assessed in 2021, 265, or 53 percent, are considered “underutilized’’ by the district. The system’s

capital footprint has been “so mismatched for so long that it’s an obvious expenditure control they could implement given their declining enrollment,’’ Blake Yocom, a director and lead analyst at credit rating agency Standard & Poor’s, told Crain’s. Surely, we are cleareyed about the harm that drastic school closings can bring to a community, and we do not support massive closings like the one in 2013 under former Mayor Rahm Emanuel, which disproportionately affected neighborhoods that depended on those schools for essen-

tials beyond reading and writing. But a thoughtful process to combine some underutilized schools can drastically help the system by not only saving money but also putting students in better environments with their peers. In addition, the moratorium seemed unnecessary, especially given that the Lightfoot administration hasn’t said it plans to undertake any large-scale consolidation within the system. Even one of the sponsors of the bill, state Sen. Rob Martwick, D-Chicago, acknowledged this in the Crain’s story, saying “(City negotiators) said, ‘The mayor isn’t interested in closing a bunch of schools; why are you tying our hands?’ I said, ‘It’s not about you; I don’t know who the next mayor is going to be.’’’ That strikes us as a disingenuous at the very least. Most problematic about the moratorium is that it unfairly hurts neighborhoods trying hard to solve their local school building concerns. As Quig noted, it’s unclear how the moratorium would affect an interesting consolidation proposal in North Lawndale put forth by community groups that would merge three low-enrollment schools into a new one focused on science, engineering, arts and math. Not only is City Hall stymied by this provision, so are the parents who are looking for better solutions for their kids. At the end of the day, the moratorium maneuver smells like an unnecessary gift to a teachers union that has already received a lot from Springfield. It’s time for legislators and the CTU to start thinking about giving CPS a fighting chance.

th b ov ac n le

Group

Assist

YOUR VIEW

Good job on the finances, Illinois. Next up: Chicago.

to levels consistent with a 30-day he state’s first bond ratpayment cycle. Finally, the state ing increase in two dehas so far resisted using onecades, followed by a sectime federal aid to expand or add ond ratings upgrade last new programs that would add month, is welcome news. Given recurring costs long-term. Illinois’ long history of fiscal Next up is the city of Chicago, mismanagement, let’s hope this which typically begins its budget is the beginning of the difficult process in August and was alloroad to reach fiscal stability and cated $1.8 billion in general aid competitive parity with other from the American Rescue Plan, states. While the state of Illinois Kelly R. Welsh is or ARP. Like the state, the city still has the worst bond rating of president of the has a long history of high debt any state in the country, we are Civic Committee levels, underfunding pensions, nevertheless encouraged that the and of the Comand structural budget deficits. state has used the stability pro- mercial Club of Like the state, Chicago has a vided by recovering tax revenues Chicago. political environment that too and the influx of federal funds to often leads to the easy path instead of the put itself on better financial footing. There have been several positive devel- responsible path. Already, local lawmakers are positioning opments. The recently enacted state budget pays back the remaining short-term for a major debate on how best to spend debt the state borrowed from the Federal non-dedicated ARP dollars. While the deReserve to deal with COVID-related reve- sire to spend on programs to address Chinue shortfalls. It also pays back interfund cago’s many social and economic needs is borrowing (borrowing by the state’s Gen- understandable, using one-time federal eral Fund from special-purpose funds). dollars for programs that will increase onThe unpaid bill backlog has been reduced going expenses, with no ongoing revenue

source to pay for them, will only lead to aid, the city and its sister agencies have received billions in funding from Washingmore deficits and taxes down the road. The city took on $465 million in short- ton to use for specific purposes, funding term debt at the end of 2020 and, facing programs such as emergency rental assisa remaining $965 million deficit for 2021, tance, homelessness assistance, and busiwill likely have to borrow another $500 ness relief. And the Chicago public schools million if federal aid is not used to cov- received $1.8 billion in pandemic relief. The bottom line is that the city has reer the gap. That’s close to a billion dollars just to balance this year’s budget, and city sources to pull itself out of the COVID-inofficials expect to begin the 2022 budget debate facing down an- ONE WAY OR ANOTHER, WE NEED TO other billion-dollar gap. Closing these budget gaps would use MANAGE OUR DEBTS AND ALIGN SPENDING up much of the ARP general aid funds. And in addition to the WITH REVENUES FOR THE LONG TERM. short-term burdens facing Chicago, the city’s unfunded pension liability duced recession, address important social needs and address its substantial overhang is more than $30 billion and climbing. That being said, let’s remember that the of deficits. If we use the money wisely, we dollars allocated in these budgets pay for should be able to avoid increases in propthe critical services and programs, like erty taxes, pay down some debts and put support for community services, econom- Chicago on a sustainable financial footing ic development, public safety and infra- that will enable the city to grow and prostructure, that we all want the city to provide vital city services for its people in the long run. vide. Stable finances are the foundation for Let’s also remember that, in addition to the money coming to the city as general every other area of investment—mak-

Peo

ple

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Chicago Business, 150 N. Michigan Ave., Chicago, IL 60601, or email us at letters@chicagobusiness.com. Please include your full name, the city from which you’re writing and a phone number for fact-checking purposes.

P010-P011_CCB_20210816.indd 10

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.

8/13/21 2:58 PM

CRAIN’S CHICAGO BUSINESS • August 16, 2021 11

YOUR VIEW Continued ing everything else possible. Chicago has great assets as a location for business investment, including a talented, diverse and well-educated workforce; a world-leading transportation infrastructure; world-class research and higher education institutions; and leadership in industries from logistics to health care. But our city’s finances are a deterrent to employers deciding whether to expand or locate in Chicago. Both the mayor and the governor are in their first terms in office. They inherited both fiscal policies and practices shaped over decades by elected officials from across the political spectrum—and the need to change them. There are so many legitimate needs in our city and state that

ne ly ey n-

nto n

te lty tre ut ous

m yng w ng le d a g,

ior

Chief executive officer KC Crain

Group publisher/executive editor Jim Kirk

Associate publisher Kate Van Etten

*** Editor Ann Dwyer

Creative director Thomas J. Linden

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

Deputy digital editor Todd J. Behme

Digital design editor Jason McGregor

Associate creative director Karen Freese Zane

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

Contributing editor Jan Parr

m o a

Political columnist Greg Hinz

rt e.

egng sils

en-

al ng e put ng ohe

or k-

Senior reporters Steve Daniels

Alby Gallun John Pletz Reporters Elyssa Cherney

the desire to spend money on immediate programs is real and palpable. But that desire to spend on worthy programs, unchecked by recognizing our fiscal limits, is what got us into this situation in the first place. Both the mayor and the governor have sent the right signals about wanting to use the federal relief money responsibly and meet our other obligations. And this year’s state budget delivered on that. The city and state can create a new narrative of transparency and fiscal restraint, move beyond annual budget crises and begin planning for the long-term. One way or another, we need to manage our debts and align spending with revenues for the long term.

LETTER TO THE EDITOR The July 29 article “Chicago investor raises $265 million, seeks more for opportunity zone projects” offered an unenthusiastic outlook on deployment of Opportunity Zones capital in Chicago, but the Chicagoland Opportunity Zones Consortium, or COZC, has a different view of the landscape based on our work with a variety of stakeholders over the past two years. Although the prevailing assumption is that most OZ investors are large institutional actors investing in large-scale deals, the COZC has seen a much wider variety of actors, reflecting the investment opportunities available in the local market. To date, the COZC is aware of more than 1 million square feet of new commercial, industrial and residential space that has been built or

is under development in Chicago with the support of OZ equity. The majority of these investments are embracing the spirit of the OZ incentive by bringing private capital to historically underresourced communities. We should celebrate those investors who are using the OZ tax incentive to invest in our neighborhoods and encourage others to follow their lead. By expanding our understanding of who can be an OZ investor, we can build greater pathways to private capital that can further increase the amount of funds being deployed in local projects, helping to bring them across the finish line. ROBIN SCHABES irector, Chicagoland D Opportunity Zones Consortium

YOUR VOICE.

OUR AUDIENCE.

Katherine Davis Danny Ecker Stephanie Goldberg Ally Marotti A.D. Quig Dennis Rodkin Steven R. Strahler

Contributing photographer John R. Boehm Researcher Sophie H. Rodgers *** Managing director/ Jill Heise marketing and events

Director of digital strategy Frank Sennett

Director of custom media Sarah Chow

*** Production manager David Adair Account executives Claudia Hippel Christine Rozmanich Bridget Sevcik Laura Warren Courtney Rush Amy Skarnulis People on the Move manager Debora Stein

Project manager Joanna Metzger

Digital designer Christine Balch Crain Communications Inc.

Keith E. Crain Mary Kay Crain Chairman Vice chairman

KC Crain Chief executive officer

Lexie Crain Armstrong Secretary

Veebha Mehta

Chris Crain Senior executive vice president Robert Recchia Chief financial officer Chief marketing officer

***

G.D. Crain Jr. Mrs. G.D. Crain Jr. Founder Chairman (1885-1973) (1911-1996)

For subscription information and delivery concerns please email customerservice@chicagobusiness.com or call 877-812-1590 (in the U.S. and Canada) or 313-446-0450 (all other locations).

cation

P010-P011_CCB_20210816.indd 11

Join a Select Group of Thought Leaders Our print and digital written roundtable features provide a unique opportunity to present Crain’s audience with compelling insights around the most important business issues. Secure your spot at an upcoming Roundtable and take a seat at the table with other thought leaders in your industry. Upcoming Roundtable Topics: Q Labor & Employment Q Future of Work Q IP/Patent Law Q Workplace Health

To find out about full benefits, rates and how to reserve your spot, contact Sarah Chow at schow@crain.com or (312) 280-3172.

8/13/21 2:58 PM

Advertising Section

PEOPLE ON THE MOVE

Golan Christie Taglia, Chicago

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

ACCOUNTING / ADVISORY CONSULTING

CONSTRUCTION

EXECUTIVE RECRUITMENT

LAW

Friedman + Huey Associates LLP, Homewood

Summit Design + Build, LLC, Chicago / Tampa

Comhar Partners, Chicago

Clifford Law Offices, Chicago

Friedman + Huey, a leading CPA and business advisory firm located in Greater Chicago, is pleased to announce John Cremins has been named Managing Partner. John succeeds Elliott Friedman, a founding member of the firm and active partner, after the firm’s multiyear succession planning process. As a Partner at Friedman + Huey, John has been a passionate advocate for the success of the firm’s clients and team members. Friedman + Huey has a long history of being a valued partner to their high-net-worth clients and their families.

General contractor, Summit Design + Build, recently welcomed Larry Blouin as the firm’s new vice president. Blouin joins Summit Design + Build with over 37 years of construction industry experience. Blouin will assist in the day-to-day management of the firm’s operations, overseeing project management, field operations and project staffing. Working alongside the firm’s senior management team, Blouin is also charged with developing and executing Summit Design + Build’s long-term growth plan.

Comhar Partners, a recognized national leader in retained executive search and professional recruiting, has announced the addition of Joe Brennan to their team. As Managing Director, Brennan will serve as a senior member of the Private Equity practice group for Comhar Partners. Brennan’s diversified full product life cycle, strategic business planning, and global sales management background have helped him develop a keen eye for identifying and placing top executive talent.

Yvette Loizon comes to Clifford Law Offices with a strong litigation background after serving in the Cook County State’s Attorney’s Office for 12 years where she managed all aspects of complex, cutting-edge cases requiring in-depth investigations and high-level legal analysis, resulting in her being named Supervisor of a specially created Violent Crimes Investigation Unit. She recently served as Chief Legal Counsel for the Illinois State Police overseeing its legal department and providing guidance and advice on legal and legislative issues impacting law enforcement including the COVID 19 crisis and recent civil unrest. She also has served as clerk to Illinois Supreme Court Chief Justice Thomas Fitzgerald for five years.

LAW Attorneys’ Title Guaranty Fund, Inc., Chicago

BANKING Fifth Third Bank, Chicago Fifth Third Bank proudly welcomes Tracey Kosky as the Mortgage Group Sales Manager for Illinois. Tracey comes to the bank with significant experience in the Mortgage industry, spending 25 years at Fannie Mae. Tracey held several leadership positions, and was most recently a Vice President focusing on single family mortgage business & customer management. Tracey is also involved in the Illinois Mortgage Bankers Association and a member of the National MBA Women’s MPower Organization.

DESIGN / CONSTRUCTION Burns & McDonnell, Chicago John Lukowski joins Burns & McDonnell in Chicago to lead highway design projects regionwide. With nearly 30 years of experience, John has led the delivery of many critical transportation projects, including interstate and state highway improvements, municipal street improvements, site developments, bridges, freight and passenger railroads, and light rail transit. Throughout his career, John’s versatility in civil engineering and project management has produced cost-effective, timely solutions.

BANKING

DESIGN / CONSTRUCTION

First Bank of Highland Park, Northbrook

Burns & McDonnell, Chicago

As one of the five largest privately held banks in Chicago, First Bank of Highland Park is proud to announce Angela S. Carlstrom, CAMS has been promoted to Vice President, BSA Officer. As the bank continues to grow its BSA Compliance program, Angela is responsible for developing policies and ensuring a high level of compliance with the BSA/AML related laws and regulations, internal policies and procedures, and Federal/State regulatory expectations. Angela joined the First Bank team in 2013.

Adam Rehfeld joins Burns & McDonnell in Chicago to lead distribution modernization projects for utilities nationwide. With more than 15 years of experience, Adam specializes in leading teams to transform increasingly complex power grid challenges into safe, reliable and cost-effective solutions. Previously, as an executive leader, Adam led his company’s electrical distribution group and oversaw a team of more than 30 engineers and designers serving utilities nationwide.

ENGINEERING / CONSTRUCTION BANKING / FINANCE Old Second National Bank, Chicago Kip Read of Glenview has been named Senior Vice President, Commercial Banking, with Old Second National Bank, operating from the Chicago—Loop location. He will be responsible for developing and growing commercial banking relationships, specializing in the middle market space. Read has over 30 years of commercial banking and financial services experience. Prior to joining Old Second, he served as Senior Vice President and Division Head, with Fifth Third Bank.

P012_CCB_20210816_v3.indd 1

Cyclone Energy Group, Chicago Emmy Riley has been promoted to the role of Account Manager, managing and overseeing Cyclone Energy Group’s commercial real estate service offerings. In this role, Emmy will further develop and improve the energyPLAN and airPLAN programs while providing dedicated support and focus to our clients. She will manage Cyclone’s team that supports each building, helping them understand opportunities to improve building energy and air quality using data.

Attorneys’ Title Guaranty Fund, Inc. announces the election of Steve Norgaard as Chairman of the Board of Directors. He has been an ATG agent since 1995 and was elected to the ATG Norgaard Board of Directors in 2011. His Glen Ellyn, Illinois, law firm, Steven K. Norgaard, P.C., focuses primarily on real estate and estate planning. Attorneys’ Title Guaranty Fund, Inc. also announces the election of David S. Dunn Dunn as Vice Chairman of the Board of Directors. He joined ATG as an attorney agent in 2002 and has been on the Board of Directors since 2006, previously serving as Secretary. A practicing attorney in Bloomington, Illinois, he handles probate, wills, estate planning, land use, and zoning.

LAW Attorneys’ Title Guaranty Fund, Inc., Chicago Attorneys’ Title Guaranty Fund, Inc. announces the election of Aurora Austriaco as Secretary of the Board of Directors. She joined ATG as a title agent in 1999 and was elected to the ATG Austriaco Board in 2008. Aurora concentrates her practice at Valentine Austriaco & Bueschel P.C., Chicago, in commercial and real estate litigation. Attorneys’ Title Guaranty Fund, Inc. also announces the election of Jim Hallene Hallene as Treasurer of the Board of Directors. He was elected to the ATG Board in 2014. His considerable expertise has served ATG well in the areas of investor relations, new business development, and portfolio management. He is a founding partner of two Chicagobased private equity investment firms.

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

LAW

LAW Croke Fairchild Morgan & Beres LLC, Chicago Tracey Wolfe joins Croke Fairchild Morgan & Beres as partner in the firm’s commercial litigation and employment law practice. Formerly a named partner at a boutique firm, she Wolfe brings 20+ years of experience handling employment disputes, breach of contract claims, and commercial property disputes. She regularly appears in state and federal court and has represented clients before the Illinois Strohmeyer Department of Human Rights, Illinois Department of Labor and other agencies. Taryn Strohmeyer joins from Cravath, Swaine & Moore LLP as an associate, where her transactional practice spans securities, funds, mergers and acquisitions and general corporate matters. She has advised clients on transactions valued up to $17.4 billion. She is based in NYC.

LAW Golan Christie Taglia, Chicago GCT welcomes Laurie Smigielski as Of Counsel to the firm. Laurie focuses her practice on commercial litigation and employment matters in federal and state courts. Laurie previously served as a judicial law clerk in the U.S. District Court for the Northern District of Illinois to the Hon. M. David Weisman and the Hon. Jorge L. Alonso. She also served as an Illinois Assistant Attorney General where she first-chaired several trials and administrative hearings and defended state agency decisions.

GCT proudly welcomes Jeffrey Rambach as Partner to the firm. Jeff focuses his practice on tax and business transaction matters including tax credits, transactional tax, private client/wealth management and non-profit organizations. Clients with challenging tax and business transaction needs seek out Jeff because of his seasoned counsel and knowledge in the ever-changing world of tax law. Jeff also has a strong trusts and estates practice, covering all matters related to personal wealth transfer.

LAW Riley Safer Holmes & Cancila LLP, Chicago RSHC welcomes new partner Keyonn L. Pope to our Chicago office. A tech-savvy litigator and business-minded advisor, Keyonn helps clients navigate complex and critical issues involving intellectual property, media and entertainment, and a range of commercial disputes. Businesses rely on Keyonn to represent their brands in bet-thecompany patent and trademark litigation and regularly turn to him for guidance and counsel on a wide range of other high-stakes matters. MANUFACTURING Norix, West Chicago Norix has named Jamie May as its new vice president, sales and marketing. At Norix, May will oversee sales staff, product lines, communications and marketing for the furniture company, which serves the healthcare, justice, transitional housing, education, GSA, and commercial markets. May most recently served as principal, director of sales for Denver-based Interior Environments, where he was responsible for marketing and sales of the company’s line of workspace furnishings. RECRUITING Kittleman & Associates, Chicago Kittleman & Associates is proud to announce the promotion of Michelle R. B. Saddler to Managing Director & Principal of Kittleman’s Chicago Office. In this role, Michelle will further Kittleman’s presence and growth in the Chicago market and continue to provide executive search and other consulting services for nonprofits nationally. Prior to joining Kittleman in 2015, Michelle served for several decades in numerous government agencies and not-for-profit organizations across Illinois. TECHNOLOGY Crisp, Chicago / New York Crisp is proud to announce Stacy Bohrer as Senior Vice President of Sales. Based in Chicago, Bohrer brings deep CPG sales experience and brand connections to help lead programmatic commerce growth and expansion for Crisp. Prior to Crisp, she served as regional vice president at The Trade Desk helping brands grow by integrating data-decision strategies. Bohrer brings a successful programmatic approach from advertising into the food industry, making her an integral addition to the Crisp team.

8/11/21 11:26 AM

CRAIN’S CHICAGO BUSINESS • AUGUST 16, 2021 13

DATA DROPS: Some Chicago-area tech firms are sharing racial and ethnic workforce stats. PAGE 15 SOLUTIONS: Cybersecurity expert calls for changing the narrative around working in the tech field. PAGE 17

CRAIN’S CHICAGO BUSINESS MINORITIES IN BIG TECH Jeffery Smith, a hiring manager at digital ad platform Centro, struggles to find minority talent: “How do we increase that pool?”

MESSAGE TO VCs: Funding community needs to break habits that hinder minority founders. PAGE 17

TACKLING THE TECH TALENT IMBALANCE Companies scramble to expand recruiting channels in the lucrative and dynamic technology sector, where minorities in leadership roles number in the low single digits BY JUDITH CROWN

See TECH TALENT on Page 14

JOHN R. BOEHM

As a hiring manager at digital advertising platform Centro, Jeffery Smith says he struggles in the search for minority talent. “As a Black man myself, I feel confident that I don’t have biases that we might attribute to other hiring managers,” Smith says. “But I have trouble finding minority talent. How do we increase that pool?” Following the murder of George Floyd in 2020 and the heightened awareness of racial inequality, companies have been scrambling to expand their recruiting pipelines and hire more minority employees. Nowhere is the imbalance more evident than in the lucrative and dynamic technology sector, especially Big Tech, where the number of Black and Latino workers in technical roles and in leadership is in the low single digits. “If we want to create economic mobility and opportunities for Chicagoans and those who have been left out of Chicago’s growth, we need to be focused on those skill sets and access to those spaces,” says Matt Muench, senior vice president of talent solutions at nonprofit P33, who is working with area companies to help source and develop tech talent from diverse backgrounds. The tech giants in recent years were pressured by socially conscious investors to publish the data they report to the Equal Opportunity Employment Commission on workforce representation of minorities and women. It isn’t pretty. At Google, which employs about 1,200 in Chicago (out of parent Alphabet’s workforce of more than 130,000), African Americans are represented in 2.2 percent of technical roles and Latinos in 4.8 percent of these jobs nationwide. Fortunately, opportunities in tech go well beyond Silicon Valley. Tech roles are in demand in financial services, health care, retail and transportation—and many firms have vowed to rectify historic imbalances. Some tech executives and recruiters say there are plenty of qualified technical Black and Latino workers and that blaming the pipeline is just an excuse to keep the status quo. Citing data from the National Center for Education Statistics, Muench points out that 19 percent of bachelor’s degree awards in computing and information sciences go to Black and Latino students. That should

SPONSORS

P013-P019_CCB_20210816.indd 13

8/13/21 2:52 PM

14 August 16, 2021 • CRAIN’S CHICAGO BUSINESS

CRAIN’S CHICAGO BUSINESS

TECH TALENT

Relat man “If yo sible code he sa a tec such ing, h Epon and gate Tech The c to re that migh out t the p In pon

Continued from Page 13

Co JOHN R. BOEHM

supply a robust pool of tech workers, but it also lags their 37 percent representation of the young adult population. Only 8 percent of graduates from the most prestigious programs (such as Stanford and MIT) are Black and Latino, he says. Moreover, Black and Brown people disproportionately work in the routine IT operations and help desk jobs, which pay well. However, they aren’t the hotshot software engineering positions that can start at $180,000 out of college and build substantial wealth. Given the disparity, local tech companies and companies that employ tech workers are seeking new resources, or pipelines, for tech talent, reforming the interview process to mitigate bias and introducing initiatives to support minority workers once they arrive. Legal software firm Relativity launched a fellowship that provides training and a full-time job for candidates from underserved communities. Groupon is recruiting more developers from coding boot camps. Motorola Solutions looks to historically Black colleges and universities. A range of companies have programs with high schools to introduce students to the possibility of STEM careers, as well as in middle schools, a time when confidence in math gets baked in.

Michelle Bess, vice president of talent and DEI at online lender OppFi, says she set a goal for boosting the percentage of women in technical roles; the company exceeded that mark ahead of schedule.

MINORITY AND WOMEN REPRESENTATION IN COMPUTER JOBS, 2020

tional recruiting practices, starting or expanding relationships with White Black Asian American four- and two-year colleges, in9% 23% Computer/mathematical occupations 65% cluding historically Black colleges. Recruiters schmooze attendees at 10% 19% 8% Computer systems analysts 68% 36% gatherings such as the Grace Hop12% 7% 16% Information security analysts 80% 11% per conferences for women in tech. 6% 28% 7% Computer programmers 64% 21% And they tap professional organizations such as National Society of ENGINEERING TEAMS THAT ARE TRIBAL 6% 34% 6% Software developers 58% 19% Black Engineers and the Society of Consulting behemoth McKinsey 12% 30% 9% Software quality assurance analysts/testers 58% 25% Hispanic Professional Engineers. has made the case that diversity 4% 16% 6% Web developers 80% 28% “After COVID, things are opening isn’t just socially beneficial, it’s good up like gangbusters,” says Tauhidah business. Its most recent analysis 6% 10% 16% Web/digital interface designers 82% 45% Shakir, chief diversity officer at Payfound that companies in the top 13% 11% 12% Computer support specialists 72% 26% locity, a provider of payroll and HR quartile for ethnic diversity on ex6% 30% 6% Database administrators/architects 62% 29% software. She says there’s a scarcity ecutive teams were 36 percent more of tech talent in general, so compalikely to have profitability above 9% 12% 8% Network/computer systems administrators 77% 20% nies must be more resourceful. “You their national industry medians 15% 16% 16% Computer network architects 68% 9% can’t go to the same wells because than those in the fourth quartile. 13% 16% 11% Computer occupations, all other 68% 28% they are dry.” Companies in the top quartile for Note: The race groups may not equal 100 percent because the total includes smaller race groups not shown separately; also, respondents may have selected two or more races. When Michelle Bess joined ongender diversity on executive teams Source: Bureau of Labor Statistics line lender OppFi last year as vice were 25 percent more likely to have says Smith, director of production teams, he says, are tribal. Indian en- panies like AT&T and Comcast take president of talent and DEI, she above-average profitability than operations at Centro. “Why is this gineering teams don’t hire Chinese this more seriously than Big Tech,” set a goal of boosting the percentcompanies in the fourth quartile. person’s ethnicity or race valuable engineers, and Chinese engineers Gates says. “They end up hiring age of women in tech roles from 19 Chicago tech executives say dito the team?” he says. “That can be a don’t hire Indians, and neither more of a diverse workforce.” percent to 25 percent in two years. verse teams deliver rigorous dehard sell to a team of engineers who group hires African Americans or United Airlines employs about The company exceeded its goal bate and opinions. Diversity also are focused on ones and zeros.” 1,500 in tech jobs out of its work- in less than a year by seeking out can also help avoid embarrassing Latinos, he says. The Silicon Valley giants and the missteps, such as when a 2019 gov“When I was at Google, I wanted force of 95,000—including devel- candidates through organizations spinoff startups that make founders to identify bias in hiring women. Ev- opers who design and update the such as the Mom Project, Women ernment study found that facial millionaires are notorious for a lack ery time a competent woman was websites and mobile apps used by in Technology and Lesbians Who recognition algorithms falsely idenof diversity. This pool of tech geeks in the interview phase, an engineer consumers as well as by pilots, flight Tech. tified African American and Asian is disproportionately white and that didn’t want women on the team attendants and gate agents. The “Our recruitment team spent American faces. Of course, people Asian American and, as in other would say, ‘She codes too slow,’ ” carrier is one of 36 area companies time going into the community and in a minority are highly conscious fields, they’ve historically hired peo- Gates recalls. “That’s code for, ‘We’re working with P33 to find ways of di- building relationships,” Bess says. of their difference and are reticent ple like them: people in their social going to pass on her.’ These kinds of versifying its tech talent. “We want to make sure the process to express a different opinion, says networks, from the top pro- things are used against people of Linda Jojo, executive vice pres- is equitable, that we’re not screen“THE WORD ON THE STREET IS THAT grams at Stanford and MIT. color as well. It eliminates them in ident of technology and chief dig- ing people out too soon.” “The word on the street the interview process.” A Google ital officer, says the carrier’s tech Relativity last year started a felYOU HAVE TO KNOW SOMEONE TO is that you have to know spokeswoman didn’t respond to re- minority representation is slightly lowship program, hiring mostly someone to get those posi- quests for comment. better than the finding of a 2018 Black and Latino candidates for a GET THOSE POSITIONS.” tions,” says Larry Bailey, an Gates points out there are plen- National Science Foundation study five-month paid training program IT analyst at Potbelly Chi- ty of Black and Brown people in IT that pegged the national science that leads to a full-time job at the Larry Bailey, IT analyst, Potbelly Chicago cago who is African Amer- operations as desktop technicians, and engineering workforce at 30 company, a partner or customer. ican. “You have to know someone but they hit a roadblock landing the percent women, 21 percent Asian “This is for folks who would not Mike Gamson, CEO of Relativity. who will vouch for you from inside.” “Creating a culture so that you can higher-paying jobs in application American, 6 percent Hispanic and have ended up in an industry like The tech field has been talking technology, such as front-end de- 5 percent Black. Even though we’re ours,” says CEO Gamson. Relativity extract that difference of opinion is about diversity for 20 years, and veloper and software engineer. slightly higher, Jojo says, “we’re not also offers paid internships, which beneficial,” he says. not a single thing has changed, says Gamson says helps provide the exBut it can be hard to convince colIf minority tech workers are sty- there yet.” Carlton Gates, a Chicago-based mied in Silicon Valley, they enjoy perience that well-off students obleagues to go the extra mile to hire recruiter for Yum Brands who has brighter prospects at public compatain by unpaid internships or other a minority candidate who has less OPENING NEW PIPELINES worked at Oracle and Google and nies as well as the area’s small and experience or doesn’t score as well United and other area tech em- volunteer work. is African American. Engineering midsize technology firms. “Com- ployers are broadening their tradiGamson points out that although on a tech exam as a white candidate,

P013-P019_CCB_20210816.indd 14

Percentage Percentage of Hispanics of women 8% 25%

8/13/21 3:09 PM

Th have Black pecia ershi Un vesto in th data up o port men Som follo tions

MIN

Asi

O WO

TEC

LEA

REP

Ov Tec Lea

Notes:

CRAIN’S CHICAGO BUSINESS • August 16, 2021 15

Relativity is a tech company, it has many roles that are not technical. “If you define a tech job as responsible for writing a discreet line of code, that’s 30 percent of our jobs,” he says. The vast majority of roles in a tech company are nontechnical, such as sales, finance and marketing, he adds. E-commerce marketplace Groupon reformed its internal recruiting and interviewing process to mitigate unintentional bias, says Chief Technology Officer John Higginson. The company uses a third-party tool to review job postings for language that could be exclusionary. “You might use a catchy phrase that turns out to appeal only to one segment of the population,” he says. In the interview process, Groupon strives to ensure that there’s

other groups provide opportunities for their members to take on leadership roles, says Chief Diversity Officer Tinisha Agramonte.

diversity in the candidate lineups as well as among the managers doing the interviewing. The candidate’s journey doesn’t have to be the same as that of the hiring manager, Higginson says. Companies also are going to new lengths to support minority hires so that they don’t flounder for a lack of mentoring and coaching. Groupon is hiring more candidates from boot camps, and because they have less experience than college graduates, they’re assigned a mentor who helps them bridge the gap. “If you take one employee from a university and one from a boot camp, in a couple of years, you can’t tell them apart,” Higginson says. At Motorola Solutions, business councils for multicultural employees, women, LGBTQ workers and

STARTING EARLY

There’s no doubt that interest in technology starts early. Some companies team with nonprofits or engage directly with middle and high school students with an eye toward broadening the pipeline. Many minority students don’t have role models in tech and or a family connection to even know of the career possibilities. While there are dozens of nonprofit programs that try to engage students in STEM fields, they tend to be fragmented and not well funded. “They’re not well connected enough so that an individual student is sup-

ported along the pathway to get to the ultimate goal,” says Muench at P33. “A student has a great summer experience at a robotics camp, but when he gets back to school in the fall, does the teacher know about it so that the interest is nurtured?” Some companies are trying to reach students as early as middle school. Groupon invites groups of middle school Girl Scouts to spend a day at the company “to learn about science and technology and see that this is a career (they) could pursue,” Higginson says. He also speaks to students at Chicago Tech Academy in Pilsen about how to break into the field. More than two-thirds of students from diverse backgrounds who enter college saying they plan a STEM major aren’t in those fields by the

time they get to junior year, according to an analysis of academic research and administrative data by P33. “That’s a far steeper decline in STEM enrollment than the overall student body,” Muench says. “We’re losing them for a variety of reasons—maybe a student is banging his head against the wall trying to study algorithms.” Company initiatives underway are a good start, he says, but earlier and more consistent intervention is needed. Even a casual conversation could provide an inspirational spark. A struggling student, Muench says, might be encouraged by a recent grad who counsels, “I know your situation sucks now, but I have a cool job at a fintech startup, so maybe stick with this a bit longer.”

JOHN R. BOEHM

Companies begin public sharing of their ethnic and racial data

rting with ineges. es at Hoptech. ganity of ty of s. ning idah Payd HR arcity mpa“You ause

onvice she centm 19 ears. goal g out tions men Who

pent and says. ocess een-

a felostly for a gram t the mer. not like tivity hich e exs obother

ough

BY JUDITH CROWN The big technology giants don’t have the best record in employing Black and Latino professionals, especially in technical jobs and leadership. But at least they admit it. Under pressure from activist investors, the top tech firms have been in the forefront of publishing the data on the ethnic and racial makeup of their workforces that they report annually to the Equal Employment Opportunity Commission. Some Chicago-area companies are following that lead. Motorola Solutions last month published a more

Tech companies with a presence in Chicago, including Google, LinkedIn and Salesforce, show Black and Latino representation in technical jobs and in leadership in the low single digits. Amazon, with its massive warehouse operations, reports high percentages of Black and Latino workers overall, but their representation in leadership drops to the 4 percent range. Among Chicago companies, Groupon is one of the few that discloses its data, which mostly tracks its Silicon Valley cousins. For technical roles, only 2.2 percent of the jobs are held by Black employees and

detailed breakdown of its workforce’s racial and ethnic makeup than in the past. Legal software firm Relativity plans to start publishing its data next year. Minority representation became a hot-button issue following the rise of the Black Lives Matter movement and the murder of George Floyd. The EEOC reports disclose the number of employees by gender and racial/ethnic identity and their representation in leadership and other job categories. While many companies proclaim fealty to DEI goals, the data shows that there’s a long way to go.

6.4 percent by Hispanic employees. Showing the numbers and “that we have work to do is an important signal to the business community,” says Chief Technology Officer John Higginson. Payroll and HR services provider Paylocity began disclosing data last year with the arrival of Chief Diversity Officer Tauhidah Shakir. The company doesn’t break out the percentages of Black and Latino staff in technical roles. But Black employees represent only 1 percent of company leadership, and there are no Latino leaders. “We made a commitment to improve representation

at the leadership level,” Shakir says. “The only way to do that is to understand where we started and know that we have work to do. There’s no reason to keep the numbers behind a curtain.” There can be a downside to such disclosure, says Jeffery Smith, director of production operations at digital advertising platform Centro. “When your numbers aren’t great, publishing it could be bad for your efforts,” he says. “It could be a turnoff for a candidate who sees the data and concludes she would be the only woman, or he would be only the second Black guy.”

MINORITY REPRESENATATION AT SELECTED TECH COMPANIES IN PERCENTAGES Asian American

Black

Hispanic/Latino

AMAZON

GOOGLE

GROUPON

14%

OVERALL WORKFORCE

40%

26%

11%

37%

11%

68%

30%

UBER

48%

SALESFORCE

10% 6%

20%

42%

PAYLOCITY

15%

42%

23%

LEADERSHIP

MOTOROLA SOLUTIONS

16%

27%

TECH ROLES

39%

48% 5%

1% 17%

17%

30%

34%

3% 4%

REPRESENATATION OF WOMEN AT SELECTED TECH COMPANIES IN PERCENTAGES 50 50% Overall Tech roles 40 40 45% Leadership

45%

3030

1010 0

22%

24%

27% 19%

24%

NA%

AMAZON

48%

42%

39%

35%

32%

2020

45%

GOOGLE

GROUPON

25%

40% 34%

32% 24%

21% NA%

MOTOROLA SOLUTIONS

PAYLOCITY

26%

SALESFORCE

23%

UBER

Notes: Most recent data available. Gender data is global or companywide. Leadership is for the highest level reported. Racial/ethnic data is for U.S. Companies’ methodologies differ; totals may not equal 100 percent. Sources: Company reports, Crain’s list of top tech employers

P013-P019_CCB_20210816.indd 15

8/13/21 3:20 PM

16 August 16, 2021 • CRAIN’S CHICAGO BUSINESS

CRAIN’S CHICAGO BUSINESS

ENTREPRENEURSHIP

Diversifying its tech sector would distinguish Chicago Garry Cooper is founder and CEO of Rheaply, a software-as-aservice company that specializes in enterprise asset management technology for the circular economy.

attractive city to tech talent, and specifically diverse tech talent, not only from the esteemed West Coast but also from our own backyard, including those who may not even be in tech yet. While plenty of work is underway to attract tech talent to Chicago, we should focus equally on providing Chicagoans opportunities to learn, develop in and elevate our tech community. Here are some of the steps that we should take to make this possible. If you have executive-level decision-making power, consider removing supplier diversity constraints and update definitions; form go-to-market partnerships with diverse tech founders and companies; and recruit diverse talent to your senior leadership team (and make an effort to promote diverse team members throughout your organization to leadership roles). Even if you’re not on the executive level, you can help in other ways. For example, connect with local schools, from primary education to higher education, as they are always in need of connectivity into the Chicago tech ecosystem for mentorship and internship opportunities. (World Business Chicago, in collaboration with the city of Chicago and the University of Illinois, does

Chris Izuak foun Popon-d cyber GETTY IMAGES

hile globally Chicago may still be associated primarily with our financial markets or our epithet the “hog butcher for the world,” it is our tech, and specifically our B2B tech enterprises, that is the engine powering wealth creation. With nearly 400 startups founded in the past five years, and nine of those achieving unicorn status in 2021 alone, Chicago is witnessing a quick rise in entrepreneurship. Yet this rise has not been experienced evenly by all the groups that comprise this diverse city. We in Chicago tech have two primary problems: a lack of diversity and a need for talent. I believe that if we focus on the former, we can solve the latter. The lack of diversity in tech nationally is well documented, but in Chicago, the issue is stark; the city’s population is 50 percent nonwhite and 51.4 percent female, yet data from Chicago:Blend revealed that, of 65 Chicago-based startups backed by Chicago-based VCs, less than 25 percent have a nonwhite founder and only 23 percent have a female founder. If we wish to set ourselves apart from other tech hubs and attract newcomers, let us work to make diversity our distinction. We need to make Chicago a more

an amazing job at inspiring local undergraduates by direct exposure to tech leaders during its annual ThinkChicago summit.) At any level of a business, you can help by actively making your organization more inclusive. If you are one of our universities or colleges, fund startup ideas—especially from students coming from underrepresented communities. Do business with entrepreneurs from underrepresented backgrounds, especially if they were formally trained at your institution. Invite diverse founders and techies to come speak to and inspire your school community—and pay those speakers for that work. If you are one of Chicago’s 94 VCs or angel investors, “hire and wire,” full stop. Update pattern-matching criteria from the past.

If you, too, are a founder, invest forward. Join investment funds like LongJump, which gives underrepresented founders access to capital and resources to start scaling their businesses. Finally, if you are someone who has thought that the tech industry is out of reach because you haven’t met someone in tech who looked like you or shared a story like yours, please reconsider. We need your voice and your perspective more than ever. Our community’s big problems will likely only be solved by innovative ideas from founders who’ve actually faced those problems. Let’s work together to make our Second City second to none. Let’s make Chicago the best place for anyone in our community to start a business.

M to

RECRUITMENT

Tap community insiders to make genuine connections

R John Wallace is co-founder and CEO of Workbox, a co-working accelerator in Chicago.

ight now, tech companies across the country are scrambling to find new talent and fill vacant positions. While there is no question that corporate America is still feeling the effects of the COVID-19 pandemic, the problem is not a shortage of talent, but rather a problem of access. At the same time, it’s no secret that minorities have been woefully underrepresented in the technology sector for years. Yet so many qualified individuals from minority communities are missing out on that access simply because of systemic biases. Herein lies the solution to corporate America’s recruiting crisis. It is in those underrepresented communities that companies should be focusing their recruiting efforts— especially tech companies or those looking to fill technology-based positions. When companies focus on creating access to opportunities— and act on it—a whole new pool of qualified candidates opens up to them. As the CEO of Workbox, a

P013-P019_CCB_20210816.indd 16

fast-growing Chicago-based co-working accelerator, I have seen firsthand what can happen when companies expand their recruiting channels and look for ways to connect with minority communities. Since our inception in 2019, Workbox has made diversity a top priority, and I believe wholeheartedly that has been one of the keys to our success. Our Accelerator Program Membership is designed to help growth-stage companies scale and early-stage startups (many of which are in the fintech, health tech and SAS spaces) build thriving businesses. Workbox provides tech entrepreneurs from all walks of life with access to funding via 30-plus angel investors and venture capitalists, something that is all too commonly an uphill battle for minority entrepreneurs in the tech field. Our members also receive guidance on everything from digital marketing and finance to recruitment and exclusive networking programs. All too often minority groups don’t have access to the tools necessary to ascend to

an educator, social justice pioneer, leadership roles. Programs like ours philanthropist and businessman, provide those tools as well as entry to Tim has a plethora of experience groups and conversations that social and insight that will help Workbox biases have prevented minorities figure out new ways to make genfrom penetrating in the past. Simply uine, actionable connections with put, we focus on providing access communities we have yet to reach. and opportunity. This type of diversiHis recommendations and obserty-focused programming is, I believe, vations are not only helping Workone of the best and quickest ways to box with our internal and external increase the number of minorities in diversity initiatives but also helping leadership roles. our members formulate the ways in One of the tricks to being a sucwhich they want to structure their cessful leader is to know what you own recruiting practices. don’t know. To that end, I believe it’s Partnerships, like the one Workbox also crucial for companies to turn to diversity experts to help make purposeful connections with THE PROBLEM IS NOT A SHORTAGE OF TALENT, the communities BUT RATHER A PROBLEM OF ACCESS. they are looking to engage. has with Tim King, are vital to creatFor example, at Workbox, there ing permanent change and leveling are communities that, try as we the playing field so that there are might, we just haven’t been able to more minorities in leadership posiconnect with thus far. To help solve tions. Building true diversity requires that problem, we recently tapped Tim King, founder and CEO of Urban a multifaceted effort—and one that needs a holistic approach. That’s Prep Academies, to join our board what we’re doing at Workbox. of advisers. Through his work as

8/13/21 2:36 PM

Hora Flou foun Sway a me mino tech

CRAIN’S CHICAGO BUSINESS • August 16, 2021 17

SOLUTIONS

Hacking the diversity gap in the startup scene O

GETTY IMAGES

Christine Izuakor is the founder of Cyber Pop-up, an on-demand cybersecurity firm.

Shift the paths to generational wealth for people of color For decades, many people of color grew up seeing the road to riches as a path that often required becoming a famous athlete, entertainer or celebrity of some sort. While those are all honorable career paths, this widespread misconception among youth has led to a very narrow view of what it means to build wealth and achieve financial freedom. Today, there are more examples than ever of the different paths that can lead

ke al r

Secke in .

kbox

ENT,

eatng

siuires hat

Change the narrative around what it means to work in tech There’s another common misconception that building a tech company requires you to be a super-technical coder or programmer. This can lead folks to shy away from solving critical problems with tech. Instead, some might think to solve problems via a traditional trade or skill. The reality is that to be a tech founder, you must understand the problem you want to solve really well. Once you do, you can work with tech experts to engineer and test solutions. Many codeless app-building solutions can allow non-technical founders to build products early on. It’s essential to expose underrepresented groups to the creative process of

Rethink the traditional funding journey and create a more inclusive evaluation process Most unicorns and successful tech companies receive some form of funding eventually. On that note alone, the number of Black-owned unicorns and successful startups is drastically impacted. As reported in Harvard Business Review, 2.3 percent of venture capital goes to women. Furthermore, just 0.34 percent goes to African American women, according to Crunchbase. This means that the chances of founders in these groups making it to the unicorn stage are slim, though not impossible. Though my points above address the need to increase exposure of tech opportunities for people of color, this is not to be mistaken with the notion that there is a pipeline issue. There is not. One of the biggest and probably most frustrating elements of the Big Tech journey for any founder of color is access to capital. The main challenge here is that traditional

firms often have homogeneous criteria for evaluating a very heterogeneous pool of ideas and approaches. Investors and funding institutions must consider where founders are starting when evaluating progress. All founders are not starting on a leveled playing field. The ask is not to “lower standards”—a form of pushback some investors so boldly and inaccurately voice. The ask is simply to consider the entire journey. For example, someone who reaches $1 million in revenue while bootstrapping, working another job and supporting their extended family at the same time is very different from someone who reaches $1 million in revenue after raising a $700,000 friends-and-family round and quitting their job to build the startup full time. Current processes don’t tend to account for those unique experiences across various founder groups. It’s also important to increase diversity within venture-capital and investment teams. More-diverse teams are accepting of diverse thoughts and perspectives. It’s also critical that investment firms reassess how they evaluate deals, as well as the diversity of who is evaluating them. Doing so will only bring us a step closer to lessening the gap.

Men and Chicago Scholars, both organizations that are preparing the next generation of talent that will power the workforce and portfolios down the road. VCs could also employ new standards for evaluating investments into Black and Brown startups. For example, they can make an investment in a Black startup that doesn’t have much traction and connect that startup to an accelerator program. In many ways, technology allows us to break old habits. VCs should break old habits, too. Funding Black startups is the best way to hire Black tech talent. If you look at our team at SwayBrand, it’s a case study of how I was able to hire talented Black and Brown individuals in tech. But I’m doing it in Los Angeles. Much like my grandfather, also named Horace, who left east Texas during the Great Migration to find opportunity in Chicago, I relocated to the West Coast. For my grandfather in 1953, Chicago

was the place to be. I represent a digital generation that understands the needs to make similar geographical moves for equitable and financial gains. Like my grandfather, I made a hard decision to leave a city that I’m fiercely loyal to in order to seek more opportunities to advance my tech startup. Why L.A.? The funding community is more liberal about making investments and forming partnerships with Black- and Brown-founded startups. Doors opened up for me in L.A. after only nine months. Chicago has begun discussions to lay out some frameworks for addressing DEI issues, but I believe we are many investment checks (written) and at least a few “exits” away. Black founders are on the court and could use some assists. When we score points, so do investors, and so does our beloved city, which wants to see itself as the Silicon Valley of the Midwest. Let’s work to get that ball through the hoop together.

building a startup. Though having a solid technical solution is vital to winning in Big Tech, it’s usually not the most crucial thing initially. Getting access to resources that help guide the tech founder’s journey is important.

PASSAGES

Minority founders need VCs to break from their old habits

er, , e ox th ch. rkal ing s in ir

to success and financial freedom—one of which is in Big Tech. Stories, such as that of Tope Awotona, the founder of Calendly, who recently raised $350 million, bringing the company’s valuation to $3 billion, highlight the fact that there are multiple paths to success. Squire and Black Unicorn Factory are other examples. These stories and more showcase a very different path to success in Big Tech that isn’t shared enough.

Horace L. Flournoy is the founder of SwayBrand and a mentor to minorities in the tech field.

hicago, we have to talk. We live in a time when technology plays a vital role in literally everything we do, affecting everyone regardless of background or station in life. Making sure the tech field, and importantly, access to startup capital, is more equitable and takes true diversity into account is one of the big challenges of our time. To use a basketball analogy, I know firsthand the grit and the grind that goes with getting a startup off the floor, especially in Chicago. The challenges are much harder for Black and Brown tech founders, who, more times than not, are measured by a different standard. Just getting on the court, let alone to the basket, is a grind. In basketball, players would have a much different shooting percentage if the rim were 20 feet high instead of 10 feet. But the rim for me is 50 feet high. I’m asked to perform at a level that my white startup counterparts aren’t required to. Black and Brown tech founders have the ideas and the talent but have to jump higher to make a basket. We can’t do it alone. We need assists from those who fund startups: in most cases, the VC community. And we all know who makes most of the funding decisions. “Men make up 68% of Chicago’s venture industry. And it’s 81% white.” That quote can be found on the website of Chicago:Blend, an organization that tracks and supports diversity,

P013-P019_CCB_20210816.indd 17

equity and inclusion among Chicago VCs and startups. The lack of diversity in Chicago’s tech ecosystem mirrors the lack of investments into Black and Brown startups. Black Americans in particular have been severely hampered by representational disparities in corporate and startup America because of historical and current patterns of exclusion. These deeply rooted patterns contribute to the VC and investment community in Chicago being a walled garden that’s hard to penetrate. As Brian Lowery, a professor at the Graduate School of Business at Stanford University who researches racial privilege, said, “Inequality is a function of systems, not individuals within a system.” In Chicago, hubs like 1871 help break down some barriers, but more can be done. To be frank, the VC community needs to be more liberal with check-writing and eliminate subjective excuses that limit Black founders. VCs make bets on startups, but they make bets on founders with whom they have a connection. If VCs hired more associates who are Black and Brown and specifically tasked them with identifying Black and Brown startups, that would be progress. As a tech entrepreneur in Chicago, I can recall maybe a handful of VC associates or partners that I’ve pitched who are minorities. Diversity efforts also can look like supporting groups like the 100 Black

GETTY IMAGES

o y is met you e nd Our kely s ced

ver the past decade, the rise of tech unicorns, or startups that reach $1 billion in valuation, has been astonishing. These trailblazing companies inspire more tech founders to bring their ideas to life while leaving investors eager at the thought of the next big deal. One thing that’s been clear is that the diversity among those who reach unicorn status or even make it into Big Tech at all remains concerningly disparate. Though a few are on the horizon for the first time ever in 2021, the percentage of tech unicorns led by Black founders is close to none. While many deep-rooted and systemic issues contribute to this challenge, let’s look at a few critical ways to close the gap.

8/13/21 2:36 PM

18 AUGUST 16, 2021 • CRAIN’S CHICAGO BUSINESS

Ulta hopes to bring in new customers loyal to Hispanic- or Black-owned brands ULTA from Page 1 retailer looking to capitalize on the surging buying power among Black and Hispanic shoppers in the beauty industry, experts say. Ulta is making efforts to diversify its product offering, hoping to bring in new customers who are loyal to Hispanic- or Black-owned brands. And those experts wonder how much more those customers’ spending might increase if they didn’t have to travel outside of their neighborhoods to go to Ulta. Even with the rising growth of online shopping, physical-store footprint can play a major role in winning over customers. “How are people going to access your store if you’re not in the communities that they predominately live in?” says Melanie Muñoz, diversity, equity and inclusion consultant at consulting firm Kaleidoscope Group.

WHERE’S ULTA? There are nine Ulta locations in Chicago, plus two that are set to open inside Target stores this fall. Only one location, in Archer Heights, is in a majority-Hispanic community. None are in majority-Black communities. ULTA LOCATIONS AND NEIGHBORHOOD DEMOGRAPHICS Hispanic/Latino Hispanic/Latino

99 44

10 10 88

White White

Asian Asian

Black Black

Other/multiple races Other/multiple races

33 11 11

1. Archer 1.Heights Archer Heights

2. Hyde 2. Hyde Park Park

6. Loop 6. Loop

7. Near 7. Near North Side North Side

3. Lake 3. Lake View View

4. and 11. 4. and 11. Lincoln Park Lincoln Park

5. Logan 5. Logan Square Square

Upcoming Upcoming Existing Existing

Sources: Crain’s reporting, Chicago Metropolitan Agency for Planning’s Community Data Snapshots

DIVERSITY

edly noted the importance of Hispanic shoppers to the future of the company, saying how vital it is to have the right product mix to draw those shoppers in. Here’s why: Black consumers’ buying power in the U.S. is projected to grow almost 29 percent by 2024 to $1.8 trillion, according to market research firm NielsenIQ. Hispanic con“HOW ARE PEOPLE GOING TO sumers’ buying power is to grow even ACCESS YOUR STORE IF YOU’RE NOT expected faster: 35 percent by 2024 to $2.3 trillion, compared IN THE COMMUNITIES THAT THEY to 25 percent growth for PREDOMINATELY LIVE IN?” non-Hispanic white consumers. Melanie Muñoz, Kaleidoscope Group Black and Hispanic consumers are particularbling its assortment of Black- ly alluring to the beauty industry, owned brands and said it would says Kymberly Graham, vice presidedicate $4 million to marketing dent of diversity initiatives at Nielthem. In June, it partnered with senIQ. Nationwide, Black consumthe 15 Percent Pledge, a nonprof- ers spent 3 percent more on beauty it that asks companies to commit and personal care products than to buying 15 percent of products the general population in 2020 and from Black-owned businesses. took 2.3 more trips to a store where Ulta executives have also repeat- they purchased such a product, Over the past year, Ulta joined the swell of companies making diversity commitments following public outrage over the murder of George Floyd. Beyond corporate pledges, Ulta also promised to change its product selection. It committed in February to dou-

8. Near 8. Near West Side West Side

according to NielsenIQ. Hispanic shoppers took three more trips and spent 7.6 percent more than the general population. Holistically engaging with those potential customers means locating in their communities, Graham says. “From a retailer perspective, those are the types of investments you’d have to think about truly making in order to capture that buying power,” she says. Ulta still has some work to do winning over Black consumers in Chicago. On a recent sweltering afternoon, Marshall Callery popped into the Ulta in the Hyde Park neighborhoods with two friends so one could buy some scrunchies. The group, all between ages 18 and 21, say they don’t go to Ulta much, even though they all live nearby. “Ulta doesn’t really seem (to be) for Black people, to be honest,” Callery says. All three friends say they visit beauty shops regularly for hair products, but Ulta doesn’t typically have what they need. Though there is an Ulta in south

9. West 9. West Ridge Ridge

10. West 10. West Town Town

suburban Evergreen Park, the Hyde Park shop is the retailer’s only location on the city’s South Side. Another location, a half-hour drive away in Archer Heights, is the only Ulta in Chicago in a majority-Hispanic neighborhood. South Shore resident Tiffany Carter says she favors her neighborhood beauty shop over Ulta. Carter visits a beauty supply store once a week—usually with her 15-yearold daughter—and estimates she spends as little as $5 during some trips and over $100 during others. “My daughter, she’s the beauty supply store queen. She wants to go all the time,” Carter says. “Usually, it’s just the neighborhood beauty store. . . .If it’s Ulta, I have told her, ‘No, not Ulta, you can’t go there. They don’t have what you’re looking for.’ ”

OPPORTUNITY

The Target partnership gives the retailer an opportunity to get in front of more customers and draw them in with their product mix.

“If you’re not located in communities of color, then it’s almost like you’re keeping a distance,” says Lisa G. Williams, a Chicago-based diversity and inclusion expert. Beauty retailer Sephora, which is owned by luxury conglomerate LVMH, is making moves similar to Ulta in diversifying its brands. It joined the 15 Percent Pledge before Ulta did and is also rolling out stores within Kohl’s. Ulta had been on a growth spree pre-pandemic, opening about 100 stores a year since 2016. It slowed last year, closing some stores permanently and shelving an expansion into Canada. When CEO Dave Kimbell took over in June, he was tasked with figuring out how to drive growth with fewer store openings. Merchandising will play a role as could the deal with Target. Initially, Ulta plans to open 100 boutiques in Target stores starting this fall. The beauty retailer intends to increase that number to 800. Target has more than 1,900 stores nationwide, 100 in Illinois. Ulta will need to ensure its new stores don’t cannibalize business from existing shops, says Will Winter, senior associate at Stone Real Estate. These days, retailers are apt to use e-commerce data when determining store location. They can, for example, look at which ZIP codes people are getting items shipped to and determine where customers are, he says. Spokeswoman Eileen Ziesemer declined to comment on how Ulta selects store locations. “While we certainly take into account demographics locally within our overall real estate strategy, we are not comfortable sharing greater detail on the topic as our real estate approach is a competitive differentiator for the business,” she says in an email. “We strive to have locations that work to meet beauty enthusiasts where they are and take great pride in joining many communities across the country.”

As Adtalem doubles down on health care, will a CEO change rattle investors? sites, initiating student evacuations and standing up temporary months—closing at $37.19 housing and transportation for Wednesday—and Adtalem pre- students, faculty and staff. Jeffrey Meuler, a senior redicts annual revenue growth between 5 percent and 7 percent. It search analyst at Baird who folwill hold its fourth-quarter earn- lows Adtalem, said that tapping a new CEO at the time of the ings call Aug. 19. Beard acknowledges Adtalem’s Walden purchase could make recent “uneven performance,” investors even more skittish. He said he doesn’t think Wardell “IT’S UNUSUAL TO SEE A CEO TRANSITION was pushed out but noted THAT’S NOT FORCED AT A TIME OF A LARGE that choosing someone TRANSFORMATIONAL ACQUISITION.” such as Beard, Jeffrey Meuler, senior research analyst, Baird who’s never held the highwhich he blamed on rising costs est executive position before, and dropping enrollment at the could increase risk. “It’s unusual to see a CEO tranmedical schools after Hurricanes Irma and Maria battered the Ca- sition that’s not forced at a time ribbean campuses in 2017. The of a large transformational accompany lost about $4.6 million quisition,” Meuler said. “Anytime in revenue after the hurricanes there is an administrative change, and shouldered additional costs it increases uncertainty for highly for continuing classes at new regulated businesses, including ADTALEM from Page 3

P018_CCB_20210816.indd 18

the education-services sector.” Another ongoing shift is Adtalem’s strategy to double down on health care education. On the same day that Adtalem announced Beard’s promotion, it said it was conducting a “strategic review” of its segment that offers test preparation, certifications and continuing education to finance professionals. That suite of businesses—which generated $185.6 million in revenue in fiscal year 2020—could attract financial or strategic buyers.

FINANCES

Selling the financial services segment would help Adtalem shore up finances after the Walden purchase, said Alexander Paris Jr., president and senior managing director of Barrington Research Associates in Chicago. He estimated the segment could fetch anywhere from $360 million to $400 million. Adtalem had about $498 mil-

lion of cash as of March 31, Paris said, and took out an $850 million loan for the deal. “They’ve arranged the financing but without the sale of financial services, there would be an awful lot of debt on the balance sheet,” Paris said. The move, however, means Adtalem is betting exclusively on the long-term success of its health care programs. Driven by severe shortages of nurses and doctors, the global health care education market is expected to grow to $125.2 billion by 2025, up from about $83.6 billion in 2020, according to a report by the research firm MarketsandMarkets. The proliferation and increased acceptance of online programs is fueling that expansion, the report said. With the Walden acquisition, about 82 percent of the 140,000 students enrolled at Adtalem’s institutions take classes online. Just this year, more than

ADTALEM’S STOCK Weekly closing price $60 50 40 30 20

$37.19

10 0

2018

2019

2020

2021

Source: Yahoo Finance

1,000 students graduated from Adtalem’s medical and veterinary schools. “Once we complete the Walden transaction, we will be one of the largest providers of professional talent to the health care industry in the United States,” Beard says.

8/13/21 4:56 PM

Exploring solutions to the biggest challenges facing Chicago and Illinois Crain's Forum discussions bring together thought leaders to discuss the critical issues affecting the city and state, as well as the local economy. FEATURED SPEAKERS INCLUDE:

Kip Kirkpatrick

Ngozi O. Ezike, M.D.

Kathleen Sebelius

Shawn T. Wooden

Scott Serota

Melissa Scanlan

Martin Nesbitt

Crystal Davis

Helene D. Gayle

Michael J. Sacks

Monica Lewis-Patrick

Topics The Future of Capitalism - Thursday, Aug. 19, 1-2 p.m. As a new generation of investors consider their investment “footprint,” how is capital power changing the world around us? Our panel is at the forefront of this change and will explore how capitalism’s future will be reshaped by a new mindset. Water Equity - Thursday, Aug. 26, 1-2 p.m. Achieving water equity across the Great Lakes has been an auspicious goal. Water mismanagement together with climate change and political stasis have combined to make equity efforts even more challenging. Our panel looks at the latest ambitions to protect the vital resource while making sure all are treated fairly in those efforts. It’s not too late! Our Aug. 12 webcast, “Healthcare’s New Moment” was recorded. Hear from industry leaders when it’s convenient for you.

Register at ChicagoBusiness.com/AugustForum $25 per topic includes one live webcast and the associated archived recording

Presented by

tab doc.indd 1

21cb0355.pdf

RunDate 8/16/21

FULL PAGE

Color: 4/C

8/11/21 4:55 PM

20 August 16, 2021 • CRAIN’S CHICAGO BUSINESS

CLASSIFIEDS

æ`ÛiÀÌ Ã } -iVÌ

To place your listing, contact Claudia Hippel at 312-659-0076 or email claudia.hippel@crain.com www.chicagobusiness.com/classifieds

CAREER OPPORTUNITIES

REAL ESTATE

CTC TRADING GROUP, LLC is seeking a DATA ENGINEER in Chicago, IL to supervise and maintain shared services to unite data storage systems. Telecommuting permitted up to 10% of time. Apply at www.jobpostingtoday.com, reference 49531

This one-of-a-kind 4 bedroom home in Kinzie Park’s boutique midrise building is just across the Chicago River from the East Bank Club. 2 bedrooms on opposite ends of the expansive floor plan are currently utilized as offices but allow for flexible living or bedroom spaces. Detached size home without the stairs. 3 exposures wrap around the building providing North, East and South light, offering river and skyline views as well as treetop park views over the townhomes of Kinzie Park. 2 fireplaces. The 2 balconies provide outdoor living spaces for each section of the home. Multiple garage spaces available. 24 hour gatehouse, free guest parking, pool, gym, and more. 400 N. Clinton Street Unit 502. MLS listing 11146389. Listed by Harold Blum @properties Ivan Petrov @ properties. Phone 312.498.2015 or email harold@kinzieparkagent.com

CAREER OPPORTUNITIES SENIOR ACTUARIAL ANALYST with LIBERTY MUTUAL GROUP, INC. located in Chicago, IL. Implement various actuarial analyses, programs and procedures to support the preparation of reports and assist in the formulation of recommendations regarding Personal and Commercial products. Travel required up to 10%. To apply, please visit https://jobs. libertymutualgroup.com/, select “Search Jobs,” enter job requisition #2021-39795 in the “Job ID or Keywords” field, and submit resume. Alternatively, you may apply by submitting a resume via e-mail to RecruitLM@LibertyMutual.com. Reference requisition number in subject of e-mail.

LEGAL SERVICES

DADS’ RIGHTS!

Follow Our Victories !

REAL ESTATE FOR SALE $7.5 MILLION COUNTRY INN AND FARMSTEAD NW Illinois 500 Acres 1/3 in cash rent $1.0 M gross Income from Inn Multiple other income streams Financing Options Outright Sale, Contract for Deed Sale/Leaseback Joint venture For Access to Website and details CONTACT ED NEAVES, BHHS CENTRAL ILLINOIS, REALTORS 309-261-3724

REAL ESTATE LOOKING FOR LAND? CALL JAMES 773-368-1977

ChicagoBusiness.com

OUR READERS ARE 125% MORE LIKELY TO INFLUENCE OFFICE SPACE DECISIONS

Find your next corporate tenant or leaser.

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

P020_CCB_20210816.indd 20

Bluhm fends off threats, chases opportunities BLUHM from Page 1 will require a professional gambler’s knack for calculating odds. “We’re all guessing,” says Chris Grove, a gambling industry analyst at Eilers & Krejcik Gaming. “Sports betting is new; sports betting at sports stadiums is new. A casino in Chicago is also new.” As Bluhm mulls his next moves, FanDuel and DraftKings are inking partnerships with sportsbooks at Chicago’s stadiums. The most potentially lucrative and furthest along is a DraftKings sportsbook at Wrigley Field. The Chicago Cubs have already received the OK from the city’s Landmarks Commission to build a betting parlor at the corner of Addison Street and Sheffield Avenue. But the City Council hasn’t approved stadium-based wagering yet. Ald. Walter Burnett, 27th, whose ward includes the United Center, got the ball rolling last month when he introduced an ordinance allowing betting at stadiums. City Hall sources say people in Bluhm’s camp argued against the bill, which has been sidelined in the rules committee. Bluhm confirms that he opposes the stadium-betting bill. He warns that stadium-based sportsbooks would generate little money for the city beyond a licensing fee of $50,000 for the first year and $25,000 per year after, while cutting into the action at a Chicago casino that city leaders hope will generate about $200 million in tax revenue annually to shore up sagging municipal pensions. “If you think that that revenue would be hit by, call it 15 or 20 percent, that could cost the city, I’d say, anywhere from $25 (million) to $35 million a year in tax revenue,” he says. Stadium sportsbook proponents say the argument is disingenuous: Money will flow to the city, just via vertical capital spending through the state’s “Rebuild Illinois” program. Chicago is expected to receive hundreds of millions to improve university and community college facilities as the state’s gambling expansion takes off. Bluhm says he considered bidding for sportsbooks at Wrigley and the United Center, which went with FanDuel, but ultimately decided both were too expensive. “We were never a serious bidder,” he says of the Wrigley sportsbook. DraftKings estimates the Wrigley project will be the largest individual sportsbook in the country. Rush Street has entered into a marketing agreement with the Chicago Bears that includes signs at Soldier Field and social media ads promoting sports betting at Rivers Casino and on the BetRivers app. However, Bluhm says he has no interest in a physical betting operation at Soldier Field. Rush Street Gaming’s brick-andmortar portfolio includes the Des Plaines location and Rivers casinos in Schenectady, N.Y., Pittsburgh and Philadelphia. But Bluhm’s digital gambling unit is growing faster. Rush Street Interactive, which went public in December, offers online sports betting in eight states, retail sports betting in five and online casinos in four. Launched nearly a decade ago, RSI expects plenty of growth as more

w SHRINKING POT, MORE PLAYERS Receipts are down at local casinos as more competitors prepare to enter the market. ADJUSTED GROSS RECEIPTS AT CHICAGO-AREA CASINOS, IN MILLIONS Rivers (Des Plaines) Horseshoe (Hammond) Ameristar (East Chicago, Ind.)

Hollywood (Joliet) Hollywood (Aurora) Majestic star (gary)

Harrah’s (Joliet) Blue Chip (Michigan City, Ind.) grand Victoria (Elgin)

$500 million

400

$321.2 300

$303.2

200

$157.3 $116.3 $109.0 $107.6 $79.1 $77.7 $57.0

100

2015

2016

2017

2018

2019

2020

Note: Potawatomi’s Milwaukee casino does not publicly disclose revenue data. Source: Illinois Commission on Government Forecasting & Accountability

budget-strapped states legalize various forms of digital gambling. The company has operating agreements to launch in four new states—including New York—and could enter seven more that recently authorized sports betting. RSI’s most recent quarterly earnings show a big recovery from last year’s COVID doldrums: Revenue shot up 89 percent to $122.8 million during the second quarter. While RSI is smaller than digital competitors DraftKings and FanDuel, Grove says the compa ny has top-shelf technology and strong operational teams. “Rush is executing really well on the online gambling side,” Grove says, adding that brick-and-mortar casinos help pull in digital bettors. “Being a strong retail operator is a cornerstone advantage.” Still, Bluhm’s online and in-person sports betting trails DraftKings and FanDuel in his home state. BetRivers logged $94 million in adjusted gross receipts in Illinois between March 2020 and June 2021. DraftKings, which takes bets online and in person at Casino Queen in East St. Louis, posted $104 million in the same span, according to Illinois Gaming Board records. And FanDuel, which has a partnership with Fairmount Park Par-A-Dice in East Peoria, raked in $129.5 million.

CITY CASINO

Another potential source of competition for Bluhm is in the works as Chicago seeks bidders for a gambling house that city officials call “one of the most attractive casino-resort development opportunities in the country.” That’s debatable, as at least two major casino companies have taken a pass on bidding for a casino that would saddle its operators with a high tax rate. “It’s a tough deal because the tax rates are high and there’s plenty of competition,” Bluhm says. Bluhm’s incentives are complex when it comes to a city casino that could siphon business away from Rivers in Des Plaines. He acknowledges that a Chicago casino—re-

gardless of who owns it—“definitely will have an impact” on Rivers’ bottom line. Bluhm would get that business if he wins the city casino license. If not, Rivers could lose market share to a competitor. Yet a city casino would require an investment of as much as $1 billion. If Bluhm were to bid, he would team up with real estate firm Related Midwest at the site of the 78, the 62-acre site south of downtown along the Chicago River. “Everyone kind of sees (Chicago) as the golden goose. There’s definitely some gold in there, but it’s not an endless supply. It has to be balanced with the risk of having that much capital invested,” says Mark Dvorchak, a managing partner of Pro Forma Advisors. Would a Chicago casino subject to a 40 percent tax rate generate an adequate return on such a huge investment? The lack of interest from major players such as MGM and Wynn suggests they may have concluded the answer is no. Gambling analysts note that any new casino would compete in an increasingly crowded market with Illinois’ 10 existing casinos; nearby gambling houses in Indiana, Michigan and Wisconsin; and five new casinos yet to open across the state, including in Waukegan and the south suburbs. Further complicating the picture are ties between Chicago Mayor Lori Lightfoot and members of Bluhm’s family. Daughters Meredith BluhmWolf and Leslie Bluhm each contributed more than $100,000 apiece to Lightfoot’s campaign. Leslie Bluhm, a law school classmate of Lightfoot’s, also hosted a fundraiser for the mayor. Both have a financial stake in Rivers casino. and Leslie Bluhm is a member of RSI’s board. Lightfoot could face criticism for favoring political donors if Bluhm wins the license. Bluhm dismisses such concerns, calling Lightfoot a “principled person” who will pick the best bidder for the project. Lightfoot, too, has said there would be no “hometown favorite” when the city considers bids.

8/13/21 4:03 PM

CRAIN’S CHICAGO BUSINESS • August 16, 2021 21

Entertainment concepts look to turn around the struggling Magnificent Mile MAG MILE from Page 3 tenants in the entertainment industry. Producers of shows based on King Tut, Harry Potter, Dr. Seuss and even Pink Floyd are shopping for space on North Michigan Avenue, according to people familiar with the Mag Mile market. Most are still in the exploratory phase, but one exhibit is expected to open this fall: “The Office Experience,” which is based on the popular television mockumentary. Superfly, the show’s creator, is bringing it to a former Forever 21 store at 540 N. Michigan, following

Fulton Market, opened in 2018. In February, “Immersive Van Gogh,” a digital exhibit of the post-Impressionist’s artwork, opened in a landmark building in Old Town.

TRACTION

In May, “Michelangelo’s Sistine Chapel: The Exhibition,” a show featuring projected images of the artist’s paintings in the Vatican, opened in a former Sears store at the Oakbrook Center mall. “The Art of Banksy,” featuring the anonymous subversive street artist, opened at 360 N. State St. on Aug. 14. And at Navy Pier, New York-based Illuminarium Experiences plans a digital exhibit recreating “(THE MAG MILE) ALWAYS SEEMED the experience of an African safari, a trip UNATTAINABLE BECAUSE THE RENTS to Mount Everest WERE SO INCREDIBLY HIGH.” base camp and other places. Tom Zaller, president and CEO, Imagine Exhibitions It’s still too early to know whether the a successful run of an exhibit there trend will gain traction on North Michigan Avenue. But the street’s based on the Friends TV sitcom. Superfly representatives did not current struggles have created an respond to comment. City records opportunity, with lots of empty show the company has received a space and falling rents. The Mag Mile “always seemed business license for “The Office” unattainable because the rents show in the building. New entertainment concepts were so incredibly high,” says have also popped up in other Tom Zaller, president and CEO places. The WNDR museum, a of Imagine Exhibitions, an Atsensory mix of science and art in lanta-based company with more

than 40 exhibitions in its portfolio, including Harry Potter and King Tut. It’s getting more attention now “because there’s so much vacancy.” The North Michigan Avenue vacancy rate has jumped to 26 percent, up from 22 percent in 2020, according to Cushman & Wakefield. High-profile departures over the past year include the Gap, Uniqlo and Macy’s, which in March closed its big department store in the Water Tower Place mall. Zaller confirms that Imagine is searching for space on the street but declines to discuss plans for individual shows or offer more specifics. “It is my hope that one day I have a beautiful venue on the Magnificent Mile,” he says. “It’s all about the right deal and the right partnership and right location.” That’s not easy. Experiential tenants typically want turnkey space with high ceilings—20 feet or higher—and no columns that requires an inexpensive and quick buildout, say brokers. Though space generally is abundant on North Michigan Avenue, space that fits those requirements isn’t. Producers also tend to prefer short-term leases, unwilling to commit to something longer in the event a show doesn’t catch on.

It also will take much more than a few experiential shows to turn around North Michigan Avenue. They may be only one of several solutions as retailers and landlords try to create something that shoppers can’t buy online. But successful shows can be a major draw, especially when it comes to tourists, generating foot traffic that brings shoppers into nearby stores, Zaller says. “Somebody like us in this new world is important in that we spend a lot of advertising dollars to drive people to our location,” he says. The shows also can be a differentiator for a retail destination that needs to offer visitors something they can’t get in a high-end shopping mall.

‘UNIQUE EXPERIENCE’

“What people expect from (Michigan Avenue) is a unique experience, and these operators bring that,” says Kimberly Bares, president and CEO of the Magnificent Mile Association, which promotes retailers, hotels and other businesses in the neighborhood. More than one business profits because the typical tourist tends to buy more than just a ticket to “The Office Experience.” “They’ll also grab dinner, they’ll do a little shopping, they’ll spend

w NOT SO MAGNIFICENT More than a quarter of the retail space on North Michigan Avenue is vacant. VACANCY RATE 26.0%

30% 25 20 15 10 5 0

‘15 ‘16 ‘17 ‘18 ‘19 ‘20 ‘21

Source: Cushman & Wakefield

the night,” Bares says. Zaller aims to find a long-term location on North Michigan Avenue, one where Imagine could run multiple shows, one after another. The firm has already brought its “Jurassic World” exhibit to the Field Museum of Natural History and its Titanic show to the Museum of Science & Industry. Its other shows include “Astronaut,” “Angry Birds Universe” and exhibits on Leonardo da Vinci and the “Downton Abbey” TV drama. “We have content,” Zaller says, “and we are ready to deploy it.”

Wall Street hasn’t been jumping for joy over the latest Chicago bank mergers BANKS from Page 3

Those waiting for that jackpot got a “merger of equals” with an LaSalle Bank’s 2007 sale to Char- Evansville-based bank few in Chilotte, N.C.-based Bank of America, cago have heard of and the unfaPrivateBancorp’s 2017 sale to Can- miliar bank’s name adopted as ada’s CIBC and the 2019 acquisi- the new brand. The pitch from executives is that the two banks will tion of MB Financial. First Midwest’s corporate head- combine into a regional banking quarters will go away, but Old power, with significant presences National is casting the deal as in cities like Milwaukee, India“dual headquarters” by locating napolis and Minneapolis-St. Paul, its commercial and retail base at in addition to Chicago. So far, First Midwest’s Chicago offices. skepticism has been the reaction. “I believe I called (First MidThe bank will be Evansville-based, west) my prime takeout candihowever. It’s not as if Wall Street is bearish date in a report 22 years ago,” says on all bank dealmaking. Several Terry McEvoy, analyst with Stesellers in deals valued at $1 billion phens in Portland, Maine. “Their or more this year have seen their stock price was $4 higher then stocks rise faster than their peers than it is today.” First Midwest CEO Mike who “I BELIEVE I CALLED (FIRST MIDWEST) will giveScudder, up that job to Old National CEO MY PRIME TAKEOUT CANDIDATE Jim Ryan and become IN A REPORT 22 YEARS AGO.” executive chairman of the combined compaTerry McEvoy, analyst, Stephens ny, says that time will demonstrate the comsince their transactions were un- bination’s worth. “Our announced partnership veiled. Even sellers whose stocks dropped haven’t underperformed with Old National is, at its core, their peer indexes as much as First a tremendous growth story and one that is well understood and Midwest. supported by our investors, clients and colleagues across LETDOWN For First Midwest investors in the marketplace,” he says in an particular, the result so far must email. “A factually relevant combe disappointing. First Midwest parison of recent stock perforlong has been perceived by ana- mance since the announcement lysts as prime takeover bait, with must be viewed in the context of an enviable deposit franchise and similar-sized banks, such as ofbranch network attractive to out- fered by the KRX bank index, as of-town banks wanting either to well as compared to other recent enter the Chicago market or bulk mergers of equals. Under that lens, our price performance has up here.

P021_CCB_20210816.indd 21

largely been in line with the industry, clearly better than similar combinations and all with the expectation of superior, future returns.” Through Aug. 11, First Midwest’s 9.8 percent stock-price decline since May 28, the last day of trading before the deal was made public, compared with a 5.2 percent decline for the KBW Regional Bank Index—the KRX index Scudder references. The 4.6-point negative gap is more than any other $1 billion-plus U.S. bank merger pending since each deal’s announcement.

SKEPTICISM

The First Midwest-Old National combination’s stated goal of creating a Midwestern banking “powerhouse” is where the skepticism is centered, analysts say. Though First Midwest shareholders get meaningful presences in other Midwest cities they don’t have now, the combined company isn’t a top-three deposit holder in any of the major ones. It barely cracks the top 10 in Chicago, Milwaukee, Madison and the Twin Cities. For Old Second, the investor skepticism takes a different form. The West Suburban acquisition is by far the largest Old Second has done. Concentrated in the western suburbs already, Old Second’s purchase of West Suburban doubles down on the submarket it’s already in. Tom Brown, a longtime bank investor whose hedge fund, Second Curve Capital, specializes in financial services companies, recently cited Old Second’s deal as

THUMBS DOWN Since First Midwest accepted a buyout offer, its stock has lagged the shares of other bank acquisition targets. BANK SELLER STOCK PERFORMANCE From their deal announcement to now People’s United Financial

Cadence Bancorp

Sterling Bancorp

Flagstar Bancorp

Location: Bridgeport, Conn. Buyer: M&T Bank Corp. Announcement date: Feb. 22 People’s stock change to date: 6.6% KBW Regional Bank index: 6.0% Difference: plus 0.6 points Location: Pearl River, N.Y. Buyer: Webster Financial Announcement date: 4/19/21 Sterling’s stock change to date: (1.7%) KBW Regional Bank index: (2.5%) Difference: plus 0.8 points

Investors Bancorp

Location: Short Hills, N.J Buyer: Citizens Financial Announcement date: 7/28/21 Investors stock change to date: 9.6% KBW Regional Bank index: 7.2% Difference: plus 2.4 points

Location: Houston Buyer: BancorpSouth Announcement date: April 12 Cadence stock change to date: (5.5%) KBW Regional Bank index: (1.2%) Difference: minus 4.3 points Location: Troy, Mich. Buyer: New York Community Bancorp Announcement date: 4/26/21 Flagstar stock change to date: 6.8% KBW Regional Bank index: (3.3%) Difference: plus 10.1 points

First Midwest Bancorp

Location: Chicago Buyer: Old National Bancorp Announcement date: 6/1/21 First Midwest stock change to date: (9.8%) KBW Regional Bank index: (5.2%) Difference: minus 4.6 points

Note: Stock prices through Aug. 11 Sources: S&P Global/Market Intelligence, Crain’s reporting

an example of what’s gone wrong in bank M&A. “Old Second is planning to reduce West Suburban’s expense base by 37 percent, and 63 percent of those savings will come from reduced staff and closing overlapping branches,” Brown wrote in a July 30 note. “The acquiree is a community bank with a community bank’s typical client base. Let’s just say that a meaningful loss of those customers after the consolidation is over is highly likely to happen.” “I would rather see the com-

pany transform itself into a digital competitor to compete in the future rather than attempt a Hail Mary pass into a fierce wind,” he concluded. Old Second CEO James Eccher didn’t respond to a request for comment. There is at least one saving grace for Old Second shareholders, however. The larger Old Second—it will have more than $6 billion in assets when the deal is completed—is potentially a more enticing target for would-be acquirers in the future.

8/13/21 4:24 PM

22 August 16, 2021 • CRAIN’S CHICAGO BUSINESS

No end in sight for area’s warehouse boom Industrial real estate has survived the pandemic without even getting the sniffles, and the Chicago market is only getting stronger as the economy continues to recover Another key data point, net absorption—or the change in the amount of leased space versus the prior period—totaled 14.7 million square feet in the Chicago area in the first half of the year, eclipsing the total for all of 2020. Absorption this year is on track to surpass the annual record of 26.6 million square feet set in 2016.

ON A BINGE

As other companies put their expansion plans on hold last year, Amazon went on a real estate binge here as online shopping surged during the pandemic, part of a push to build out its supply chain and shorten delivery times. The Seattle-based e-commerce giant isn’t quite as busy in 2021, but other tenants are pulling their weight. “As the economy progresses towards full recovery following the economic recession caused by the coronavirus pandemic, many companies that had sidelined real estate decisions due to uncertainty will address expansion and relocation needs,” the Colliers report says. Developers are building like

WHERE LEADERS CONNECT AND LEARN

BRIDGE POINT NORTH

a 907,000-square-foot building in Joliet that could eventually emThe great industrial real estate ploy as many as 1,400 people. It boom is gaining momentum, with was the biggest local lease of the the Chicago-area market on track quarter. “I don’t see an end in sight,” says for a record year. Soaring demand from e-com- broker Michael Senner, executive merce, logistics and manufac- vice president in the Rosemont ofturing companies has turned the fice of Colliers International. The hot market heated up furonce unglamorous warehouse sector into the coolest kid in the ther in the second quarter. The neighborhood. Industrial real es- Chicago-area industrial vacantate has survived the pandemic cy rate fell to 6.29 percent in the without even getting the sniffles, quarter, down from 6.68 percent in the first three months of 2021 FIFTY-SEVEN INDUSTRIAL BUILDINGS and 6.42 percent a year earlier, acTOTALING 30.1 MILLION SQUARE FEET cording to a ColWERE BEING BUILT IN THE CHICAGO AREA liers report. It’s within striking AT THE END OF THE SECOND QUARTER. distance of its most recent low and it’s only getting stronger as the of 6.15 percent in 2019. Local records are already falling. economy recovers. Amazon continues to lead the Tenants signed 173 leases totaling way, leasing big warehouses in 15.4 million square feet in the secWaukegan and Huntley in the ond quarter, the most industrial second quarter. But other com- space ever leased in the Chicago panies are gobbling up space, too, area in three-month period, acincluding Lion Electric, a Canadi- cording to Colliers. The Colliers an firm that makes electric-pow- data does not include leases of less ered school buses, which leased than 10,000 square feet.

BY ALBY GALLUN

Amazon has leased a 501,000-square-foot building at 3940 S. Lakeside Drive, in the Bridge Point North industrial park in Waukegan. mad to keep up with the strong demand. Fifty-seven industrial buildings totaling 30.1 million square feet were being built in the Chicago area at the end of the second quarter, the most space ever under construction at one point in the history of the Chicago market, according to Colliers. Of that total, 41 percent of the space is been developed on a speculative, or spec, basis—without a tenant secured before breaking ground.

Given the strength of the market, Senner isn’t worried about a potential glut. A bigger problem right now is a shortage of steel and precast concrete that developers need to build new warehouses. The shortage could keep the supply of space from outpacing demand. “You’ll see a lot of projects that are contemplated but their delivery dates are going to be pushed” back, Senner said.

0ȁǐƊǐƵ ɩǞɈǘ ǞȁȺȯǞȲǞȁǐ ƦɐȺǞȁƵȺȺ‫ ة‬ȁȌȁȯȲȌ˛Ɉ ƊȁƮ public sector leaders, learn from experienced facilitators, and develop life-long professional relationships. Together, you and your fellow future leaders will experience executive education that transforms you professionally and personally.

Chicago Live Sessions Fridays October 1 - October 29

New York Virtual Sessions Tuesdays September 28 – December 14

›

P022_CCB_20210816.indd 22

Learn more and apply at CrainsAcademy.com

8/13/21 2:57 PM

CRAIN’S CHICAGO BUSINESS • August 16, 2021 23

Prairie Style landmark sells in two days

That’s far faster than the nearly eight years it took for the last sale of the former River Forest Women’s Club A Prairie Style building, which opened in River Forest in 1913 as a women’s club but later was refashioned as a house, sold the second day it was on the market. That’s far faster than the last time, when the house on Ashland Avenue was on the market for almost eight years, fell into foreclosure and was sold by the lender at about the value of the land. Listed at $680,000 on June 9, the 3,200-square-foot former River Forest Women’s Club went under contract the next day. The sale closed Aug. 6 at $700,000. That’s 25 percent more than Vladimir and Elizabeth Barisik paid foreclosing lender Alliant Credit Union for the home in April 2020. The Barasiks made no substantial changes to the home during their tenure, according to their listing agent, Stephen Scheuring of Compass. One key to the quick sale, Scheuring said, was that the Barasiks overcame the building’s awkward layout. It’s essentially a historical auditorium with new living spaces and kitchen built below it as a walk-out basement.

THE BUILDING’S ARCHITECT, WILLIAM DRUMMOND, WAS FRANK LLOYD WRIGHT’S CHIEF DRAFTSMAN FOR A TIME AND ALSO WORKED FOR DANIEL BURNHAM. The previous owners treated the large main space in the house as the auditorium it had been when built according to the design of Prairie School architect William Drummond, two stories high with numerous leaded glass windows and horizontally ribbed wood trim. The Barasiks “embraced” the large space, Scheuring said, furnishing its audience floor as the living and dining rooms and using the elevated stage as a family media room. Buyers who walked through the space “could envision living in it,” Scheuring said. There is still an awkwardness to the layout: The kitchen is in new space one flight below the main living spaces. But the buyer, Marty Castro, said that’s not a problem for him, because “I’m more of a microwave guy” who won’t make much use of the kitchen. The appeal of the house for him was

“the art, architecture and history of that building and its auditorium.” Castro, who now heads Casa Central, a Latino social service agency in Chicago, chaired the U.S. Commission on Civil Rights under President Barack Obama and has an appreciation, he said, for “a progressive group like the women’s club in the 1910s.” Castro said he will use the modern living room beneath the auditorium as a gallery for his art collection and, like the recent sellers, use the old auditorium as his primary living spaces. Castro was represented by Brent Jensen of Coldwell Banker. The auditorium must be preserved as is under the terms of an easement granted to Landmarks Illinois in 2005. The rear of the building, with the same board and batten finish as the front, must be preserved, too, which would make adding to the back of the building difficult. The other key to selling the home was price. The couple who rehabbed the building in the early 2000s after the women’s club membership dwindled and the local park district opted not to use it anymore first put it on the market in 2012 at almost $1.58 million. Those sellers later said they had about $2 million invested in the property. By October 2019, price cuts had taken it down to $632,000 before the sellers took it off the market in the midst of Alliant’s foreclosure action against them. Alliant ultimately sold it for more than $1 million below the homeowners’ original asking price. As part of the sale to the Barasiks, Alliant covered the cost of getting the building’s geothermal climate system back in working order, Scheuring said. The Barasiks bought the home for about 28 percent of the previous owners’ total investment in the property. In April 2020, they said they planned a multiyear rehab that would solve the awkward layout, but instead they put it on the market 14 months later. The Barasiks could not be reached. Schuering would say only that their decision to sell had to do with “pandemic lifestyle changes.” The building’s architect, William Drummond, was Frank Lloyd Wright’s chief draftsman for a time and also worked for Daniel Burnham before opening his own practice, where he designed several buildings in River Forest, Brookfield, Wilmette, Austin and elsewhere around Chicago.

HOW TO CONTACT CRAIN’S CHICAGO BUSINESS EDITORIAL � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 312-649-5200 CUSTOMER SERVICE � � � � � � � � � � � � � � � � � � 877-812-1590 ADVERTISING � � � � � � � � � � � � � � � � � � � � � � � � � 312-649-5492

P023_CCB_20210816.indd 23

CLASSIFIED � � � � � � � � � � � � � � � � � � � � � � � � � � � � 312-659-0076 REPRINTS � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 212-210-0707 editor@chicagobusiness.com

VHT STUDIOS PHOTOS

BY DENNIS RODKIN

Vol. 44, No. 33 – Crain’s Chicago Business (ISSN 0149-6956) is published weekly, except for the last week in December, at 150 N. Michigan Ave., Chicago, IL 60601-3806. $3.50 a copy, $169 a year. Outside the United States, add $50 a year for surface mail. Periodicals postage paid at Chicago, Ill. Postmaster: Send address changes to Crain’s Chicago Business, PO Box 433282, Palm Coast, FL 32143-9688. Four weeks’ notice required for change of address. © Entire contents copyright 2021 by Crain Communications Inc. All rights reserved.

8/13/21 2:57 PM

tab doc.indd 1

21cb0349.pdf

RunDate 8/16/21

FULL PAGE

Color: 4/C

8/5/21 11:27 AM