In the 2½ years since he became commissioner of the Big Ten Conference, Kevin Warren has navigated a global pandemic, the advent of moneymaking opportunities for college athletes, the addition of two powerhouse schools and, as of this month, the negotiation of the richest media deal in college sports history. Somehow, his biggest challenges are still ahead of him. By adding USC and UCLA to the conference beginning in 2024 and securing a broadcast rights contract reportedly worth $7.7 billion over the rest of this decade, Warren has not only cemented the Big Ten’s place as a centerpiece of college sports for the next generation, but also solidi ed his position as one of the most in uential gures in the business.e58-year-old former NFL executive wields this newfound power at a time when the NCAA’s authority over intercollegiate athletics is crumbling and conferences are gaining control over a system that looks more like professional sports. Athletes seize commercial deals and transfer schools at will, while universities ock to conferences that have unprecedented clout that will help schools maximize revenue andWithexposure.billions of dollars and the well-being of thousands of
IMAGESGETTYWITHILLUSTRATIONCRAIN’SGETTYIMAGES CHICAGOBUSINESS.COM | AUGUST 29, 2022 | $3.50 ENERGY: Winter heating costs could be the highest in memory—maybe ever. PAGE2 RETAIL: Why this mall on the Mag Mile is thriving PAGE 3 NONPROFITS Helene Gayle joins board.foundationGates PAGE 22 YOUR VIEW Supply forever.changedproblemschainhavecarbuying PAGE 10 NEWSPAPER VOL. 45, NO. 34 COPYRIGHT 2022 CRAIN COMMUNICATIONS INC. ALL RIGHTS RESERVED FIND THE COMPLETE SERIES ONLINE ChicagoBusiness.com/CrainsForum A shrinking pool of high school seniors, a lack of resources and limited academic offerings force small private schools to nd creative survival solutions I PAGE 13 FORUM I HIGHER EDUCATION CONFRONTING THE How Big Ten boss Kevin Warren is changing the game With expansion and a massive media deal, Kevin Warren positions the conference to grab more power as college athletics become more like professional sports BY DANNY ECKER CLIFF WARRENKEVIN See BIG TEN on Page 31
It will shock few Illinoisans that public pension funds across the U.S. are underfunded, under managed and underperforming. And yet, year after year, these funds, with $4.5 trillion in assets and covering 14.7 million work ers and 11.2 million re tirees, show themselves outpacing Portfolioissueinincludinger lookardinvestmentbenchmarkedself-selectedgoalsforreturns.PensionexpertRichEnnistookaclosat 24suchfunds,twobigonesIllinois. InarecentoftheJournalofManagement,he wrote that they underperformed pas sive investing indexes by an average 1.4 percentage points, despite reporting a 0.3-point positive margin against bench marks. Only one of the funds beat indexing over the 10-year period.“is sharp disconnect raises questions about the usefulness of the funds’ performance re porting, as well as their heavy reliance on expensive active management,” he concluded. “Altogether, the results paint an un attering portrait of the stew ardship of public pension funds in the United States.” Ennis, 78, is a retired chair man of industry consultant EnnisKnupp (acquired in 2010 by Hewitt Associates, now part of Aon) and a former editor of Fi nancial Analysts Journal. He ar gues that funds set benchmarks too low and then overpay man agers once performance is made to appear better than it is. He estimates that management fees average 1.3% of assets—roughly equaling the fund underperfor mance he measured.Amongthe two doz en funds he surveyed, the $66 billion Teach ers’ Retirement System of the State of Illinois was the erpercentage(8.3%)anperforming,fourth-worstreportingannualizedreturnthatwas3.23pointslowthananindexedre turn. e gap was a negative 1.24 points, just above the median, for the $24 billion State Employ ees Retirement System of Illi nois. For the State Universities Retirement System, which Ennis examined at Crain’s request, the shortfall was 1.9 points. While benchmark revisions are sometimes prompted by changes in asset allocations, Ennis wrote that they are often revised to “more closely match the execution of the investment program,” adding: “We talk about hugging the benchmark in portfolio management. Here is a di erent twist on that theme, with the benchmarks hugging theEnnisportfolio.”hadmore to say in this email exchange with Crain’s.
City and pricesmaybeheatingfacehouseholdssuburbanandbusinessesthehighestwintercostsinmemory—ever—ifnaturalgasstayattheselevels
You thought heating costs were high last winter?
ALAMY
Pension fund returns worse than they look
See PENSIONS on Page 7
“Current natural gas costs across the U.S. re ect continued uncer tainties and speculation over what the next 12 months hold globally for weather patterns, market con ditions and in ation, and escalat ing geopolitical events that contin ue to cause an uptick in the current and forward market for natural gas prices,” she said in an email. Nicor has set up a new Commu nication Connection Center it dubs C3, which customers can contact at NicorGas.com/CCC to learn about nancial assistance and arrange ments to repay past-due amounts.
LEARN MORE ABOUT HOW AN SBA LOAN FROM WINTRUST CAN HELP GROW YOUR BUSINESS IN SBAILLINOISLENDER GREG HINZ IS ON VACATION
Last winter’s heating bill shock looks to be just a prelude for far worse this coming season. Chicago households served by Peoples Gas will pay more than $1,440 on average from November through March based on natural gas price futures for the coming cold-weather season, according to a Crain’s analysis. at’s 44% above last season’s $999 average tally, which itself was a 44% in crease over the prior winter. And that city average is a ected by the large number of apartments in Chicago, so those in single-family homes will pay quite a bit more thanSuburbanthat. households served by Nicor Gas will pay an estimated $1,223 on average over that time period, a spokeswoman said last week. at would mark a 59% in crease over the $769 paid on aver age the previous season. ese would be the highest local winter heating costs in memory— and maybe ever. Natural gas price futures are well above where they were last year, which itself was a sharp increase from the rock-bottom prices util ity ratepayers enjoyed over more than a decade since the fracking revolution dramatically increased the supply of natural gas in the U.S. Behind the price surge is con tinued market volatility stemming from Russia’s war with Ukraine, along with more liqui ed natu ral gas being shipped overseas by U.S. producers. In addition, a hot ter-than-normal summer in the Southwest and Western U.S. con sumed substantial amounts of gas for power Peoplesgeneration.Gasspokesman
David Schwartz declined to comment on the Crain’s estimate except to say that heating bills would be higher than last season. “It is too early for anyone to pro vide a reliable estimate of costs for the upcoming winter heating sea son,” he said in an email. “ e cost of natural gas in the global mar ketplace uctuates sharply from month to month, week to week, sometimes even minute to min ute. How things are tracking right now does not necessarily re ect how they will look this winter.” Indeed, it’s possible prices will come down from these levels, par ticularly if there are predictions of a warmer-than-normal winter. It’s also possible they’ll increase if an unusually quiet Atlantic hurri cane season becomes more active, potentially a ecting production in the Gulf of Mexico and on the Gulf Coast. But there’s little doubt they’ll be considerably higher than the year before, as they have been since Russia invaded Ukraine in lateForFebruary.consumers and businesses over the winter, the price of heat may become the most noticeable of the many in ationary pressures they’re feeling now. City households, in particular, have struggled to stay current on their natural gas bills as their rates have climbed. More than 213,000, or 26%, of all household customers of Peoples were hit with late-pay ment fees in July, according to information Peoples submitted to the Illinois Commerce Commis sion. More than $111 million owed to Peoples was more than 30 days pastPeoplesdue. said that more than $46 million in government assistance was provided to ratepayers during the year that ended last spring. All low-income households had their past-due balances wiped out, Schwartz said. But clearly middle-income people are struggling to pay their heating bills as well, judging by the large number seriously behind. “With global natural gas prices climbing even higher since last winter, we fully realize a high level of nancial assistance may again be needed to support customers who are having a tough time pay ing their bills,” Schwartz said. Utilities pass the cost of the fuel to ratepayers at no markup. ey prof it on the rates they charge to deliver gas. ose have been rising as well, both at Nicor and Peoples, thanks to historically high spending on capi tal investment. Peoples is overhaul ing its entire system of pipes in the city, a project costing more than $10 billion and slated to continue well into next decade. Residents are pay ing an average of $15 in a monthly surcharge just to cover the infra structure program’s costs before they consume a single therm of gas.
BY STEVEN R. STRAHLER
BY STEVE DANIELS
Peoples’ authority to levy that surcharge, which it can do be fore any regulatory scrutiny of the spending occurs, will expires at the end of next year. at sets up a debate in Spring eld in next year’s session over natural gas regula tion. Gov. J.B. Pritzker has called for ending the surcharge authority for Peoples, Nicor and downstate utility Ameren Illinois. Nicor spokeswoman Allison Erdman Gregoire emphasized that the high cost of fuel accounts for nearly 80% of the projected gas bill this coming winter.
An expert examines 24 public funds, including two big ones in Illinois. ‘ The results paint an un attering portrait of the stewardship of public pension funds.’ Richard Ennis
2 AUGUST 29, 2022 • CRAIN’S CHICAGO BUSINESS Banking products provided by Wintrust Financial Corp. banks. Based on total amount of dollars lent through SBA loans – for fiscal year ending 9/30/2021. wintrust.com/SBALending
CRAIN’S CHICAGO BUSINESS • A UGUS T 29, 2022 3 900 North Michigan thrives while the Magni cent Mile’s other vertical emporiums struggle | BY ALBY GALLUN Defying the downturn
After blowout success at Ulta, she’s taking on a turnaround project at Foot Locker
“WHAT WE TRIED TO CREATE IS WEEKLYMULTIPLEPEOPLEENVIRONMENTANWHERECOMEINTIMESONABASIS.”
BOEHMR.JOHN
A spokeswoman for Illinois’ economic development arm says the state expects “exponen tial growth across all elements of the EV manufacturing space— including battery production— and we will continue to aggres sively pursue opportunities.” She adds that Illinois “has several pending leads” and “looks for ward to making them public once they are Perhapsnalized.”Pritzker will soon an nounce a big win. If not, he should get to work on a better pitch.
JOE CAHILL ON BUSINESS Illinois is falling behind in the EV race
The interior of 900 North Michigan Shops.
Not long ago, Mary Dillon was reportedly in the running for the top job at Instead,Starbucks.theformer CEO of Bolingbrook-based Ulta Beauty is taking the helm of a struggling, mall-based shoe store chain. Foot Locker announced this month that Dillon will become CEO Sept. 1. Shares of the New York-based chain jumped 20% on the news Aug. 19, re ecting investors’ hopes that Dillon will lead Foot Locker to the success Ulta en joyed during her eight years as CEO of the beauty retailer. By the time she stepped aside in June 2021, Ulta’s annual revenue had surged 230% and its share price had tripled under her watch. at performance earned Dil lon a reputation as one of the savviest executives in U.S. retail ing and appeared to create lim itless opportunities for her next act. As one of the few women to have run a Fortune 500 compa ny, she was considered a like ly contender for CEO posts at top-performing companies. e move to Foot Locker puts her reputation on the line at a company badly in need of a turn around. Annual sales bounced around between $7.2 billion and $8 billion for several years before rising to nearly $9 billion in 2021. e stock had plunged 30% since February, when Nike said it would cut inventory at Foot Locker stores. e athletic footwear Goliath accounted for about 68% of the chain’s sales lastStill,year. observers see some par allels between Foot Locker’s sit uation and Ulta’s when Dillon took over.
See DILLON on Page 33 See MALL on Page 33
Tisha Maley, a consultant who advises JMB in Chicago
What is Mary Dillon thinking?
Mary Dillon BY ALLY MAROTTI
Gov. J.B. Pritzker’s vision of Illinois as an electric vehicle pro duction hub is in danger of be coming a pipe dream. After landing a couple of as sembly plants early on, the state has fallen behind in the race for the fast-growing new industry’s top prize. Illinois still hasn’t won a factory that produces the most valuable component of electric vehicles—the batteries that make them go. By all rights, Illinois should be an attractive location for a battery plant. We have relevant technical expertise, including advanced battery research at Argonne Na tional Laboratory in Lemont. We also have a highly skilled work force, manufacturing know-how, a convenient midcontinent lo cation and great transportation systems.YetEV battery makers keep by passing Illinois as they scramble to build enough production ca pacity to ful ll the auto industry’s promise to make only electric cars by the mid-2030s. By my count, Illinois is 0 for 18 in the competition for battery plants so far. Manufacturers plan to spend tens of billions building plants in 11 di erent states and a Canadian province. is month brought news of another one that appears to be getting away: A partnership of General Motors and LG Energy is considering a site in Indiana, which would be the second battery plant for our next-doorIndustryneighbor.forecasters expect battery makers to build many more plants in North America, giving Illinois at least a chance to catch up. But the woeful start doesn’t inspire con dence. We’ve lost to a wide range of states, from North Carolina and Tennessee to Michigan, Ohio and Kansas. Nearly a dozen companies, including giant au tomakers Ford, GM, Hyundai, Stellantis, Toyota, Mercedes and Volkswagen, are building their initial battery plants elsewhere. Even Rivian, which assem bles electric-powered trucks in downstate Normal, chose Geor gia for its rst battery plant. at’s despite Pritzker’s e ort to lure EV-related investments with a generous subsidy package aimed at matching the incentives other states routinely o er manu facturers. Employers in the EV in dustry will get subsidies of 75% to 100% of the income tax withheld from their workers’ paychecks. But it seems the subsidies hav en’t been su ciently enticing to o set Illinois’ downsides in the eyes of battery manufacturers. Like it or not, Illinois generally isn’t seen as an employer-friendly state. Businesses complain about our tax rates, workers’ compen sation system, precarious state nances and the drawn-out pro cess of getting permits for new factories.Pritzker’s clean-energy legis lation added a new worry. e Clean Energy Jobs Act is expected to drive up electricity costs, a major expense for manufacturers. Historically an economic plus for Illinois, which until recently had lower rates than nearby states, power prices are turning into an other disadvantage in the compe tition for investment and jobs. EV makers have speci c gripes, including a new Illinois law re quiring auto manufacturers to pay dealers retail rates for war ranty repairs and restrictions on direct auto sales to consumers. ese concerns will be hard to address, but Pritzker needs to nd a way if he wants to achieve his goal of creating an “ecosys tem” encompassing the entire EV supply chain in Illinois. You see, once you get past the battery, the EV supply chain is a lot shorter than the conga line of suppliers currently mak ing internal-combustion engine parts. Batteries are by far the most lucrative component of electric vehicles, representing 30% of the total value, according to EVsBloomberg. requirefar fewer parts than the traditional autos they’re ex pected to replace over the next couple of decades. Fewer parts means fewer suppliers, as well as fewer employees making parts and putting them together on ve hicle assembly lines. at’s a threat to an industry that generates $28 billion in an nual economic activity and em ploys 36,000 in Illinois, accord ing to a 2019 study by the Illinois Manufacturers’ Association. Winning an EV battery plant or two is the state’s best hope for o setting job losses and disin vestment in traditional auto man ufacturing. Battery plants bring billions of investment and em ploy thousands of workers.
e Magni cent Mile took a turn for the worse this spring when the owners of the Shops at North Bridge and Water Tower Place, two of three vertical malls on the shopping strip, gave up the properties. Could the third mall, 900 North Michigan Shops, be next? Don’t count on it. e six-story mall is ourishing as many other properties ght to survive amid an unforgiving downturn that has pushed up the Mag Mile’s retail vacancy rate to nearly 29%. e vacancy rate at 900 North is just 2%. e mall’s success may o er some lessons to other Mag Mile land lords searching for a path forward in the post-pandemic, e-commerce era. Owner JMB Realty has sought a mix of merchants—luxury re tailers like Gucci; tenants that cater to locals, like Equinox Fitness
Even before his Aug. 24 announcement, Biden had already for given more student loan debt than any other president. e ad ministration has eliminated $32 billion in payments over the course of Biden’s term by giving relief to borrowers deceived by malicious actors.
Members of the president’s own party have pressured him to eliminate a greater swath of debt, and many on the left had hoped to see more debt eliminated for those struggling the most.
4 AUGUST 29, 2022 • CRAIN’S CHICAGO BUSINESS
Many of these older borrowers have high outstanding debt due to accumulated interest, accord ing to Yannelis. “Not everyone who goes to college ends up earn ing a signi cant amount of mon ey—so there are certainly cases of people who didn’t get those high returns,” he said. “Unfortunate ly, current policy doesn’t allow many options for debt discharge, especially for much older people.” And this outstanding debt will almost certainly negatively impact their retirement. “ ey can’t even get out of that debt by defaulting because, due to court rulings, So cial Security income can be gar nished,” Yannelis said. As a result, older Illinois borrowers still deep ly in student loan debt might delay retirement and will consume less in retirement, which will a ect the overall economy. So should Chicagoans who aren’t burdened by student loan debt care about Biden’s decision? “Oh, de nitely,” Yannelis said. For starters, it will impact those who own and work for privatesector businesses in Chicago. Ac cording to Yannelis, when student loan payments restart and peo ple ultimately spend less money at these businesses, it will a ect those employees’ paychecks. “Chicago will probably be im pacted more by student loan re payments than many other areas of the country,” Yannelis said. e city has many young people living with signi cant student loan debt, and with that comes greater nancial instability.
President Joe Biden last week announced his long-anticipated plan to forgive some federal student loan debt and extend the pause on student loan repayment for an additional four months.
WHO QUALIFIES AND HOW MUCH Biden’s plan eliminates $10,000 in federal student loan debt for individual borrowers with annual incomes of up to $125,000 or for families ling jointly with collective incomes up to $250,000. Biden has been hesitant to forgive debt for wealthier Americans, lead ing the administration to cap the eligible recipient pool to below that in comeBorrowersthreshold.who received Pell grants are eligible for forgiveness up to $20,000.Borrowers who went through private loan providers like Navient won’t see their loans budge as Biden’s plan only applies to federal student loans, while others have already dealt with confusion brought on by new rules and loan servicer transfers.
The day-to-day spending of the state’s 1.6 million borrowers is at play here
And it’s not just about those fresh out of college. Years of accumulated interest push the amount of debt much higher for those who have been out of school longer and lugging that loan debt around with them.
BIDEN FACED PRESSURE TO FORGIVE MORE
On the other side, some claim that student loan debt forgiveness is more likely to bene t higher-income borrowers while the poorest Amer icans won’t bene t at all from the move. Others say it will stoke in ation further.
Bloomberg and Crain’s Sophie Rodgers contributed to this report. JACK GRIEVE
1 BY
BY SOPHIE RODGERS NEWSROOM/FLICKRCOD 5432w STUDENT LOAN DEBT AVERAGE DEBT OUTSTANDING PER AGE GROUP IN ILINOIS 24 or younger25to3435to4950to61 62 and older $16,169 $36,806 $46,959$48,894$50,757 Data as of March 31 S ource: Department of Education, Office of Federal Student Aid NUMBER OF BORROWERS PER DEBT SIZE IN ILLINOIS Less than $5,000 $5,000 to $10,000 $10,000 to $20,000 $20,000 to $40,000 $40,000 to $60,000 $60,000 to $80,000 $80,000 to $100,000 $100,000 to $200,000$200,000ormore 218,100262,700 340,500357,400 151,800 42,60053,30092,80097,900
Responding to the idea of forgiving $50,000, Wisdom Cole, National Director of the NAACP’s Youth and College Division, said, “President Biden, we agree that we shouldn’t cancel $50,000 in student loan debt. We should cancel all of it. $50,000 was just the bottom line. For the Black community, who’ve accumulated debt over generations of oppression, anything less is unacceptable.”
Prominent voices including Sens. Chuck Schumer, D-N.Y., and Eliz abeth Warren, D-Mass., have called on the president to cancel $50,000 in debt. Sen. Bernie Sanders, D-Vt., called on the federal government to cancel all student debt in a tweet Tuesday that echoed a message he’s been delivering for some time.
Illinois will feel the weight of Biden’s student loan move
A recent analysis by the Penn Wharton budget group, based out of the University of Pennsylvania, estimates that a one-time maximum debt for giveness of $10,000 per borrower would cost roughly $300 billion if the relief is limited to those with incomes less than $125,000. e cost increases to $330 billion if the program is continued over a decade. at $10,000 has been oated by the Biden administration for a while: It’s the same amount he suggested as a presidential candidate in 2020. e decision will have a huge impact on the 1.6 million student loan borrowers in Illinois. With an average debt of $38,526 per borrower, Il linois ranks seventh overall in the country behind Washington, D.C., Maryland, Georgia, Virginia, South Carolina and Florida.
Loan forgiveness has become a tricky issue for the White House, as it tries to appeal to younger voters ahead of the midterms, while also trying to present Democrats as good stewards of the economy.
UNPRECEDENTED FORGIVENESS
WHEN WILL THE PAUSE ON DEBT COLLECTION END?
Federal student loan debt: 5 things to know
HOW TO GET YOUR DEBT FORGIVEN e Education Department plans to automatically apply the for giveness to borrowers about whom it already has income informa tion. All other borrowers will apply for the debt relief through StudentAid. gov to self-certify their eligibility.
Although the federal student loan moratorium was facing a possible end on Aug. 31, President Joe Biden decided last week to ex tend relief though the end of the year. at gives Illinois’ 1.6 million borrowers more time to prepare for monthly payments that inev itably will a ect their daily living. On average, Illinois student loan borrowers owe $38,526, the seventh-highest average debt in the United States. is statistic is not alarming to Constantine Yannelis, associate professor of nance at the University of Chi cago Booth School of Business, whose recent research explores repayment and strategic behav ior in the student loan market. “Illinois, like New York, is an area which is dominated by one met ro area where you disproportion ately see a lot of young, educated people living. is is why you have high student loan debt.” Recent graduates in Illinois age 25 to 34—many of whom might have moved to Chicago—owe an average of $36,806. When the pause on payments and interest does end Dec. 31, Chicagoans will feel the repercussions of bur dening student loan debt. “If people are hit with month ly payments of $500 or more, it’s going to impact their day-to-day spending: money for restaurants, whether they can a ord both lux uries and necessities, what type of housing they can a ord, what types of cars they can a ord,” Yan nelis said. “I expect there to be sig ni cant e ects on consumption.” But younger borrowers in Il linois are not among those hit hardest by student loan debt. On average, of Illinois student loan borrowers, those age 50 to 61 owe the most: $50,757. ose age 62 and up owe an average of $46,959.
On average, of Illinois student loan borrowers, those age 50 to 61 owe the most: $50,757. ose aged 62 and up owe an average of $46,959.
Biden is extending the student loan moratorium, which has put a pause on debt repayments for over two years, through Decem ber 2022. is will be the last extension of the moratorium that the presi dent supports, according to Bloomberg. e moratorium was originally a Trump administration policy that came in response to the onslaught of the pandemic in March 2020 and has been extended numerous times throughout both the Trump and Biden administrations.
Fueling the Tech-Enabled Broker BrokerTechVentures.com
The home at 116 N. Willard Court, left, was built in the decade prior to the Great Chicago Fire in 1871. At right is a rendering of the condo building rising in its place.
This former Sears store in Orland Park has sat empty since 2018.
e two highest-priced units will be two-story interiors with large roof decks above, Hebson said. An elevator opens directly into each unit. e fth and smallest unit, a two-bedroom on the ground oor, is $795,000.Construction began several months ago, Hebson said, and the units are scheduled for delivery in 2023. e rst two units hit the mul tiple-listing service Aug. 22, priced at $2.45 million and $2.65 million. Designed by Chicago archi tecture rm 360 Design Studio, the brick condo building is go ing up on the 5,200-square-foot former site of a three-and-a-half stor y Italianate structure from the 1860s. e site is on a short, quiet block between action-packed Randolph and Washington streets.
6 AUGUST 29, 2022 • CRAIN’S CHICAGO BUSINESS
PLD demolished the old build ing earlier this year after buying it for $2.05 million. e site was about twice the size of the foot print of the building and had been owned by a family since 1987. Because it was built in the de cade prior to the Great Chicago Fire in 1871, the building—its ad dress was 116 N. Willard—was in a technical sense a “pre-Fire” build ing, but the site is several blocks west of the Burnt District. Even so, for its age, it was quite rare in the downtown neighborhoods.
Big-box space glut eases as fewer retailers close stores
THE AMOUNT OF VACANT ANCHOR RETAIL SPACE IN THE CHICAGO AREA DROPPED TO 13.2 MILLION SQUARE FEET THIS YEAR, DOWN 16% FROM A PEAK OF 15.7 MILLION IN 2020.
A ve-story condo building is replacing an 1860s structure that was demolished in the West Loop earlier this year. Four condos in the building under construction at 120 N. Wil lard Court are priced at between $2.45 million and $3 million, according to Colin Hebson and Karen Schwartz, Dream Town Re alty agents representing the build ing for developer PLD Custom Homes. e four condos are all four- and ve-bedroom units with three full baths, family-sized like much of the new construction in the West Loop these days.
BY ALBY GALLUN In mid-2020, as the COVID-19 pandemic paralyzed the econo my and many retail chains closed stores or went bankrupt, the future of the market for big-box retail space looked especially bleak. But the future is here, and it’s not so bad, according to a report from CBRE. e amount of vacant anchor retail space in the Chicago area—the biggest stores in shop ping centers—dropped to 13.2 million square feet this year, down 16% from a peak of 15.7 million in 2020, according to the report. It’s an encouraging data point for a segment of the retail real es tate market that was in bad shape even before the pandemic, follow ing the bankruptcies of Carson’s and Toys R Us in 2018 and a wave of store closings by Sam’s Club, Sears and other chains. Anchor store closings have slowed over the past two years, and landlords have been able to lease up some of the vacant space at a steady pace. In other words, demand for bigbox space hasn’t really increased, but the market has stabilized, with fewer retailers going out of business or closing large numbers of stores. Don’t get too excited: e Chicago-area anchor vacancy rate is still 60% higher than it was in 2016. And rents have slipped: e average local big-box rent dropped for the second straight year, to $9.53 per square foot, down from a recent peak of $12 in 2017, according to CBRE. “We’ve still got a ways to go to get back to the norm, unless this is the norm,” said CBRE Senior Vice President Joe Parrott, who pre pared the report. CBRE’s anchor report tracks spaces of 20,000 square feet or more within 56 of the largest shop ping areas in metropolitan Chica go, including northwest Indiana. e category includes big-box re tailers like Dick’s Sporting Goods, along with department stores like Macy’s. When a big space or de partment store goes dark, a shop ping center su ers a double blow, losing both its rent and a decline in foot tra c that brings shoppers to neighboring stores. e Chicago area is still littered with empty anchor stores. Parrott gets paid to lease them. At the North Riverside Park Mall, he has lled an empty Sears store with a Round 1 bowling alley, an Amita Health o ce and a Forman Mills store. He has about 25,000 square feet left to lease. In Orland Park, a CBRE team in cluding Parrott is seeking a buyer for a 203,000-squarefoot Sears at the Orland Square Mall that closed about four years ago. He expects a new owner to redevelop the building, possibly into a mixeduse property. AMC eatres had planned to open a cinema in the store but scrapped that idea last year.Many department stores are so big that it’s next to impossible to nd a single tenant interested in leasing the entire space. But the owners of Edens Plaza shopping center in Wilmette pulled o the feat at the beginning of the year, leasing an empty 152,000-squarefoot Carson’s store there to online home furnishings retailer Wayfair. Another solution: Tearing the store down and building some thing new. Dallas-based Centen nial Real Estate has razed empty Sears stores at Hawthorn Mall in Vernon Hills and Fox Valley Mall in Aurora and is building hundreds of apartments in their place. New York-based Brook eld Property Partners has already demolished a Macy’s store at the Northbrook Court mall with plans for redevel opment that would include apart ments, but it put the project on hold during the pandemic. Knocking down big stores to make way for apartments or other uses helps the market overall by removing retail space from a sec tor that has way too much of it. e trend hasn’t made a noticeable impact on the market yet, but give it time, Parrott said. “ ere hasn’t been a ton of it,” he said. “I think we’ll see more, es pecially with the state of enclosed malls.”e anchor space glut here has declined over the past two years mainly because chains have closed fewer stores, not because of a surge in leasing. e bloodletting was brutal before the pandemic: Retailers vacated 3.8 million square feet of anchor space in the Chicago area in 2017 and again in 2018 and dumped another 5 mil lion square feet on the market in 2019, according to CBRE. But the space purge eased from there, dropping to 3.1 million square feet in 2020, 2.5 million in 2021 and just 600,000 this year (Parrott compiles his data at the end of the rst quarter, so the an nual gures cover the 12 months that ended March 31, not Dec. 31). e slowdown in closings has given landlords time to catch up. ey leased 3.4 million square feet of anchor space in the area last year and 2.1 million this year, according to CBRE. at’s a fairly normal leasing volume, roughly in line with the pace of the past de cade, Parrott said. Multiple big-box retailers new to the Chicago area are scout ing for space here. In addition to Wayfair, the list includes Northern Tool & Equipment, which recently opened a store in Mount Prospect; Ollie’s Bargain Outlet, which has opened a store in Aurora; and Go ing Going Gone, an outlet chain founded by Dick’s Sporting Goods, with a new store in Orland Park. eir stores range from 20,000 to 35,000 square feet, Parrott said. Other big-box chains that al ready have a presence here are expanding, too. Planet Fitness, Burlington, Forman Mills, Bob’s Furniture, dd’s Discounts and Room Place continue to open new locations here, Parrott said. Ama zon Fresh, the e-commerce com pany’s grocery chain, has “prob ably been one of the most active” anchor retailers leasing space in the Chicago area, he said. Will the glut of anchor space continue to decline? at will hinge on multiple factors, includ ing the direction of the economy— and the nancial health of individ ual big-box retailers. “It really depends on whether we have any major bankruptcies,” ParrottWorriessaid.are building that one bigbox retailer, Bed Bath & Beyond, could le for bankruptcy soon. If the chain, which operates nearly 20 Chicago-area stores, goes out of business and closes stores during a restructuring, it could dump a lot of space on the local market—and create new headaches for shopping center owners across the area.
BY DENNIS RODKIN
The Chicago area is still littered with empty anchor stores, but a CBRE report o ers an encouraging data point
Remember the West Loop pre-Fire building that got demolished?
Multimillion-dollar condos are rising on the site where an 1860s structure once stood
I have not analyzed TRS perfor mance in detail. At the total fund level, my analysis indicates that TRS’ active management record is among the worst of the approxi mately 50 large funds in my dataset. is holds for the 10 years covered in this paper and the longer 13-year period in my research. e excess return of -3.23% for TRS means that it underperformed passive invest ment by that margin annually for 10 years. I doubt that the fund keeps many of its investment managers on that long with those kinds of numbers.
Are there any peculiarities of the Illinois funds? Not that I’m aware of.
You can bet they are all aware of the papers I’ve been publishing for the last two years. Lying low does not surprise me.
Your HSA might soon be able to buy you a gym membership
According to the PHIT site, the bill would reduce physical activi ty expenses from 20% to 37% and help Americans achieve healthier lifestyles. e site also states $74.7 billion in health savings account as sets go toward treating disease; the act seeks to use the funds to prevent disease through physical activity.
State pension returns worse than passive investing
e Illinois Fitness Alliance, es tablished in 2020 by Illinois tness business owners, helped to reig nite the tness industry in the state after the devastating e ects of the COVID-19Accordingpandemic.toFitness Formula Clubs, at the end of 2021, 25% of all tness businesses nationwide closed for good. e industry strug gled to stay a oat as group sessions were banned amid capacity caps and stay-at-home orders. In Illinois, 27% of health and t ness facilities closed as of July 1, 2021, the most recent data available, ac cording to the International Health Racquet & Sportsclub Association.
PENSIONS from Page 2
I would bring about the type of re form initiated in the private sector in the wake of the Studebaker deba cle. ( e Employee Retirement In come Security Act passed in 1974) established minimum funding re quirements for corporate plans. e accountants (Financial Accounting Standards Board) required that lia bilities be reported at their market value. e reform played out over decades and in piecemeal fashion, but these are the two pillars that set apart public and private plan fund ing: assured funding and liability valuation. How do your ndings di er from other studies done on this issue?
The Illinois teachers’ retirement system has a sizable allocation in alternative investments and private equity. Is that also true of the State Universities Retirement System? TRS has a longer history with alts than does SURS, and their alloca tion there has been greater. Has it paid o for TRS?
CalSTRS annual report. Reported investment expenses are about 11 basis points (0.11%). South Caro lina, which does an excellent job of capturing costs, reports costs of 137 basis points (1.37%). Expense reporting by the funds is largely useless. Most underreport, and the reporting they do is nearly indeci pherable.
If you had a magic wand, what would you do to improve public pension fund reporting?
No one else has looked at the issue with public pension funds. In un published research, I nd the same benchmark bias exists among large endowments funds. Just last week, ( e Wall Street Journal’s) Jason Zweig discusses a similar phenom enon among mutual funds in his Intelligent Investor column.
How would you rate the quality of the public pension fund boards overseeing the process? In terms of diligence, loyalty and having all the best intentions, I would rate most boards very highly. at said, most individual mem bers of the board are in way over their heads in terms of trying to su pervise extraordinarily complex in vestment programs such as these. ey have virtually no alternative to accepting the recommendations of sta . e boards are best served when they include one or more nance or economics professors as elected members, or non-govern mental investments professionals serving as board members.
CRAIN’S CHICAGO BUSINESS • A UGUS T 29, 2022 7 Call our Executive Director, Kim Nicholas at (312) 525-9995 Genesys Works partners with leading Chicago companies, connecting them with emerging young professionals. We provide them with training in accounting, business operations, and information technology You provide the entry-level internships and the exposure to the career possibilities within your organization. Our young professionals bring their new skills, their ambition, and their work ethic Together, we build a pipeline of diverse, talented, and engaged workers. Together, we change the future of Chicago’s workforce! Shape His Future. And Yours. 180 N. Wabash Ave., Suite 600, Chicago, IL 60601 | genesysworks.org/chicago Learn why industry leaders partner with Genesys Works Previously Valued to $12,50 0,000 Suggested Opening Bid $2,50 0,000 On-site Inspections noon to 2pm on August 24, 30, and September 8 and by appointment. Rick Levin & Associates, Inc. | since 1991 312.440. 2000 | www.ricklevin.com FOR INFORMATION CONTACT IN CONJUNCTION WITH JBS ADVISORS INVITEDPARTICIPATIONBROKER
I gave the Illinois State Board of Investment, which manages fund assets, a chance to comment on your ndings. I never heard back. Does that surprise you?
Using funds from exible spend ing accounts and health savings accounts to pay for your gym membership may become a reali ty if Congress passes the Personal Health Investment Today Act. e PHIT Act, rst introduced in 2006, is a bipartisan bill pushed by the Illinois Fitness Alliance and the National Health & Fitness Alliance to allow pretax funds from FSAs and HSAs to pay for gym memberships, youth sports, exercise equipment and other quali ed activities. According to Bill Sells, senior vice president of government and public a airs at the Sports & Fitness In dustry Association, the act passed the House in 2018 but didn’t make its way to the Senate. Sells said that the act was pushed away due to an estimated tax revenue loss of $3.5 billion over 10 years. “So more people will use these accounts to stay healthy, (but) that’s BY CORLI JAY going to cost the government more money because we’re gonna have less tax revenue,” said Sells, who also said the amount lost would be pennies to the government and more bene cial to the overall goal of helping Americans get t. Sells said the utilization of these accounts aren’t as high as it should be. “ ese accounts are so un derutilized, if we can utilize them for people to stay healthy, we need to do Galethat.”Landers, founder and CEO of Fitness Formula Clubs and chair person of the NHFA Advisory Coun cil, said he thinks this go-around is di erent because of the impacts of COVID. “Awareness of building up a person’s immune system through regular exercise is more important than eever.”PHIT Act currently has three Illinois House members as co-spon sors: Reps. Danny Davis, D-Chica go; Darin LaHood, R-Spring eld; and Rodney Davis, R-Normal.
ENNIS: Curiosity. My research revealed that public pension funds overwhelmingly underperform passive investment benchmarks indicating a fair economic return. At the same time, it seemed to me that most were reporting favorably relative to their custom bench marks. So I decided to investigate. is paper is the result. Did the 10-year study period account for an adequate number of down markets by asset class to give active managers an opportu nity to test their ability to select individual securities and struc ture portfolios? Yes. Could you elaborate? I don’t like the question. By that I mean, the question itself re ects the spin mentality that investment managers put on presenting poor performance results: “Our style (category of investment) was out of favor. Just you wait.” Proper per formance measurement takes into consideration manager style or ap proach, and my work has done so. Accepted practice is to give active managers a reasonable amount of time to perform. And the 10 years covered here is enough. It began with a major bear market, followed by an extended bull market. You write that divining the true cost of management expenses is opaque. CEM Benchmarking, a respected independent arbiter of institution al fund benchmarking, reported that U.S. public pension funds underreport their costs by more than half. Look at the most recent
CRAIN’S: What prompted you to do this now?
e deals mark the biggest dis tressed hotel sales in the Chicago area since the beginning of the pandemic, a sign that some inves tors see a clear road to recovery for local inns. Occupancy at Chicagoarea hotels has neared prepandemic levels over the past few months from booming leisure trav el demand and the return of large group gatherings. Room rates now exceed where they were in 2019. Local hotels still face big chal lenges with higher labor costs, rising Cook County property taxes and business travel coming back at a glacial pace, but Be ort’s deals show that investors may still line up to acquire distressed proper ties if the discount is so severe.
e Evanston deal nalizes a consensual short sale of the Orrington, meaning the owner— with the approval of its lender— sells the property for less than the value of the debt tied to it.
A startup that’s developing an air taxi plans to test the service in Chicago next month. Eve Air Mobility, which is creating an electric vertical takeo and land ing aircraft—or eVTOL—is teaming up with a helicopter operator to o er 15-minute ights from down town to Schaumburg and Tinley Park for $150 per person. e ights will be available Sept. 14-30.
Evanston,distressedItascahotels
Air taxi maker tests new way to commute around Chicago
The Hilton Orrington in Evanston.
Oklahoma investor picks up
It’s the second test for Eve, which plans to deliver its eVTOLs in 2026 to airline customers, such as re gional carriers Republic Airways and SkyWest Airlines. Eve, a spino of Brazilian plane maker Embraer, previously conducted a mobility simulation in Rio de Janeiro. Many airlines, including Chicagobased United and Fort Worth-based American, are exploring the eVTOL market, placing orders for electric aircraft and talking about provid ing air taxi services to and from air ports. EVTOLs also are an attractive alternative to helicopters because they’re quieter and require less maintenance, much like electric cars.
“ e airlines are getting into this because they have experience in operating a eet of aircraft, and they think it will carry over and allow them to operate e cient ly,” says William Crossley, head of Purdue University’s School of Aeronautics & Astronautics. “ e technology is here to do this. For a long while, we lacked the bat tery and engine technology. e operations part is every bit as im portant as getting the technology right.”Helicopters have long been used by wealthy and time-strapped travelers to beat the tra c to air ports in New York, where global air mobility platform Blade oper ates. But Eve decided to test airtaxi commuting in Chicago. “It’s the right choice to simulate the eVTOL ecosystem,” says Luiz Mauad, vice president of services and eet operations at Eve. “Chi cago makes a good scenario to simulate the infrastructure on the ground, airspace and passenger journey.”NoeVTOLs are operating yet, although some companies report having done test ights. Regula tors are still developing rules to deal with air taxis at the same time that it deals with a surge in the number of drone aircraft in the skies.Chicago has both congested airspace and roadways. Eve chose the routes between Schaumburg and downtown and between Tin ley Park and downtown because they’re heavily traveled commut er routes. “We studied the move ments in Chicago. It’s to show people they can save time,” Mauad says, estimating an air taxi cuts a 45-minute trip to 15 minutes.
One source familiar with the deal said Be ort’s venture is planning a series of capital improvements to the property, which o ers almost 20,000 square feet of meeting space. at includes the 5,848-squarefoot Grand Orrington Ballroom, which was heavily damaged from a roof leak during the pandemic and is now in “shell condition,” accord ing to a marketing yer from Jones Lang LaSalle, which brokered the sale to the Be ort venture. e property also includes a 178-space, 65,000-square-foot parking garage. In Itasca, a Be ort venture is set to buy a property that was at the center of another COVIDinduced legal battle last year be tween the hotel’s previous owner and its lender. Philadelphia-based GF Hotels & Resorts and lender Oceanview Commercial Mort gage Finance fought in court last summer over how to sort out the distressed Westin hotel at 400 Park Blvd. in the suburb. GF and a venture of Marriott International temporarily closed the property early in the pandem ic. (Westin is a Marriott brand.) But by the time Marriott gave GF the green light to reopen to guests more than a year later, demand was so decimated that GF decid ed it couldn’t make payments on its $31.3 million mortgage and took steps to surrender the prop erty to Oceanview rather than go through a foreclosure process. But Oceanview led a foreclosure suit anyway last summer, asking a DuPage County judge to force GF and founder Kenneth Kochenour to pay back a total of $33.2 million. DuPage County records show the cases were dismissed in No vember. A source with knowledge of the matter said an a liate of Oceanview subsequently took control of the property and recent ly marketed it for sale, ultimately reaching a deal with the Be ort venture.Aspokesman for Oceanview did not respond to a request for com ment.GFbought the hotel for $27 mil lion in 2015 from private-equity giant Blackstone, which had taken over the property in 2010 through an acquisition of distressed debt tied to a larger portfolio of hotels. e Westin is part of the 300acre Hamilton Lakes Business Park, which includes a mostly va cant 27-story o ce building that previously housed the headquar ters of insurance brokerage Gal lagher. at 490,000-square-foot property, at 2 Pierce Place, was sold earlier this year for around $24 million to a venture of New York-based investor Sovereign Partners.Anumber of local distressed hotels and hotel loans are mak ing their way through foreclosure and will test investor sentiment for heavily discounted deals. In the suburbs, Atlanta-based lender Ardent is trying to sell $34 million worth of defaulted mort gages backed by the 249-room Hilton Chicago Northbrook. Downtown, the owner of the Palmer House Hilton Chicago was recently dealt a foreclosure judg ment, while the lender tied to the JW Marriott Chicago submitted the highest bid in a sheri ’s sale to complete the foreclosure process and take control of the property. A distressed $44.7 million mort gage on the 228-room Hotel Felix at 111 W. Huron St. also went up for sale this month, more than a year and a half after the hotel’s owner was hit with a foreclosure lawsuit.
8 AUGUST 29, 2022 • CRAIN’S CHICAGO BUSINESS
An Oklahoma real estate inves tor is buying a pair of distressed suburban hotels in a wager that brighter days are ahead for the COVID-gutted hospitality sector. In a pair of deals poised to re solve pending foreclosure lawsuits, a venture led by Oklahoma-based real estate investor Mark Be ort this month bought the 269-room Hilton Orrington hotel in down town Evanston and has agreed to acquire the 408-room Westin Chi cago Northwest in Itasca, according to people familiar with the deals.
New York-based real estate rm Olshan Properties and its lender earlier this year hired the Chicago o ce of Jones Lang LaSalle to mar ket the property, a move that came more than 10 months after Olshan was hit with a foreclosure lawsuit for allegedly defaulting on its $40 mil lion loan. e loan was packaged with other mortgages and sold o to commercial mortgage-backed securities investors, making most of the property’s nancial data public. When the foreclosure com plaint was led, Olshan indicated to special servicer Midland Loan Services—which is overseeing the mortgage on behalf of CMBS bondholders—that it planned to hand over the keys to the property to resolve the matter. But the two agreed instead to try a short sale to recoup as much of the lender’s investment as possible. e loan balance is just un der $39 million, according to Bloomberg data tied to the CMBS loan, meaning CMBS investors will take a nancial haircut in the sale to Be ort’s venture. e pur chase price is also dramatically lower than the $60 million Olshan paid for the hotel in 2015. e hotel performed well prior to the pandemic, generating net cash ow of nearly $3 million against less than $2.6 million of debt service, Bloomberg loan data show. But net cash ow plummeted during the pandemic to less than $1.3 million during the 12 months ended in June 2020. Olshan stopped making loan payments in August 2020, accord ing to the foreclosure complaint, and the property was appraised at $34 million in February, Bloomberg CMBS data show. Be ort did not respond to a re quest for comment. A spokesman for Olshan did not immediately pro vide a comment on the transaction.
BY JOHN PLETZ
BY DANNY ECKER
The Westin Chicago Northwest in Itasca.
The deals mark the biggest sales of such proper ties in the area since the beginning of the pandemic
A venture led by Be ort, who is backed by a high-net-worth fami ly in the Oklahoma City area, paid just more than $34 million for the nine-story property at 1710 Or rington Ave. in Evanston, sources said. e purchase price of the Westin could not be determined.
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After negotiating for a house, the most gruel ing consumer purchase has to be acquiring a new car. But considering what’s going on these days, buying a fresh set of wheels could soon be No.Since1. I’ve been looking for another ride this summer, that assertion comes from spend ing time on the front lines of the new-car world: a thicket of on line and real-time dealerships that, not so very long ago, were brimming with enough product to sate nearly any craving. Well, fellow car seekers, those days are over, never to return. e new-car lots are virtually empty and will probably stay that way for a long time, maybe forever.What’s more, the car buying “skills” many of us have honed over the years—the clever ways we’d wheel and deal with salespeo ple—are as obsolete as cursive writing. One guy I know said he would only shop for new cars on the coldest days of December; he thought the showrooms would be ghost towns and desperate sales sta s would eagerly slash their prices before year-end. I don’t think that ploy really worked.ButIdo know this: Any type of bargaining nowadays is met with indi erence from new-car salespeople and, in some cas es, outright gu aws. at’s be cause carmakers, strapped for computer chips and still coping from COVID-related supply chain disruptions, have severe ly limited production of new vehicles. In turn, dealership al locations are crimped as never before and there’s not much to sell. What’s left to peddle is assuredly being sold at a premium—sometimes a super-pre mium.Remember the salad days when any one who bought a new car for “sticker,” the manufacturer’s suggested retail price, was considered a chump? Over my adult life I’ve bought my fair share of new cars—Honda, Mazda, Jeep, Toyota—and never paid stick er. At least I believed I didn’t. Like many, I was a typical middle-of-the-road negotiator. I wanted a good car at a competitive price, and if the dealer threw in the oor mats for “free,” that was a win. So imagine my amazement recently when one car seller said the modest sedan on the showroom oor has a $15,000 “market ad justment” fee on top of the MSRP. at bears repeating: $15,000! Greed is certainly good for that car seller. Another dealership slapped on $2,000 over sticker; and yet another added $3,000 but would toss in some good ies such as an extended main tenance plan; the salesperson sheepishly said the car manu facturer wanted to give buyers “something” for all that extra moola.Each dealership basically said, “Take or leave it.” Some online and in-store sales rep resentatives delivered the ultimatum with a little gallantry, while others got impatient and dismissive after I began asking about the new-car bounty. “We’re not the only ones doing it,” one salesperson hu ed. Yeah, we get it. is is known as “what the market will bear” or “supply and demand.” It’s one of those dynamics that makes a University of Chicago economist’s heart go pitter-patter.
at’s the conclusion one can’t help but draw upon reading Crain’s Q&A with Rich ard Ennis, a veteran Chicago investment consultant who argues that the benchmarks many public funds use to grade their own performance distort the picture—and raise serious questions about their integrity. (Read the Q&A on Page 2.) You’re probably already aware that here in Illinois, public employee pensions are among the most underfunded in the nation, with a total unfunded liability—the amount the funds owe that they can’t a ord to pay— now totaling in the range of $130 billion. Even with recent improvements in perfor mance, the giant portfolios set up to cover the retirements of public employees around the state are now about 46% funded. Ennis argues in a recent edition of the Journal of Portfolio Management that 24 state pension funds nationwide—including two big ones in Illinois—set benchmarks too low and then overpay managers once performance is made to appear better than it is. Ennis estimates that in the decade through June 2020, management fees at those funds around the country averaged 1.3% of assets—roughly equaling the fund underperformance he measured. He found that the pension systems he studied under performed passive investing indexes by an average of 1.4 percentage points, despite re porting a 0.3-point positive margin against benchmarks. Only one of the funds beat in dexing over the 10-year period. “ is sharp disconnect raises questions about the usefulness of the funds’ perfor mance reporting, as well as their heavy reli ance on expensive active management,” En nis concluded. “Altogether, the results paint an un attering portrait of the stewardship of public pension funds in the United States.”
Among the two dozen funds Ennis sur veyed, the $66 billion Teachers’ Retirement System of the State of Illinois was the fourthworst performing, reporting an annual ized return (8.3%) that was 3.23 percentage points lower than an indexed return. e gap was a negative 1.24 points, just above the median, for the $24 billion State Em ployees Retirement System of Illinois. For the State Universities Retirement System, which Ennis examined at Crain’s request, the shortfall was 1.9 points. TRS in particular came out looking espe cially bad in Ennis’ analysis. Its active man agement record “is among the worst of the approximately 50 large funds in my dataset,” Ennis told Crain’s Steven R. Strahler. “ e excess return of -3.23% for TRS means that it underperformed passive investment by that margin annually for 10 years.” So what would Ennis do to hold public pensions more accountable and set them on a path toward healthy funding levels?
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Illinois’ public employee pension prob lem is even worse than you thought.
Robert Reed, a veteran Chicagoeditormagazine,contributesjournalistChicagowhotoChicagoisaformerofCrain’sBusiness.
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“I would bring about the type of reform initiated in the private sector in the wake of the Studebaker debacle,” Ennis said, re ferring to the epic implosion of Studebak er-Packard, which closed its South Bend, Ind., plant in 1963 and subsequently slashed pensions for roughly 4,000 workers. at collapse ultimately inspired the Employee Retirement Income Security Act, signed into law by President Gerald Ford a decade later. at law, among other things, established minimum funding requirements for cor porate pension plans. It also required that liabilities be reported at their market value. “ e reform played out over decades and in piecemeal fashion,” Ennis noted, “but these are the two pillars that set apart public and private plan funding: assured funding and liabilityIllinois’valuation.”publicemployee pension plans could certainly use a lot more of both.
Buying a new car? You’re not in the driver’s seat.
Here’s something else: e chances of get ting exactly the car you want is problematic even if you do order from the manufacturer, which is limiting not only the number of cars made, but also what’s in them.
YOUR VIEW ANY TYPE OF BARGAINING NOWADAYS IS MET WITH INDIFFERENCE FROM SALESPEOPLE.
10 AUGUST 29, 2022 • CRAIN’S CHICAGO BUSINESS EDITORIAL
A buyer may crave a hot-rod red SUV with leather interior, sunroof and heated seats—you need heated seats during Chi cago winters—but will have to settle for whatever SUV rolls o the assembly line that month. In short, buyers end up paying full price for a car that doesn’t have everything they want. What’s more, I know folks who ordered a new automobile only to be told months lat er that it wasn’t coming and thanks for your time.(Ididn’t get into the used car or leasing
It’s not just that the performance targets are too easy to meet. It’s also that pension fund sta ers and the outside money manag ers who handle these investment portfolios for them are often the same ones setting up the yardsticks that measure success. Ennis calls this benchmark bias. It can in ate fund ing shortfalls and de ate retirees’ monthly payments. It can also shrink paychecks for public employees and boost taxes for every one else as the ratio of taxes used to nance locked-in pension obligations gets thrown further out of whack. In short, the goal posts are easy to hit—and even when they’re not, they’re easy to move. And who gets to move them? e funds themselves.
An even darker take on the state’s pensions
It is sad that we concede to a bunch of hooligans that raided the monu ment instead of the will of the people who overwhelmingly are in favor of re turning the monuments to their right fulThisplaces.reminds me of another “big lie” that was responsible for raiding the U.S. Capitol on Jan. 6, 2021. Why are we so righteous to think that we are being politically correct in this case? As a member of the Chicago Monu ments Project Advisory Committee, I admit it was hard for me to participate in an effective manner due to illness, but the few times that I did speak up, my objections were loud and clear.
CRAIN’S CHICAGO BUSINESS
CRAIN’S CHICAGO BUSINESS • A UGUS T 29, 2022 11
My bet is new-car inventory will remain tight, even after the chip crisis abates, because that’s the way the carmakers and dealers want it. Limiting supply cuts down on nasty overhead costs, making car production and selling a more rational business model. What’s more, con trolling demand invites higher prices because more buyers will be chasing fewer cars. Should we villainize car manufacturers or dealerships for what’s going on in the market place? Probably not. But that doesn’t mean we have to like it. My summer excursion didn’t lead to purchas ing a shiny new vehicle. But I did learn something important along the way: Car buying is becoming less engaging, more aggravating and very expensive.
NOMINATE NOW! Deadline is Friday, September 9 Crain’s 2022 Notable Military Veteran Executives will recognize accomplished veteran executives in the Chicago area for their success during the last 18 months.
MILITARY VETERAN EXECUTIVES 2022
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JOHN VINCI Fellow of the American InstituteArchitectsofChicago
Columbus discovered the Americas in 1492. The tragic fate of the Ameri can Indians is a long and treacherous battle that has its roots in colonization. The tragedies and atrocities were not due to Columbus, who never stepped foot on the mainland. I hope that we can rectify this tragic misunderstanding and return Colum bus to his rightful place.
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Return Columbus to his rightful place in Chicago LETTER TO THE EDITOR market, but each of them has also been a ected by limited supply and outpaced demand.)
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I t is a sad state of affairs when a committee deems Christopher Columbus was the cause of the American Indians’ fate (“Columbus statues should stay in storage, panel says,” Aug. Columbus19).was an explorer who opened up the west to new horizons and has been honored for such an accomplishment. Our capitol, cit ies, countries, universities, rivers and mountains have been named in his honor acknowledging this fact. The World’s Columbian Exposition of 1893 and its accomplishments are honored on the flag of the city of Chicago.
HEALTH CARE Noble Schools, Chicago Tanya Klinkhachorn has been named Chief People Of cer of Noble Schools. In her tenure at Noble, she has created the Distinguished Teacher program, co-launched the Diverse Leaders Fellowship, and led the recruitment and hiring of teachers and leaders. Previously, Tanya was a biology teacher and science department chair at Uplift Community High School in CPS and was a management consultant for Bain & Company. She earned an MBA from the University of Pennsylvania and a BS from Yale.
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Ardmore Roderick, Chicago Ardmore Roderick (AR), one of Illinois’ infrastructureminority-ownedlargestengineeringrms,welcomes
Saint Anthony Hospital, Chicago Saint Anthony Hospital welcomes Ericka Anderson as Vice President, Chief Human Resources Of cer to lead the human capital strategy. In this role, she will provide leadership to organizational management and planning. Prior to joining Saint Anthony, Ericka served as Head of HR retail for Circle K supporting the Heartland Division and spent over 9 years leading and executing HR strategy for CVS Health, including the CVS/Target acquisition in over 47 states. CARE
HEALTH CARE Freeborn & Peters LLP, Chicago Freeborn & Peters LLP continues the expansion of its real estate practice group with the addition of Peter A. Monzon as an associate in the rm’s Chicago of ce. Monzon focuses his practice on corporate transactional matters with an emphasis on commercial real estate acquisitions, dispositions and leasing transactions. Prior to joining Freeborn, Peter served as an Associate at Rock Fusco & Connelly, LLC.
To place your listing, visit www.chicagobusiness.com/peoplemoves or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com
Valukas Whildin physIQ, Chicago Michael T. Neeb, a proven senior executive leader with extensive healthcare hasexperiencebusinessworldwide,beenappointedas a physIQ Special Advisor to the CEO. In this role, Michael will provide visionary leadership and practical knowledge to support physIQ’s mission to improve health outcomes while reducing cost.
Wintrust Mortgage Warehouse Lending, Chicago Wintrust is excited to announce the promotion of Kevin Mitzit to president of Wintrust Mortgage Warehouse Lending. Kevin has been leading Wintrust’s mortgage warehouse efforts for the past 15 years. Under his leadership, the team has recently expanded to focus its breadth and reach to a national customer base. Wintrust is excited to announce the promotion of Cindy Zuckerman to chief operating of cer of Wintrust Mortgage Warehouse Lending. Cindy joined the Wintrust team almost a year ago and has made remarkable contributions. She has not only helped to recruit several valuable team members but has deepened/ strengthened Wintrust’s mortgage warehouse risk management processes and has begun laying the internal foundation for national growth. / FINANCE
Jamal E. Jackson, JD, MBA as Vice President & General Counsel. Jackson’s experience in mergers and acquisitions, nance, and corporate structuring will play an integral part in Ardmore Roderick’s growth strategy. Jackson earned his JD, MBA, and BS in Business Administration degrees from Creighton University where he currently serves as an elected member of the School of Law Advisory Board.
BANKING
CONSTRUCTION
Wintrust Commercial Banking, Oak Lawn Wintrust is proud to welcome Vice President Tonya Berg to the Wintrust Commercial Banking team. Tonya brings over 9 and half years of banking industry experience in which she has progressed from a small business credit analyst to a middle market banker due to her focus on the customer experience. She also brings with her a strong credit knowledge which allows her to offer creative banking solutions to her customers.
HEALTH CARE
PEOPLE ON THE MOVE Advertising Section
Erie Family Health Centers, Chicago David Bruce has been named Chief Financial and Administrative Of cer of Erie Family Health Centers. David joined Erie as CFO in 2015. In this new role, he will lead Erie’s nancial strategy and the implementation of strategic projects, ensuring that Erie adopts innovative approaches and maintains strong nancial systems to support current operations and future growth. David was named Large Not-for-Pro t CFO of the Year in 2021 by the Financial Executives International (FEI) Chicago Chapter.
Komnenich Ma First Bank Chicago, Westchester First Bank Chicago, one of the top ve privately held banks in Chicagoland, is pleased to welcome Ouxiang Chen as SVP, Middle Market Banking. Based in our Westchester of ce, she is responsible for supporting our expansion strategy by growing strong client relationships while managing commercial credits within our Middle Market & Large Corporate portfolios. Ouxiang brings 20+ years of banking expertise and has held leadership roles with Old Second National Bank, Parkway Bank, and Wells Fargo.
ARCHITECTURE / DESIGN
Lamar Johnson Collaborative, Chicago Lamar hasCollaborativeJohnson(LJC)promoted Max Komnenich, AIA, to Associate Principal. He has 12 years of experience and has worked on a diverse portfolio of projects, spanning residential to community markets. Max has a BS and M.Arch from the University of Illinois and is a Registered Architect in Illinois. LJC has promoted Taokai Ma, AIA, to Associate Principal. He has nine years of diverse experience in architecture, urban design, and planning and brings a unique perspective to the design process.
Erie Family Health Centers, Chicago Erie Family Health Centers welcomes Kellie Medious and Robin Varnado to its Executive Leadership Team. As Associate Vice President, Patient Access Operations, Kellie Medious leads Erie’s call center, scheduling, referrals, hospital relations, HIM, frontend revenue cycle, and other program areas that support patients’ access to Erie’s andvolume,ongoingofdevelopmenthealth,includingoperationsOperations,AsDEIdriveshealthcare.high-qualityShealsostrategyasErie’sOfcer.AssociateVicePresident,RobinVarnadoleadsatErie’s13locations,behavioralandoralandfacilities.Sheleadstheandimplementationkeyoperationalinitiativesandprioritiesincludingvisitbudgets,enterprisegoalsclinicalqualitymeasurements.
BANKING
Tonya is a graduate of the University of St. Francis in Joliet, IL.
EDUCATIONNobleSchools, Chicago Claudia Rodriguez has been named Chief of Public Affairs for Noble Schools where she oversees the communications and government and community affairs strategy for the network. She previously served as Executive Director of the Illinois Beverage Association and worked as a legislative aide to the chairman of the Committee on Health and Environmental Protection for the City of Chicago. She holds a Master’s in Public Policy and Administration from Northwestern and a BA from DePaul University.
BANKING / FINANCE
HEALTH CARE
HEALTH CARE Medious Varnado
Camden Capital, North Palm Beach / Chicago Camden Capital is pleased to announce Dylan Kremer as Co-Chief Investment Of cer. Throughout his career, Mr. Kremer has helped build industryleading investment platforms while developing deep insights in portfolio construction, macro investment strategy and tactical asset allocation. He has also worked directly with large family of ces, institutions, foundations and endowments. Camden Capital is excited to welcome Mr. Kremer to the rm as they look to build out their Midwest presence.
HEALTH
Taokai has an M.Arch, and a master’s in urban design from Washington University in St. Louis.
LAW
EDUCATIONNobleSchools, Chicago Darko Simunovic has been named Chief Operating Of cer at Noble Schools. Darko has been with Noble for over a decade. He was a founding Assistant Principal for Hansberry College Prep and later moved to Mansueto High School as the founding Principal where he guided the construction of the new school and then built the campus into one of the largest and most successful schools in Chicago. He holds a Master of Urban Special Education from Cardinal Stritch University and a BA from Knox College.
LAW
Croke Fairchild Morgan & Beres, Chicago Croke Fairchild Morgan & Beres welcomes Camila Di Mauri as an associate focusing on general corporate and transactional matters. Prior to joining the rm, Camila worked with the Special Litigation Bureau at the Illinois Attorney General’s Of ce, where she helped launch the state’s rst unconstitutional pattern and practice investigation of police misconduct. She also previously worked as a federal litigation coordinator at the National Immigrant Justice Center.
Bradley Beutler. Brad will serve as the Business Development Manager, focusing on new business and expanding our footprint in the Chicagoland area. Brad brings deep knowledge, strong relationships and tenacity to this role. We are excited to receive his fresh perspective and outlook for the future.
ENGINEERING / CONSTRUCTION
EDUCATION
Mitzit Zuckerman ACCEND Construction, Chicago ACCEND, A Skyline Construction Company, is thrilled to announce that Alex Gomez has joined the team as Senior Superintendent. Alex is an teamAlsowithprojectssolveassessleadutilizeconstruction.inasuperintendentaccomplishedwithoverdecadeofexperiencetenantimprovementAlexwillhisexpertisetotheprojectteam,risks,problemandensurethatarecompletedthehighestquality.joiningtheACCENDis
Gomez Beutler Saint Anthony Hospital, Chicago Saint Anthony Hospital welcomes Cheryl Russell as Vice President, Chief Development Of cer, leading Foundation,AnthonyinitiativesphilanthropicfortheSaintHospitalanddonor engagement for the hospital relocation to the Focal Point Community Campus. Cheryl most recently served as the Executive Director of Corporate, Foundation, Government, and Civic Affairs at the School of the Art Institute of Chicago.
Erie Family Health Centers, Chicago Amy Valukas has been appointed to the new role of Chief Population Health Of cer of Erie Family Health Centers, a leading community health system with 13 locations serving theirtheunderstandpoorpatientstoAmyChiefpatients. Formerly88,000Erie’sOperatingOfcer,willnowleadeffortsusedatatoidentifyathighestriskforhealthoutcomesandandimpactsocialfactorsdrivinghealth. Victoria Whildin has been named Chief Operating Of cer. Victoria brings nearly 20 years of healthcare operations leadership experience, including her previous role as Erie’s Senior Vice President of Operations. She will build on Erie’s strong COVID response to further Erie’s strategic goals and create business solutions to improve patient care.
HIGHER EDUCATION HARRIS POLL: Who stands to lose the most when small colleges close. PAGE 14
BY JUDITH CROWN College presidents in Illinois are swimming against hostile currents. ey are recruiting from a shrinking pool of high school seniors and see growing skepticism that a four-year degree is required for a good career. College recruiters call the population drop “the cli .” e cohort of Illinois high school seniors graduating in 2023 is down 5% from a 2015 peak, with the Gen Z ranks thinner than their millennial predecessors. e number of high school graduates is expected to drop a stunning 22% by the mid-2030s. Given the horror stories of students graduating with unmanageable debt and the relative ease of landing a fulltime job in this economy, it’s no wonder that the need for a bachelor’s degree is being questioned. In a search for fresh talent and more equitable recruiting, Chicago companies that once required degrees for entry-level jobs are opening their doors to students from community colleges through apprenticeship programs.Small private colleges have been hit the hardest. ey lack the cachet of the most elite institutions and the resources of large state universities. ese are the colleges that educate the students who are the rst in their families to attend college—they may be students of color and often are from low-income households.
THE
STUDENTS FIRST: Dominican University bucks the enrollment trend. PAGE 18
‘THE CLIFF’
CRAIN’S CHICAGO BUSINESS • AUGUST 29, 2022 13 FIND THE COMPLETE SERIES ONLINE
TRUE COST: College taught her that student loans are like an albatross. PAGE 19 SPONSORS See CLIFF on 20
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Small colleges in the Chicago area struggle to remain relevant as the pool of high school seniors shrinks, student debt climbs and skepticism grows about the value of a four-year degree
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IMAGESGETTYWITHILLUSTRATIONCRAIN’S
CRAIN’S: How is Aurora managing the challenges facing smaller private colleges?
Colleges and universities have high rates of health care utiliza tion, and some are combining pools to get better insurance rates. It’s done widely in Wiscon sin. Could we share back-of-thehouse services with neighbors like hotels to provide food service and maintenance of the physical plant? at’s an unexplored area. Any new program initiatives? is fall, we’re welcoming students on the autism spec trum. We worked on this for 10 years, and this is a rst cohort of college-capable students with autism. We’re constructing a dedicated residence hall where they will feel at home, comfort able and calm. We think these students will be in every (profes sional) eld, and we’ll help them adapt. Has Aurora su ered sta turnover during the pandemic?
How do you ease the nancial burden?
BY JUDITH CROWN Rebecca Sherrick has led Aurora University since 2000. Campuses in suburban Aurora, downstate Woodstock and Williams Bay, Wis., enroll more than 6,000 stu dents. More than half of the uni versity’s students are the rst in their family to attend college and about 40% are Hispanic. Aurora was found ed in 1893 as a seminary college in Mendota and moved to Aurora in 1912. Before assuming leader ship of Aurora, Sherrick served for 20 years as a faculty member and senior administrator at Carroll University in Waukesha, Wis. is transcript has been edited for length and clarity.
to the Monetary Award Program and the federal government increased Pell grants. We keep tuition low and we are conservative managers. Our residence halls are clean and safe but not luxurious. We pay close attention to cash ow. And we counsel students on their choic es, like study abroad. We want to make sure they can a ord what they’re choosing. Are there more e ciencies to be had?
MOST CHICAGO RESIDENTS EQUATE A COLLEGE EDUCATION WITH SECURITY.
Our legislators in Spring eld and Congress have stepped in. is year, the state increased funding
14 AUGUST 29, 2022 • CRAIN’S CHICAGO BUSINESS
ford to. ey rely more heavily on tuition dol lars than tax-funded public schools and elite universities with sizable endowments, making it more dif cult to o er tuition relief to cash-strapped families.islack of funds causes many small pri vate colleges to ques tion their viability. Some have managed to survive by merg ing with other institutions. Others have permanent ly closed, leaving current students scrambling to nish their degrees elsewhere. Each closure not only ends a school, but also impedes opportunities for members of marginalized communities to im prove their career prospects and nancialLincolnstanding.College, a predomi nantly Black institution (a feder al designation signaling that the student body is at least 40% Black and at least 50% low-income or rst-generation college students), illustrates this trend. Many of its students saw Lincoln as a refuge from di cult situations back home and a unique chance to better their career prospects. e college boasted record-break ing enrollment numbers in 2019, but nancial strain stemming from COVID and exacerbated by a debilitating hacking incident forced the school to close in May. Some former students described the closure as a “betrayal” from school leaders and a setback for their future plans. While higher education is seen as a popular avenue for advancement, Chica goans realize that their children have other options, but those op tions must improve. Nearly 9 in 10 residents (87%) want Chicago Public Schools to prioritize o ering nonacademic, skills-based programs (e.g., life skills classes, technical training) to prepare students for life after high school. Only 36% of area residents think that children in Chicago have access to all the re sources (academic, nancial or otherwise) they need to succeed, however.Asination and a possible re cession threaten Chicagoans’ wallets, families will have to de cide where to point their children for social and economic progress. If the trend in closing private col leges continues, focusing on high school skills-based programs may become more desirable, feasible—and even necessary. Alternatively, the federal govern ment may have to increase aid for schools that serve minorities in response to their economic re alities. Additional funding could prevent more private colleges from going under and help en sure that their students can earn a college degree. One way or another, something— or someone—is going to have to give.
William Johnson is CEO of e Harris Poll, a global public andmarketopinion,researchstrategyrm.
The former seminary launches new programs and welcomes students on the austism spectrum
Aurora University makes some smart moves to keep pace
Small midtier private colleges play an essential role in higher education, providing an alterna tive to public and elite private in stitutions. However, these smaller schools face headwinds, battling signi cant nancial pressures that the COVID-19 pandemic only intensi ed. Some schools merged with other colleges to survive while others were forced to permanently close, as hap pened with Lincoln College in downstate Illinois earlier this year e loss of these colleges espe cially harms minority and lowincome communities, many of which depend on midtier private schools for social and economic advancement.MostChicago residents equate a college education with security. According to Harris Poll research, 71% of city residents agree that earning a college degree is the best way for children to secure their future. Some families ques tion whether a college educa tion is worth the steep price tag, however, and wonder whether they could even repay student loans. is is no trivial question: e U.S. cur rently has $1.7 trillion in outstanding student loanTuitiondebt. anxiety hits many American fam ilies, but Chicagoans of color may nd it especially hard to af ford higher education. Six in 10 Chicago res idents of color (59%, compared to only 41% of white tynomicbelieveresidents)thatecoinequaliisworseinChicago compared to other U.S. cities, making an already expensive advancement opportunity—a postsecondary education—feel even further out of Whilereach. small midtier colleges would like to attract students with generous nancial aid packages and grants, many schools are in nancial distress and cannot af
BY WILLIAM JOHNSON
SHERRICK: We’ve had growth in some areas, declines in others. We knew this was coming and we planned for it. A decade ago, we launched online capability, primarily for graduate programs. We’re about to launch an online initiative to reach students in rural parts of the state where there are fewer options. is is the rst time we’ve gone online for undergraduate programs. Many of your students are rst generation and their families are from underrepresented groups. How are they doing? e Great Recession of 2008 dramatically impacted family income. e pandemic made it worse. We worry about debt and the nancial pressure on fami lies. We see our students working up to 40 hours a week and going to college. Some are going full time with a tough curriculum like nursing. In many cases, they’re expected to contribute to the overall well-being of their fami lies. at’s a social and economic burden that’s pretty heavy.
Marginalized communities hit hardest by college closures
Eckhart Hall is the oldest building on Aurora University’s campus.
We were hit by the “Great Res ignation.” It’s mostly on the sta side. For the past nine months, we’ve had between 30 and 50 vacancies. Some people had been willing to drive a long way to work. But when they had the experience of being at home more and not making that drive, they wanted more balance in their lives. People look around and say, “I’m going to do it di er ently.” One of our stellar student life professionals moved with her husband to Charleston, S.C. We had a brilliant library director who suddenly found an oppor tunity with a much shorter drive and took it. People feel empow ered to make choices about their lives.
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Today’s strong labor market is likely prompting some prospective students to choose jobs over education. at’s despite clear evidence that adults with a college de gree have better employment outcomes, greater earning potential and more stability during economic downturns than those with out a Yet,degree.weare not doing enough to help stu dents get to and through college. Many institu tions are prohibitively expensive. Need-based nancial aid is insu cient to cover college costs. We implement policies that keep stu dents out, and we fail to scale programs that help them achieve their educational goals.
Universities, such as Loyola University Chicago, have partnered with third-party enterprises to introduce hybrid accelerated bachelor of science in nursing programs to create e cient pathways for working adults looking to switch careers. And the U.S. Department of Health & Hu man Services recently announced it would invest nearly $60 million to fortify the sup ply of front-line health care workers in rural areas that desperately need more resources. Addressing the local and national shortage shouldn’t mean expecting less of our health care system or more of nurses. Instead, we should be providing the exibility, support and adaptive resources nurses need to suc ceed in a demanding and ever-changing eld.
THE FOUNDATIONAL SYSTEMS ON WHICH NURSING ENROLLMENT RELY ARE STRAINED.
Arizona, for example, allows nursing stu dents with one semester completed at an approved nursing school and successful pas sage of the nursing exam to apply for a nurs ing assistant certi cate. e state also allows wider use of simulated training and online coursework to earn degrees. Similarly, the Missouri Board of Nursing introduced a pilot faculty quali cation program, allowing active nurses with pertinent clinical experience who complete an approved training program to in struct at their existing education level, open ing the potential faculty pool signi cantly.
Elected o cials, educators, nursing boards, investors and employers have an op portunity to play a meaningful role in driving those innovative and e ective solutions. And they must do so without sacri cing quali ty of care. Public o cials can help support initiatives that make it easier, not harder, for nursing students to earn degrees, complete a portion of training through accessible, remote labs and simulations, and work across state lines where necessary.
NECESSARY ACTIONS
President Joe Biden’s historic student loan forgiveness proposal will help narrow the ra cial wealth gap and address the student debt crisis, but it will do little to make higher edu cation more accessible for future generations. Now it’s on colleges and state policymakers to remove institutional barriers to entry and ensure students have the supports they need to persist. And they must do so with urgency. e state must invest more in colleges and college students. Illi nois’ long history of disinvestment in higher education has led to in creased costs to students. And with out a rational approach for how the state allocates 99% of its public uni versity funding, racial disparities in college access and completion have been exacerbated. With a rmative action under threat of being over turned, racial disparities in access could Illinois’ Commissionwiden. on Equitable Public University Funding, which launched last fall, must design a funding formula that encour ages selective universities to open their doors wider for students of color. And it must ensure that all institutions, especially those serving students of color and those from low-income households, have the resources they need to keep costs to students low. On the student side, Gov. J.B. Pritzker in creased funding in the Monetary Award Program, Illinois’ need-based nancial aid program, by 50%, helping thousands more students a ord higher education. Perhaps that’s why we’ve seen an uptick in FAFSA, or federal student aid, lings. But the cost to attend college is still prohib itively expensive for students with the least resources. e administration must maintain momentum toward a fully funded need-based aid program—one that covers all eligible stu dents and all tuition and fees. e state also should eliminate state nancial aid to for-prof it colleges.Beyond increasing a ordability, higher ed institutions should audit their practices and remove systemic barriers to access and completion, such as harmful course place ment policies and withholding transcripts if students have unpaid debt. ey could use federal Higher Education Emergency Relief Funds to re-engage the approximately 1.7 million adults in Illinois with some college education but no degree. Programs like Chi cago State University’s Cougar Return and City Colleges of Chicago’s Fresh Start can in crease college access by o ering debt forgive ness to eligible students who want to re-en roll and nish their degree. Or institutions could work together to ad dress the “stranded credits” problem, which occurs when students have course credits they cannot transfer because they owe money to the college. With Joyce Foundation support, eight colleges in Ohio are designing a stranded credits pilot program, where participating in stitutions agree to settle debts and release the transcripts of former students who can then re-enroll in any participating institution. Getting students in the door is only part of the solution. Institutions must be studentready, designing practices and policies to en sure every student graduates. e new federal College Completion grant program can help support these e orts. Colleges should apply and invest federal COVID relief funds in evi dence-based programs that support students to degree completion. ese programs will require continued state investment to ensure sustainability, but if implemented with deli ty, they can accelerate equitable college com pletion.Finally, post-secondary institutions should work closely with K-12 districts to build bridg es that help students, especially those of color and those from marginalized backgrounds, move from high school into college. One good example is the Chicago Roadmap, a compre hensive compact between Chicago Public Schools and City Colleges of Chicago that aims to smooth the transition from high school to communityInstitutionalcollege.leaders and state policymak ers have the tools and resources to deliver on higher education’s promise of equal opportu nity to ensure a diverse and educated work force. Now they must take action. Illinois stu dents and families are depending on it.
Emily Goldman is a program o cer in the Joyce Foun dation’s Education and Economic Mo bility program. e Joyce Foundation is a sponsor of Crain’s Forum. Adnan Nisar is partner and cohead of Knowledge & Learning ofVistriaChicago-basedateVistriaGroup.isasponsorCrain’sForum.
ADAPTATION
Before the COVID-19 pan demic exacerbated a nation wide nursing shortage, one of the country’s largest health care providers got proactive: The hospi tal system bought a nursing school to strengthen its talent pipeline and retention of nurses. Today, more than 1,000 HCA Healthcare employees are enrolled at Galen College of Nursing, and many are benefiting from loan repayment and tuition assistance programs. is type of proactive, outsidethe-box approach is critical to ad dressing a pressing nursing short age that the traditional model of education delivery and funding simply cannot solve alone. e foundational systems on which nurs ing enrollment rely—postsecondary edu cation and clinical training—are strained. Without urgent and thoughtful intervention, the quality of care provided by the health care system upon which we all depend is at risk.
Illinois can reverse declines in enrollmentcollegenumbers
An outside-the-box approach to solving the nursing shortage
Illinois’ college enrollment num bers do not bode well for the economic mobility of our young people, nor for the economic pros perity of the state. Since peak enrollment in 2009, undergraduate enrollment at pub lic colleges and universities has declined more than 30%. We’ve lost nearly 55,000 Black undergraduate students, and our state’s agship institution now serves a smaller percentage of Black students than it did 20 years ago. Meanwhile, en rollment at for-pro t institutions— which have questionable value and alarming student debt outcomes— has been increasing, especially for students of color.
16 AUGUST 29, 2022 • CRAIN’S CHICAGO BUSINESS
Consider:eBureau of Labor Statistics predicts a shortage in nursing sta members of roughly 1.5 mil lion by 2026. e average age of nurses to day is 52, and for specialty nurses even higher. As they edge toward retirement, an aging baby boomer population is ooding health care systems with increased demand, creating a double crisis. Universities are also turning away applicants at the front end due to lack of resources. In 2020, 80,521 quali ed applicants were not accepted at schools of nursing due primarily to a shortage of fac ulty and clinical sites to serve them. e solutions to nursing gridlock require an all-hands-on-deck approach, some of which we saw during the early months of the COVID-19 pandemic. Facing an un known global health crisis, governors and state legislatures instituted new rules to ease requirements for nursing graduates and allowed for more simulated training versus in-person clinical training.
Susan Lucci, a former lawyer, is a college essay coach, facilitator and a certi ed Purpose Guide.
Many students apply to eight or more schools, to play the odds of what feels like lottery-like stakes. You don’t have to have a child applying to college to know that the cost of college has skyrocketed. Most students seem to apply just to satisfy their parents who insist that a college degree is required for success. Of the hundreds of stu dents I have coached, 100% nd this whole process overwhelming. And so, it is no wonder that our children’s mental health is su ering. In fact, each year I read more essays revealing their challeng es and strategies dealing with anxiety and depression. is was not the case just a decade ago. Perhaps this re ects a cultur al shift, a willingness to talk about mental health, but honestly, it’s heartbreaking! I’ve witnessed excellent students breakdown as they try to maneuver this process—which is like a part-time job on top of school and sports and socializing. “What’s working?” is my response af ter a student writes each draft of the essay. My goal is to encourage their voice, to em phasize their strengths. ey respond well to that focused shift. But, actually, I’m not sure the college application process itself is working for our youth. What do students need after 18 years of standardized educa tion? Should they be invited to take a break for service, travel or internships? Can we provide experiential learning opportunities that feel more relevant and take into consid eration their unique talents and interests? One of my brainstorming questions in vites students to share what they wish they learned in high school: 99% of them say, “practical life skills.” ey want to know how to pay their bills, rent an apartment, vote, earn a living and x a toilet. From what I see, we are being called to make a new case for life after high school: for better bridging high school to college; for o ering students multiple paths, including a gap year; and, if they choose college, for making it more ac cessible, relevant and a ordable.
LIFE LESSONS
Preparing for post-high-school life shouldn’t be this stressful
CRAIN’S CHICAGO BUSINESS • A UGUS T 29, 2022 17
Ten years ago, my oldest daugh ter applied to 10 colleges, only to be waitlisted or denied by every single one. To a 17-year-old, an excellent student at a college prep school, it was traumatic. While she got busy applying to schools with rolling admissions—and eventually received an academic scholarship to a midsize private school out of state—I decided that something must be done to make the college application process more mindful and meaningful. In my unique niche as a college essay mentor, over time I’ve noticed that students are starting the appli cation process earlier, going “testoptional,” choosing to matriculate closer to home, applying primarily to large state universities and willingly creating alternate paths like gap years. And, to my delight, stu dents are excited to engage with my creative brainstorming and writing process—willing to take a deep, re ective dive to nd their voice and enjoy how therapeutic it is to tell theirNearstory.the end of several mindless hours of lling in blank boxes with grades and scores document ing high school, the Common Application requires a 650word answer to life’s essential query: Who am I? At rst glance, students have no idea what to write. And they have virtually no ex pectations about college be yond frat parties and football games—and whatever stories their parents or older siblings have shared. My students rep resent diverse backgrounds, a uence and rst-generationaptitude: fromstudentsto those hoping to continue their families’ Ivy League legacy. No matter who, it feels like a leap into the unknown. Most go undecided or choose majors like business or market ing—advised by parents to study something that translates into a job. Very few of my students seem excited to go to college—per haps because they have no idea what they are saying “yes” to—and must leave all they know behind to make the leap.
Glena Temple is president of Dominican University in River Forest.
18 AUGUST 29, 2022 • CRAIN’S CHICAGO BUSINESS
SUCCESS STRATEGIES
Illinois’ private, independent colleges are “a hidden gem” for the state. Illinois is one of only five states to boast more than 50 independent colleges. The state’s private, independent colleges and universities enroll a larger num ber of students than the state’s public universities (204,000 vs. 185,000 students). As president of the Associated Colleges of Illinois, an association of 26 institutions, I believe it is vital for Illinois citi zens to understand the strengths of these colleges and universities, particularly in light of many wide spread misunderstandings about higherPrivateeducation.colleges and universities in Illinois educate approximately 40% of the state’s teachers and 54% of all health care work ers. ese institutions employ 68,000 faculty and sta members and contribute over $21 billion annually to the Illinois economy. In many cases, the schools are prime drivers of economic development in their communi ties and support local businesses. In our uncertain economy, higher ed ucation is not immune to the nancial headwinds a ecting so many sectors. e well-publicized closure of several small col leges in the state in recent years may fuel concerns that the entire sector is at risk or unsustainable. ese fears are unfounded. e U.S. is home to more than 700 small colleges. History shows that ap proximately 10 of these institu tions close each year, while others open. Closures capture the pub lic’s attention. e myriad ways in which colleges are evolving to meet the needs of current and fu ture students do not make head lines.Iwant to turn to an issue some have called “the non-consum erism of higher education.” Sim ply stated, students, particularly males, are not going to college in droves. Since the pandemic be gan, 1 million fewer students are attending college. Over the past decade, 3 million fewer students have gone to college from high school. “With the exception of wartime, the U.S. has never been through a period of declining educational attainment like this,” according to the Center for Business & Economic Re search at Ball State University. “Gains made in reducing class-based and racial inequali ty are being wiped away,” warns a research er at the University of Michigan’s Center for the Study of Higher & Postsecondary Edu cation.e results of a decline in educational attainment are clearly documented. Adults without a college degree are 40% more likely to be unemployed and four times more like ly to be living in poverty. ey are expected to contribute 45% less in local, state and federal taxes, while requiring more in social services expenditures. Since 2010, the life expectancy for non-college graduates has declined, while that for graduates has ris en. College graduates earn, on average, 67% more than non-degree holders, amounting to a $1 million di erential in lifetime earn ings. College graduates contribute to civil society by volunteering and voting at higher rates than nongrads. A college degree remains the most signif icant step leading to social mobility. Yet in creasing numbers of young people decline to take that step. e most compelling rea sons are costs of higher education and loss of con dence in its value. Support of education as a public good makes a di erence. Illinois’ MAP grants, as well as federal Pell grants (which sup port students whose family income is less than $40,000) make college a ordable and encourage attendance. Federal and state funds are especially e ectively leveraged in private higher education. At my own insti tution, Illinois Wesleyan University, MAP grants and Pell funds contribute approxi mately 20% to students’ overall nancial aid packages. e university draws on internal resources to provide the remainder of aid, which is true of all private institutions. State funding, such as the MAP grant, yields a high return on investment. For ex
How this university designed a holistic system of supports
MUTUAL BENEFITS S. NugentGeorgia is president of University.IllinoisandCollegesAssociatedofIllinoispresidentofWesleyan
Independent colleges contribute mightily to Illinois’ economy
The demographic trends shrinking university en rollments combined with growing concerns about high stu dent loan debt are forcing higher education leaders to reckon with a critical question: How do we re spond and thrive? Adding to these pressures are tech companies lowering barri ers to earning professional cer ti cations and badges. Universi ties are no longer just competing against each other for students, but also with these new provid ers. Perhaps most concerning is the strain that the pandemic placed on student men tal health—with student anxiety and de pression increasing at alarming rates long before COVID-19 hit. Higher education is grappling with how to respond to industry trends and changing student needs in a sec tor that has been historically slow to adapt. Dominican University, where I begin my second year as president, is responding with innovative and culturally responsive strategies that meet students’ and commu nities’ needs. Our focus on a data-driven, asset-based approach to providing holistic student supports, coupled with ac ademic excellence and intentional partnering with community-based organizations, is what sets us apart. Evidence shows that these strategies are making a di erence: is fall Dominican will welcome the largest freshman class in our history. is comes at a time when enrollments have decreased near ly 7% nationwide. Improving persistence through data-driven, holistic supports Student well-being is the fo cus of our success strategy. ree times each semester, students are surveyed to identify their academic or personal hur dles, including struggles with course con tent, making friends, nances, food or housing insecurity, or physical and men tal health. Using this data, our Assessment Care Team reaches out with customized supports. e team monitors these respons es through a technology-enhanced care network to adapt strategies as our students advance toward their goals. Dominican fac ulty are key part of the success strategy— forming mentor relationships, responding to student alerts and building high-impact experiences in courses. Dominican is proudly a Hispanic-Serving Institution, and 90% of our students come from Chicagoland. Close to 50% of students are rst in their family to attend college, and many work nearly full time to make college a ordable. We bene t from Chicago part ners, including OneGoal, Bottom Line and College Possible, who are critical in sup porting the college transition for many of our students. We recognize that many stu dents’ needs may be better provided in their home community or are beyond the scope of what we can provide on campus. In 2019, Dominican became the rst university in the nation to partner with the NowPow organization. is powerful part nership extends our case-management approach by making highly matched refer rals to support resources in students’ local communities. During the pandemic, this resource was vital, connecting students and their families to multiple services close to home. Career-readiness supports and industryresponsive programs Dominican continually modi es our ac ademic program portfolio based on mar ket demands, including our professional health-related programs. Our top-ranked master of arts in mediation and con ict res olution was born out of collaboration with Chicago’s industry and community lead ers. We introduced the nation’s rst master of arts in trauma-informed leadership to meet the demand for leaders in every eld who understand the impact individual trau ma has on employees and workplaces. Our commitment to culturally responsive strat egies, equity and justice is evident in our programs and is earning us recognition. e American Association of Colleges of Nurs ing awarded Dominican’s nursing program its 2022 award for diversity, equity, inclu sion and sustainability in nursing education for liberal arts colleges. We know that being job-ready is import ant to our students. Our model includes career-development courses, internships, capstone experiences and opportunities to connect with employers and on-site exec utives in residence, who mentor students. Each spring undergraduates exhibit their capstone projects across programs, in cluding a student-produced fashion show to industry leaders and business students presenting entrepreneurship proposals to local executives in Dominican’s version of
Cameron Gearen is founder of Gear en Consulting.Educational
A once-sure bet faces an uncertain future
We are again knee-deep in the applica tion cycle. High school seniors worldwide are cataloguing their achievements and aiming to catch an admissions o cer’s attention in 650 words. Although many schools have retained test-optional pol icies, not submitting a score now would only be an admission that one didn’t earn a score high enough to report. is could certainly be for all kinds of valid reasons, but a busy admissions o cer won’t stop to ponder what those reasons are.
ample, for $5,000 of federal funds in schol arships, private institutions contribute $22,000. One intriguing policy study sug gests that if Illinois o ered merely $1,000 more in the MAP scholarship as an incen tive to students to attend a private, rather than a public, institution, savings to state taxpayers could range from $61 million to $93Colleges’million.
CRAIN’S CHICAGO BUSINESS • A UGUS T 29, 2022 19
internally funded scholarships derive largely from grateful alumni, attest ing to the value of their education. When in stitutional, state and federal funds work to gether, we can ensure that more Illinoisans bene t and can contribute to a productive future for our state.
Earlier this year, Inside Higher Ed report ed applications at Yale University up by 7% from the previous year, and applications to Brown Uni versity up by 9% in one year, with over 50,000 applicants applying to each of those schools. e data clearly revealed that the number of unique applicants to college had not in fact risen, but that single applicants were applying to more schools, and more selec tive schools than a student might have applied to when test scores wereemandatory. test-optional policy may have been bene cial for a handful of stu dents with otherwise stellar high school records who happen to not be strong stan dardized test-takers. Overall, however, most top applicants and certainly those who got an o er were—by this time, with vaccines in place and test centers again open—sub mitting test scores. Although schools could not penalize applicants for not submitting test scores, they were still nding plenty of 1500+/34+ scorers to ll their entering class. While those who shot higher in the test-option al environment were not techni cally rejected from highly selective schools for lack of a test score, their overall application likely didn’t measure up in the eyes of the admissions o cer. Meanwhile, costs of education at a pri vate college in the U.S. showed no sign of declining, and especially as the pandem ic left unemployment in its wake, families struggled more than ever to a ord it.
In one stunning twist, the ACT and SAT, heretofore rites of passage for the col lege-bound and key points of information for college admissions o cers, were sum marily canceled and standardized tests declared optional for high school seniors who were applying for fall entry in 2020 and 2021. For many schools, optional test scores remain. Some wondered whether a test-option al environment might make the landscape more equitable. After all, a major barrier to entry had apparently been lifted. Time will tell. It wasn’t until post-application season of 2021 that we had enough data to reach a tentative conclusion. Overall applica tions were up signi cantly, especially to highly selective schools, and it seemed the test-optional rule must be the reason.
LIFE LESSONS
COUNSELING
College delivered debt, not the dreams “You may now move the tassel on your mortar board to the left.” I had just nished a rite of pas sage, a years-long journey that ended with my master’s degree in communications. After gradu ating with a bachelor’s in broad casting, I thought I was throwing myself a nancial lifeline when I chose to attend a commuter school over Spelman, a historical ly black college or university. e reality was that the cost of being surrounded by Black culture was una ordable for me, a formerly homeless child from Englewood. I thought the nancially respon sible route was to cross state lines and commute to school. And as a new par ent, I reasoned that the practicality of a lo cal school outweighed my desire to attend an HBCU.eworld is focused on the rising cost of living, but for students like me, the cost of my education is the burden that traps me in poverty. I have over $78,000 in student loan debt from my bachelor’s degree, de spite earning a full-ride scholarship that paid for my master’s degree. Student loans are the boogeyman no one wants to discuss. But like many of my peers, I am distraught by the exponential ly rising balance despite my faithful payments. We cannot simply associate the shrinking applicant pools with the pan demic or dismiss it as a byprod uct of competitive enrollment. Students are now weighing the costs of furthering their edu cation more carefully because they don’t want to be saddled with unfathomable debt for decades. ey are nding that the return on their investment is not what society said it would be. e ROI of a college degree does not outweigh the cost for many Chicagoans. I can’t count how many stu dents I encounter regularly that are scrambling to cover the costs of their education with no guarantee that they will nd employment in their chosen eld. Our elders taught us that college would be the way to a better future, but so far, it has pre vented me from making drastic changes in mine.Iconsider myself relatively privileged because I work for the government, which assists with a portion of my loans, but as I look to leave the public sector, the looming $800 monthly payment casts a dark cloud over my life. In Illinois, over 57% of residents are pay ing o loans, according to e Institute for College Access & Success. For them, college debt must be factored into every decision, and for me, it’s a decision I regret. I am a sin gle mother with two children and, despite pursuing two degrees, I am not educated enough to nd my way out of this mess. I believed what I was told: that a college education would be that gateway to my fu ture. ey neglected to mention that this future included the shackles of massive student loan debt. It’s a fundamental pol icy issue that requires a policy solution, like canceling student debt. is policy is a major cause of the decline in college ap plicants.Alack of a return on investment coupled with increased tuition costs creates the scenario in which small colleges compete against each other for an ever-shrinking applicant pool. e shrinking of applica tions is a symptom of a greater institutional crack that is screaming to be xed. We can’t simply put Band-Aids on this problem. We must diagnose and treat the real problem: a ordability. Student loan debt has become a class-based system that adds another barrier that keeps people of color from moving up the economic lad der. When we cancel student loan debt and work toward free education for everyone, we can build a postsecondary education system that works for all Americans.
Ayana Clark is the cago’scandidateanCongressmemberadvocatecommunityforaofandaldermanicinChi-21stWard.
PERHAPS BEHAVIORS WILL SHIFT . . . AND FEWER YOUNG PEOPLE WILL CHOOSE A FOUR-YEAR DEGREE.
As the pandemic hit in spring of 2020, an imme diate result was that some high school seniors who had just been admitted to institutions of higher education for the follow ing fall either declined to matric ulate or deferred their entrance.
At the time, those of us who work in college counseling won dered whether it had nally hap pened. Had U.S. students voted with their feet? Were they declar ing “enough is enough” on the cost-bene t of private college and choosing other more streamlined or debtfree pathways to employment such as ap prenticeship programs? Was the pandemic the straw that broke this camel’s back? Time will tell.
IMAGESGETTY
“Shark Tank.” We o er multiple 4+1 pro grams, supporting our undergraduates’ seamless progression to advanced degrees, often saving them a year and lowering total costs. Driven by our Dominican Catholic social justice mission, we are dedicated to tearing down barriers and creating an environment where all students can thrive. A rst-gener ation college graduate myself, I understand how important it is to have intentional strat egies for support and mentorship in college. Together we are building the future of Chi cago.
e moment when we held our breaths brie y and wondered whether the broken parts of the industry would permanently change has apparently passed for now. Will there be a moment when the popu larity of this education model permanently wanes? Will families de nitively choose an alternative route to employment for their children? Will the coming, much discussed dip in the college-age population force col leges to close? Will TikTok replace books forevermore?Timewilltell.Weknowthat having a bachelor’s degree can increase one’s lifetime earning poten tial as much as 40%. Perhaps behaviors will gradually shift over the next few decades and fewer young people will choose a fouryear degree. From where I sit, working with families daily to nd a great college t, the popularity of higher education seems ev ergreen. But if I squint past the branches, I glimpse a possible future with a more var ied educational and training landscape far on the horizon.
20 AUGUST 29, 2022 • CRAIN’S CHICAGO BUSINESS
A 2020 study by the Hechinger Report, a nonpro t that covers is sues of inequality and innovation in education, found that more than 500 colleges and universi ties show nancial warning signs, and 10% of them are in Illinois and Ohio. Illinois had 26 schools with two or more warning signs, and Ohio had 36. Illinois and Ohio schools are stressed because there are so many of them, says Rebecca Sher rick, president of Aurora Univer sity. Many were founded during the Western migration of the 19th century. “A lot of the religious de nominations competed with each other to establish schools,” she says. “If there was a Methodist col lege, you can be sure there was a Presbyterian college and a congre gational college.” In more recent years, the demo graphics have shifted, with shrink age of the 18-to-22-year-old, pre dominately white student that colleges had targeted for so long, Applegate says. Families from the Midwest and Northeast, where there are the most colleges, are migrating to the South and West, where there are far fewer univer sities.Whether because of the pan demic, the high price tags or ease of landing full-time work, the number of students enrolling in college directly from high school fell by nearly 22% in 2020 from the year before, according to the Na tional Student Clearinghouse. Meanwhile, employers have been re-evaluating their criteria for rst-time hires.
College, a Christian liberal arts school, added a certif icate program that trains for pro viding leadership in humanitarian disasters. Other schools are shar ing faculty, especially in foreign languages, and joining consor tiums to provide students access to a wider range of courses. And there’s anticipation of partner ships with businesses, especially resource-rich tech rms. Mergers and closures have been slower to develop than some peo ple predicted, says Wheaton Col lege President Philip Ryken. But there’s more talk about mergers at national gatherings of college presidents. “Seven years ago, there might have been a handful of peo ple interested in the topic of merg ers,” he says. “Now it’s a roomful of people who are thinking about it more actively.”
When Lincoln College an nounced plans to close in late March, admissions o cers from nearby schools visited the campus to recruit students left in the lurch. Aurora and other nearby univer sities jumped in to give those stu dents alternatives to help them nish their degrees, says Sherrick of Aurora. Faculty and sta , how ever, are left to nd new positions. Some experts say more small colleges like Lincoln will disap pear, but others aren’t so sure the trend will accelerate. Schools on the brink may be saved by alumni donations or state assistance, says Mark Finlan, managing director at Huron Consulting. “We’re more likely to see partnerships across institutions or with private-sector companies.” For example, a school with strong science, technology, engineering and mathematics of ferings could team with another
“ ese schools require more resources if you want them to suc ceed,” says Jim Applegate, a visit ing professor in education policy at Illinois State University and an Associated Colleges of Illinois trustee. “ eir safety net is not as strong. ere’s a limit to how much tuition they can charge.” e hostile conditions already have taken a toll. Since 2016, more than 75 institutions of higher learn ing across the country have closed or merged, according to the Higher Ed Dive newsletter. Illinois saw the May closing of Lincoln College, 35 miles north of Spring eld. Mac Murray College in downstate Jack sonville closed in 2020 after years of nancial hardship. Even schools on a solid footing have had to o er more scholar ships to attract students, includ ing those from middle-class or a uent families. Nationally, the tuition discount rate for rst-year, full-time students for the 2021-22 school year was nearly 55%, ac cording to the National Associa tion of College & University Busi ness O cers. “ is is no way to run a busi ness,” says Georgia Nugent, pres ident of Illinois Wesleyan Uni versity in Bloomington. Families bargain with schools to get the best deal. “It’s like used car sales,” sheWithsays.these pressures, colleges are searching for the creative solutions they need to survive and prosper. Some are seeking to merge back-o ce operations, which achieve savings without sacri cing school identity and traditions. Many are adding or ex panding adult degree and certi cate programs, especially in disci plines where they can di erentiate o Wheatonerings.
THE CLIFF Continued from Page 13
SHARED BACK-OFFICE OPERATIONS
BARGAINING TO GET THE BEST DEALS ON COLLEGE IS “LIKE USED CAR SALES,” A UNIVERSITY PRESIDENT SAYS.
Laurie Joyner is president of St. Xavier University on the Far South Side, where the school’s strategy of restricting tuition increases has paid o with gains in enrollment.
SHIFTING DEMOGRAPHICS
Jim Coleman, senior manag ing director and Chicago o ce managing director at Accenture, recalls at tending a corporate breakfast in which then-Mayor Rahm Emanuel challenged the more than 50 ex ecutives in the room: “How many of you have hired a student from City Colleges of Chicago?” Accenture historically required four-year degrees for entry-level positions. While the consultancy had supported City Colleges, “we hadn’t thought about them as a place to recruit talent,” Coleman says. “Businesses had created bar riers to opportunity—false barri ers—and we started to break that.” Accenture began by hiring IT students from Wilbur Wright Col lege to work in tech support, but it has expanded the program so that apprentices are assigned to client-facing teams. Overall, it’s hired 230 appren tices in the Chicago area since 2016, and the initiative has been expanded to other Accenture of iºncrease from 15% in the previous scalSomeyear.Accenture employees will go on to earn four-year degrees, but it’s not required, Coleman says. “If you have an AA degree in technology and come to work for Accenture, people will look at your résumé,” he says. “ ey’ll engage with you because of the credential you carry.”at’snot exactly music to the ears of college presidents who champion a broad education that can carry a graduate through mul tiple job, and even career, chang es. “ ere is no question that a col lege degree still remains the No. 1 opportunity for social mobility,” says Nugent of Illinois Wesleyan.
Starting in 2015, Aon, Accenture and Zurich American Insurance established an apprenticeship program that provides jobs and bene ts to students at community colleges with a path to permanent full-time positions. e network in Chicago has expanded to more than 75 area employers.
Jim Coleman is a senior managing director for Accenture, which has turned to an apprenticeship program to ll some of its entry-level jobs. ces. e consultancy nationally has hired more than 1,200 ap prentices, and 80% of them joined without a four-year college de gree. Accenture set a goal to ll 20% of its entry-level roles from its apprenticeship program for its 2022 scal year ending Aug. 31, an
Elmhurst College
CHANGE IN THE NUMBER OF ILLINOIS SCHOOL GRADUATES
CRAIN’S CHICAGO BUSINESS • A UGUS T 29, 2022 21 school for liberal arts courses. Or they could form partnerships with Google or Amazon for technical education.Mergers are di cult because colleges are reluctant to give up their identities. It’s particularly di cult for Christian colleges of di erent denominations to band together. A more practical solution is to share “back of the house” op erations that aren’t visible to the public. Some colleges are pooling their insurance to control premi um costs, Sherrick says. One un explored but potentially lucrative path, she adds, would be teaming with hotels and other businesses for food service and physical plant maintenance.Whileadministrators bemoan the high rate of discounting, they also recognize the need to control costs, especially at schools with large numbers of low-income students. anks to federal Pell grants, state assistance through the Illinois Monetary Award Pro gram and merit aid awarded by the colleges, tuition can be kept a ordable.ehorror stories of students leaving with $100,000 or $200,000 of debt are exaggerated, says Tim Ricordati, vice president for ad mission at Elmhurst College. “Our students leave with an average debt of $20,000,” he adds. Schools with high numbers of low-income students can be eligi ble for government help. With 30% of its students identifying as His panic, Elmhurst recently quali ed as a Hispanic-Serving Institution, which makes it eligible to apply for federal grants. And schools like Elmhurst are adding resources to be attractive to rst-generation students.Rising senior Chris Perez won four years of free room and board at Elmhurst by placing second in a scholarship competition for rst-generation students when he rst applied. A secondary educa tion and English major who serves as a tour guide, Perez says he has tried to be an inspiration to his sib lings.“I’m the oldest of ve and the rst to go to college,” he says. “If I do well, it will be easier for the ones that follow.” At St. Xavier University on the Far South Side, two-thirds of stu dents are rst generation and more than half are eligible for Pell grants. It became a Hispanic-Serv ing Institution in 2014. “I don’t think people under stand the complexity of that shift,” says President Laurie Joyner. It requires more diverse faculty and sta , capability to communicate with Spanish-speaking families and professional development for employees.WhenJoyner joined St. Xavier in 2017, she observed that the school was posting large annual increases in tuition but was turning around and discounting. “Our net tuition fee revenue was at,” she says. e school needed to hold the line on tuition increases in order to be competitive, she says. By doubling down on grant writing, the college won $16 mil lion in federal grants. e strate gy of restricting tuition increases paid o as the school’s enrollment of rst-year students rose to 688 for the ve years ending in 2021, compared with 631 for the 10 years ending in 2021. Retention of rst-year students rose to 77.6% in fall 2020, compared with 72.1% in fallAnd2016.the school expanded its endowments to provide funds for new revenue-generating initia tives, Joyner says. “It also gives us a bu er if we do see declines in enrollment.”
HIGH
POSTSECONDARYDISCOUNTSENROLLMENT
THE HIGH SCHOOL POPULATION ‘CLIFF’ DEEPENING
In the crush to court students, schools have to be careful about how much merit aid can be of fered. Ideally, schools o er schol arships from dedicated funds that are supported by donors on an ongoing basis. e alternative of o ering scholarships through the operating budget “isn’t sustain able,” Ryken says. University pric ing is not unlike what’s happening in the airline industry, Ryken said, adding, “People are paying very di erent prices for all kinds of dif ferentAnotherreasons.”survival strategy in volves expanding curriculum to woo adult students and keep un dergrads engaged. Elmhurst has grown its graduate programs from 100 to 600 students over the past 10 years, adding master’s degrees in occupational therapy, data science and an online MBA. It’s launching a doctorate in nursing practice this fall, its rst such ad vancedWheaton,degree.too, has increased its graduate programs, with a 15% increase over the past ve years, Ryken says. Master’s programs have focused on missionary work and counseling for underprivileged communities, including the new certi cate in providing leadership during humanitarian disasters. For undergraduates, the school launched a fellowship program for students interested in learning how cities work. It’s selective, and members of the cohort receive a $5,000 scholarship. Not all stu dents admitted to Wheaton are accepted to the program, called Aequitas. “We’ve had hundreds of applicants,” Ryken says. Language instruction is one dis cipline that lends itself to coop eration. Illinois Wesleyan is plan ning to o er courses in Japanese to students at a nearby university, which will reciprocally provide in struction in Arabic and Chinese. Illinois Wesleyan also is part of 90-college consortium that o ers credit courses in high-demand elds such as public health, com puter design, nancial planning and supply chain management. ey are taught by liberal arts fac ulty members as a complement to the traditional curriculum, Nu gent esays.small traditional colleges are becoming open to new ideas out of necessity, Applegate says. “ ey’re saying, ‘Whoa, we had better do something or we may not be here in another ve to 10 years,’ ” he adds. “ eir sustain ability is threatened.”
The number of public and private high school graduates in Illinois peaked in 2014-15 and is projected to decline further in coming years.
Chris Perez is a rising senior at Elmhurst College.
IN ILLINOIS
AVERAGE INSTITUTIONAL TUITION DISCOUNT RATE PERCENTAGE CHANGE IN ENROLLMENT FROM PREVIOUS YEAR BY INSTITUTIONAL SECTOR
SURVIVAL STRATEGIES
Note: Data is from the spring of each year.
For students with lots of choices, schools often offer hefty discounts to nudge them to enroll.
Source: The Western Interstate Commission for Higher
BLACKGEOFFREYBYPHOTOS
Across all educational sectors that cater to postsecondary students, enrollments have fallen since 2018.
EducationSource: Integrated Postsecondary Education Data System -10-15-20-25-30-50% 2015-162018-192021-222024-252027-282030-312033-342036-37 −30.0 −25.0 −20.0 −15.0 −10.0 −5.0 0.0% -37’36-36’35-16’15 -17’16 -18’17 -19’18 -20’19 -21’20 -22’21 -23’22 -24’23 -25’24 -26’25 -27’26 -28’27 -29’28 -30’29 -31’30 -32’31 -33’32 -34’33 -35’34 -1.9% -26.1% -20-15-10-55%0 All SectorsPublic 20182019202020212022two-yearPublic 2012-13 2014-15 2016-17 2018-19 2020-21 40.035.030.0 44.8%40.2%60.0%55.050.045.0 2021-222019-222017-182015-162013-14 First-time undergraduatesAllundergraduates 49.0%54.5% -20-15-10-55%0 All SectorsPublic two-yearPublic four-yearPrivate nonpro tPrivate for-pro t 2018 2019 2020 2021 2022 Source: National Association of College & University Business Officers
The foundation also named Ashish Dhawan, founder and CEO of the Convergence Foun dation, to the board. Gayle and Dhawan join Strive Masiyiwa, Baroness Nemat (Minouche) Shafik, Thomas J. Tierney, Gates Foundation CEO Mark Suzman, and co-chairs Bill Gates and Me linda French Gates on the board. In the foundation’s 2022 annu al letter in late January, Suzman announced the formation of a new board of trustees, in part due to the death in late 2020 of Bill Gates Sr., Bill Gates’ father, and the decision by Warren Buffett to step down in 2021. “But it also represents an ex plicit recognition by Bill and Melinda, especially in the wake of their divorce, that the foun dation will be well served by the addition of strong, independent voices to help shape our gover nance,” Suzman wrote. “They will bring diverse perspectives and expertise that will help to ensure the future stability and impact of the foundation.”
“WE HAVE VERY AMBITIOUS PLANS AND ASPIRATIONS FOR BRINGING WNDR TO THE WORLD.”
The Gates Foundation state ment said that in response to overlapping crises involving the COVID-19 pandemic, global economics, the climate and geo politics, it would raise its annual giving by 50% over pre-pandemic levels to $9 billion by 2026.
BY JON ASPLUND
Ryan Kunkel, WNDR Global president
The Ames Room at Chicago’s WNDR Museum.Helene Gayle
Deboracontactinformation,moreStein
Helene Gayle joins Gates foundation board
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This West Loop museum plans coast-to-coast expansion WNDR, which kicked o in 2018 as a pop-up, will open several more U.S. locations in the coming months
For ordstein@crain.comatsubmitdirectly to CHICAGOBUSINESS.COM/
COMPANYMOVES
COMPANIES ON THE MOVE
To place your listing, visit www.chicagobusiness.com/companymoves or contactDebora Stein at 917.226.5470 / dstein@crain.com
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22 AUGUST 29, 2022 • CRAIN’S CHICAGO BUSINESS
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BY STEVE JOHNSON Chicago’s WNDR Museum, the four-year-old Instagram-friendly interactive art venue in the West Loop, is going national, with plans to open three more locations in the coming months. Boston, San Diego and Seattle WNDR Museums are expected to start welcoming visitors this win ter, perhaps by the end of the year if the supply chain cooperates, said Ryan Kunkel, president of parent WNDR Global. “We’re just getting started,” Kunkel said. “We have additional markets identi ed. We have very ambitious plans and aspirations for bringing WNDR to the world.” Founded by Chicago tech en trepreneur Brad Keywell—who’s also founder and chairman of Chi cago Ideas—the museum at 1130 W. Monroe St. kicked o in 2018 as a pop-up, like others in the re cent nationwide trend of photofriendly experiential museums. But within half a year, the col lection of 19 immersive, walkthrough artworks—billed as “Chi cago’s original immersive art and technology experience”—decided it would become permanent, with executives saying they had sold enough tickets to be on a pace for 360,000 visitors a year, on par with the more than 50-year-old Muse um of Contemporary Art. A period of pandemic-related closure slowed things, but since reopening in April 2021, atten dance has picked up again, Kun kel said. Visits lately have been running roughly 20,000 a month. All the while, the museum—with a core demographic of 18- to 35-year-olds—has been changing out exhibits to try to stay fresh, although a constant has been Jap anese artist Yayoi Kusama’s “Let’s Survive Forever” installation, an “in nity mirror room” that com bines mirrored balls and a mirrorwalled room. “It’s been lumpy, as you can imagine, from the pandemic. But we’re nearing almost a million vis itors through our doors since we opened,” Kunkel said. Such success is why the private, for-pro t institution is branching out, he said. e new locations, oc cupying up to about 20,000 square feet each and in cluding event space, are in tourist-friendly spots, said Kunkel—at 422 Market St. in San Diego, 500 Wash ington St. in Boston and 906 Alaskan Way in Seattle. As in Chicago, they will sell tickets at about $30 per visit, with visits typically lasting about an hour. Working to develop exhibits for the new spaces—slated to include work by local and other artists and WNDR’s in-house team—is David Allen, a Chicago tattoo artist re cently named head of WNDR Stu dios, its in-house design arm. “I really like the accessibility of what this place is and was, and I think it can be even more accessi ble,” Allen said. Known also as interactive muse ums, such venues have been pop ular across the country. One of the better known nationwide is the Mu seum of Ice Cream, which recently opened a Chicago outpost in Tri bune Tower, one of its ve locales. Museum experts say the success of such new cultural approaches— which also include “Immer sive Van Gogh” and “ e Art of Banksy”—is forcing traditional museums to reconsider their own o erings, with some even incor porating similar exhibits. “I will proudly say that ice cream is not our focus,” Kunkel said. “We’re de nitely aware of the other immersive experiences that are out there. We genuinely view ourselves a bit di erently.” ose di erences, he and Allen said, include a business model that is not to do mere “pop-ups,” or short-term stays in a city; a fo cus on community partnerships; and an aim to display quality art, often with a technological theme, that people still nd relatable.
She’s an alum of the organization, having been a former direc tor of its HIV, TB and reproductive health program
Helene Gayle, former head of The Chicago Community Trust, has been appointed to the board of trustees of the Bill & Melinda GatesGayle,Foundation.wholeftChicago in June to become president of Spelman College in At lanta, is a Gates foun dation alumna, having served as its director of the HIV, TB and re productive health pro gram from 2001 to 2006, the foundation said in a statement. She also spent nearly a decade as president and CEO of international humanitarian or ganization CARE, the statement said.Gayle started her career at the U.S. Centers for Disease Control & Prevention, where she spent 20 years on HIV/AIDS prevention and global health, the statement said.She was the Chicago Com munity Trust’s first female CEO when she took the job in 2017. During her tenure, the assets of the trust—one of the city’s old est and largest foundations— incre ased from about $2.8 billion to $4.7 billion. In April 2021, Chicago May or Lori Lightfoot named Gayle one of the winners of the inaugural Mayor’s Medal of Honor, which honors people and orga nizations who contrib uted to the city in 2020, particularly during the COVID-19 careerimportantdation“Workingpandemic.atthefounprovidedanandpivotalopportunityfor
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me, and I am pleased to be able to give back and contribute in this way,” Gayle said in the state ment. “The life-changing work of the foundation is a constant inspiration for me and my col leagues doing work in the social impact arena.”
SPONSORED CONTENT Your guide to holiday party planning 2022 Corporate Holiday Guide 2022 Corporate Holiday Guide
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A s we’re wrapping up the end of 2022, there is still one final event that must be planned, the annual holiday party. Crain’s Content Studio has made this year’s planning easy with the Corporate Holiday Planning Guide. This guide is packed with tips and insider advice for hosting the perfect holiday event for employees, clients, vendors and beyond. With a variety of suggestions for the perfect end-of-year party—from locations, to group activities, to inspiration—it ensures your party is better than ever. Sit back, relax and reunite with colleagues at an entertaining dinner show, engage in a little friendly competition with your co-workers or keep it classic and book a private event space! Every holiday party celebrates a little differently, and everyone deserves an unforgettable experience. Let the party planning begin!
C abaret ZaZou is Chicago’s most unique and stunning entertainment venue. Housed on the 14th floor of the Cambria Hotel in Chicago’s Theatre District, Cabaret ZaZou is the home of an authentic Belgian Spiegeltent with an adjacent bar and lounge that can accommodate up to 300 people and is the perfect space for corporate events or group outings. Your party can enjoy a private viewing of Luminaire, the venue’s current production, which features comedy, music, and international cirque performers, or an entertainment experience can be customized to meet the needs of your special occasion. For information on booking your group of 10 or more to see Luminaire, contact Broadway In Chicago at 312-977-1710 or email: events@cabaretzazou.com cabaretzazou.com
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A re you interested in planning a holiday event that your team members will reminisce about well into the New Year?
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Ourteammates.varietyof game styles has something to offer all personalities too, from Sarah in Sales to Alex in Accounting. And our professional hosts will take care of everything for you, from explaining each game, to keeping track of points, to ensuring your time with us is full of laughter. All you have to do is sit back, unplug and reconnect with colleagues. We’ll take care of the rest and you’ll look like the office hero for planning an unforgettable event. reservations@gamenightout.com gamenightout.com
At Game Night Out, your group will participate in a series of all-original party games, engage in head-to-head competition, genuinely have fun and enjoy each other’s company. There will be no cringe-worthy “trust falls” or “ice breakers” in sight—just casual games, real laughs and authentic fun that turns colleagues into
T MuseumHistoryChicagoheinvites you and your guests into our warm, historical home for the holidays. Be a guest at your own varietyMuseumChicagoLincolntheTuckedHistorythecelebrationholidayatChicagoMuseum.alonggardensofPark,theHistoryoffersaofspaces that can be used for corporate events, daytime meetings, cocktail receptions, reunions and, of course, your holiday festivities. events@chicagohistory.org chicagohistory.org/corporate-events
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And if you dread the party cleanup, host your holiday gathering in one of our Private Event Spaces instead. Just make one call and we’ll handle it all: (847) 562-1918. You may also email cateringcrew@loumalnatis.com or visit loumalnatis.com/special-events for more information. cateringcrew@loumalnatis.com loumalnatis.com/special-events • (847) 562-1918 two-level atelier eventeventsmakeloveornowideexperiencehasOurspecialsettingdesign:barfloorplan,featuresAve.historicoverlookingMichiganandGrantParkanopenacustomandamoderntheperfectforyourevent.teamofexpertsyearsofcateringavarietyofevents;eventistoosmalltoolarge.Clientsusbecauseweevencomplexeasy.Ourproswillworkwith each step of process to create that guests will talk about for years to come.
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S oldier Field is Chicago’s premier event venue, as it hosts a wide range of events, including concerts, expos and meetings, along with corporate, social and sporting events. Offering sweeping views of the downtown skyline and beautiful Lake Michigan, Soldier Field is, in turn, the perfect venue to wow your guests. The talented event team at Soldier Field will take care of every detail too, in order to ensure that your event is spectacular. Featuring all-inclusive packages and early setup times, enabling your event day to be turn-key and relaxed. Take your party to the next level with optional add-ons as well, such as premium catering and top-shelf bar service, audio/visual opportunities, behind-the-scenes stadium tours and photo opportunities on the field. In addition, you may also mention CRAIN’S for $500 off your 2022 Club booking! events@soldierfield.net soldierfield.com Field 1410 S. Museum Campus Drive, Chicago, IL 60605 • (312) 235-7000 he Waldorf Astoria Chicago invites you to take advantage of a few of our favorite things. Receive each of the following: 10% off your food and beverage, complimentary event space rental, a 30-minute consultation with our Cocktail & Couture Manager to create a one-of-akind holiday mocktail or cocktail, a special guestroom rate and double Hilton Honors points. To top it all off, state the word “holiday” for a surprise favorite thing when you inquire! We offer, at minimum, three ideal holiday event spaces for guests of 10 to 170! As an icon of glamour and luxury, unforgettable is our goal at the Waldorf Astoria Chicago, located in the heart of the Gold Coast. From the moment your guests arrive at our breathtaking courtyard and enter our stunning lobby, they are in for an unforgettable experience, as they’ll also feel individually special. After all, everyone deserves something with a bit of sparkle and elegance! chiwa-salesadm@waldorfastoria.com waldorfastoriachicagohotel.com E. Walton, Chicago, IL 60611 • (312) 646-1324
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FINDING BALANCE “Leadership should strive to plan as authentic of a social experience as possible,” Mojica advises, who hosts numerous corporate and virtual events at Game Night Out. One way to do so is by putting the people behind a business at the event’s forefront.
“People want to connect with other people,” he explains. “They don’t want to spend a few hours on-repeat, engaged in small talk.” To break the workplace corporate vibe, Mojica recommends planning a corporate holiday event around an activity or entertainment that “allows people to focus their energy on sharing a moment together.”
Authentic shared experiences add a personal touch to corporate events. Rather than focusing on corporate goals, Aaron Mojica, co-founder at Game Night Out, says companies should strive to help their employees create lasting memories. The corporate talk, he explains, can be saved for other opportunities throughout the year.
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This includes team-building corporate holiday events like escape rooms, trivia nights, murder mystery dinners and bowling tournaments, which are quickly becoming the trend in 2022. Traditional dinner and drinks, however, are slipping into the past as more and more companies aim to give their employees a chance to truly break free from work.
By Ashley Zlatopolsky
The key to a successful corporate holiday event?
“We believe that businesses can make their holiday events feel authentic by celebrating their people,” explains Sally Glunz, director of catering at Lou Malnati’s. “Make the celebration feel more personal by thanking them for their hard work.” To take that personalization one step further, Glunz recommends creating a slideshow with photos of the team and business highlights throughout the year. It’s all about balancing business with personal, Mojica says. “Going out for drinks for the sake of being authentic might be too casual, while trust-falls, formal icebreakers and name badges might be too structured.” Selecting a vendor or activity that can help strike that balance, he continues, can allow your team to unplug from work and re-engage as people. This, in turn, creates a holiday party “your team will actually want to attend.”
Creating authentic experiences
To strike that balance on their own, businesses can add small elements of surprise to their corporate holiday events, like friendly competition, silly prizes and end-of-year awards designed with a humorous twist. “Consider something you would do for fun with friends, or something you would love to do with friends, but have never had the opportunity,” Mojica suggests for planning the perfect event. “Also, make sure your staff gets a chance to connect with people other than the ones they work with dayto-day.”
SPONSORED CONTENT With breathtaking views just steps from the lake, the Chicago History Museum is the perfect location for your next event. We offer several event spaces, an outdoor plaza, and a theater to allow for gatherings of up to 1,500 people. Add a lively after-hours cocktail reception to unwind after a productive day. Set the perfect scene for your next event at the Chicago History Museum. CREATE YOUR HISTORIC MOMENT 1601 N. Clark St. | chicagohistory.org | 312.799.2254 | events@chicagohistory.org GOT MEETINGS? Showcase your venue or event services in our Meeting Planners Guide, a guide for key business meetings, conferences, and special event facilities. Publishing December 5 in print and online. Reserve your spot by November 17. To learn more email crainscustomstudio@crain.com.
Another important element to consider when planning corporate holiday events is atmosphere, says Lauren Hammond, communications director at LM Restaurant Group. ere’s no better way to build atmosphere, she explains, than by making everything about the event interactive—including the food and drinks. “A great way to take a standard dinner party one step further is to make the food interactive,” adds Lesley Rottsolk, catering sales manager at LM Restaurant Group. “Having multiple stations where guests can customize their food helps get people out of chairs and mingling.”
“Give employees the opportunity to get dressed up for an elegant holiday evening, bring along their signi cant other and go somewhere new for a memorable, out-of-the-norm experience. Plan an event away from the o ce or places of Still,work.”bringing a little work into the picture doesn’t hurt. “Share enthusiasm for the year ahead by highlighting company initiatives and upcoming rollouts, while also celebrating milestones,” says Lorelei Kroulaidis, director of special events at Chicago History Museum. “When corporate holiday events demonstrate enthusiasm for what’s to come, it can be contagious. A combination of a unique atmosphere, engaging moments and memorable takeaways can keep employee morale up as you head into a new year.”
“...A combination of a unique atmosphere, engaging moments and memorable takeaways can keep employee morale up as you head into a new year.”
- Lorelei Kroulaidis, director of special events at Chicago History Museum.
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INTERACTIVE ATMOSPHERE
Interactive vendors are another big success at corporate events, Iverson explains. “Photobooths are always a big hit,” she says.
Since the holidays are a time to cherish and celebrate loved ones, Iverson suggests extending corporate event invites to employees’ families. “One of our beloved events is a breakfast with Santa, which resonates with our employees and conveys an understanding of the importance of family, especially during the holiday season,” she says. “We love to host events that encourage our employees to bring their families along, turning our hosted festivities into lifelong family memories.”
Being able to travel to a venue, Iverson continues, also helps employees feel that much more valued. “To be able to travel to a venue is an exciting treat for a corporate crowd,” she says.
ADDING VALUE
Ideas for interactive food experiences can include a DIY s’mores station—which Rottsolk says is “incredibly popular” at a variety of events—or live action stations where chefs prepare custom food-to-order. Mariel Iverson, senior catering and events manager at Waldorf Astoria Chicago, suggests nding a way for guests to bring home interactive experiences as well. “Host a wine tasting with a pairing of appetizers during which guests can create a recipe book to bring home for the holidays,” she says. “Or plan reception stations with holiday-themed trivia in order to move on to the next station.”
Businesses can even brand photo frames or backgrounds with their company logo. “ ey are fun for guests of any age to participate in together and create memories that will last long a er the event is done.”
CORPORATE HOLIDAY GUIDE
nial powers Ohio State and Mich igan, for example, may not want to share the growing revenue pie equally with traditional also-rans like Northwestern and Rutgers.
Warren BIG TEN from Page 1 Kevin
Peren
in Ohio GETTING RICHER BIG TEN REVENUE Note: Revenue listed for the 12-month period ending in June of each year. Source: Big Ten Conference The Big Ten was raking in revenue even before inking an unprecedented media rights deal $265.1 2011 $483.5 2016 $448.8 2015 $768.9 2020 $318.4 2013 $758.9 2018 $315.5 2012 $512.9 2017 $338.9 2014 $781.5 2019
CRAIN’S CHICAGO BUSINESS • A UGUS T 29, 2022 31 and SEC Commissioner Greg San key in position to e ectively run their own major league businesses apart from the NCAA, complete with outsized decision-making power over issues like athlete compensation, championship for mats and the prospect of players unionizing.“Inatime of disruption, it really is a time of opportunity,” Warren told e Wall Street Journal this month. A Big Ten spokesman did not make Warren available for an interview for this story. Warren “is dealing with col lege athletics as what they are, and not like what they should be,” says B. David Ridpath, a pro fessor of sports business at Ohio University and the former assis tant athletic director at Marshall University.WhileNCAA o cials, athletic directors and conference commis sioners have spent decades cling ing to the notion that college ath letes are amateurs who shouldn’t be paid beyond the value of their schol arships, “this is a major league, big business sports property, and Kevin Warren recognizes that,” Ridpath says. e Big Ten’s nances show the scale of that busi ness even before the newly mint ed media deal with Fox, CBS and NBC kicks in. e conference, a nonpro t organization, booked nearly $769 million in revenue for the twelve months ended in June 2020, its most recent annual tax l ing shows. at’s 71% more than it pulled in ve years earlier, accord ing to Big Ten tax records. Revenue will jump again when the new media deal starts gener ating an estimated $1.1 billion an nually. Some perspective: e na tional broadcast rights deals inked last year by the National Hockey League reportedly bring in just more than half of that amount eachMediayear.money is distributed to member schools on an equal ba sis, to be used as they see t. His torically, universities have spent funds from broadcast rights to boost their athletic departments, on things like new facilities, sta and scholarships. But if Warren helps build a new framework of college athletics in which the Big Ten makes its own rules apart from the NCAA, it could change how schools spend that money.Ifathletes are treated as em ployees, with the ability to union ize and be paid directly for their work—something Warren has said he is exploring—that might change how athletic department boosters and other big donors contribute. Warren will have to meet the nancial expectations of Big Ten university presidents—his bosses, e ectively—while also ad dressing growing calls to give ath letes more of the money generated by big-time college football. Ohio State star quarterback C.J. Stroud, a favorite to win the Heisman Trophy for the football season that started last weekend, said he wants a cut of the Big Ten’s media rights windfall.
toconferencepositionsWarrenBigTencashin
IMAGESGETTY “HOW (WARREN) AND GREG (SANKEY) AND THE OTHER POWER BROKERS MOVE FORWARD TRYING TO BE NOBLE YET PROTECTING THEIR OWN SELF-INTERESTS AS A CONFERENCE WILL BE INTERESTING.”
According to recent reports, the Big 10 is looking at several more Pac-12 schools, as well as Notre Dame.Fortifying the Big Ten as a super conference also risks alienating fans of schools that aren’t in it, says Drew Russell, executive vice president at Chicago-based media and marketing rm Intersport. A relatively small number of schools have realistic shots at winning football national championships each year; changes that make it even harder for long-shot schools to compete could diminish the audience, eroding the value that makes college football so attrac tive to sponsors and media rights partners, Russell says. “It hasn’t hurt them yet, but there’s going to come a time when people don’t want to see Ohio State, Alabama, Georgia, Oklaho ma and Clemson year after year after year. at’s going to be the bigger issue that needs to be faced here,” Russell says. Expanding the conference based on football audiences could also impact the experience of ath letes in non-revenue sports. Flying eld hockey teams across three time zones several times per sea son may require more school re sources and be especially taxing on“athletes.enancial opportunities going forward are going to be amazing, but it’s not in the best in terest of the holistic experience of college sports,” says Brad Bates, a former athletic director at Boston College and Miami University in Ohio, who now works as a consul tant for athletic departments.
If the Big Ten adds even more schools, as Warren has hinted it may to pull in even more money from media rights, the commis sioner will also have to manage a far larger business with more, geographically disparate voices, and schools that may feel they pull more weight than others.
It’s not just (athletes getting paid) or the (player) transfer portal. Kevin has to balance all of those things.”Warren, who had no experi ence in college sports adminis tration before taking the Big Ten reins, faces that balancing act as the foundation of college athletics shifts. Unlike his predecessor, Jim Delany, who added four schools to the Big Ten and ushered in an era of broadcast megadeals during a 31-year run, Warren is running the conference at a time when athletes are getting their rst opportunities to cash in on their celebrity. Ath letes can make money from their names, images and likenesses— under so-called “NIL” deals—with little oversight. Warren publicly backed the concept and said he’s exploring ways to share the con ference’s new media rights wind fall directly with athletes—a sharp break from the attitude of past NCAA o Meanwhile,cials. the Big Ten and the Southeastern Conference are quickly emerging as the largest, most dominant and wealthiest college football leagues, with a widening nancial lead over oth er conferences. e consolidation of blue-blood sports schools like Texas, Oklahoma, USC and UCLA into the conferences—fueled by the hunt for eye-popping media rights contracts like the one the Big Ten just signed—puts
Brad Bates, a former athletic director at Boston College and Miami University
“ ere’s this incredible tension between the commercial and the educational view of college sports,” Bates says. “How (Warren) and Greg (Sankey) and the other power brokers move forward try ing to be noble yet protecting their own self-interests as a conference will be interesting.”
The Michigan Wolverines celebrate after beating the Iowa Hawkeyes in the Big Ten Championship game on Dec. 4 in Indianapolis.
Warren has “unprecedented levels of opportunity and scruti ny to manage through,” says John Brody, a longtime sports execu tive with the NFL, Major League Baseball and World Wrestling Entertainment, who is now chief revenue o cer for college sports marketing giant Lear eld. “It’s not simply the content distribution deals, or conference realignment.
athletes at stake, Warren’s next moves will not only reshape the Rosemont-based Big Ten, but also the structure of college sports overall—how big-time college football and other sports are governed, where and how they are seen by fans, which schools get the most money and how athletes are compensated. His moves also will be closely watched by various constituencies with nancial and emotional investments in college football—from players, coaches and athletic directors to students, alumni, wealthy donors, the press and media executives.
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k at (313) 446-0455 or email sjanik@crain.com .www.chicagobusiness.com/classi eds OUR READERS ARE 125% MORE LIKELY TO INFLUENCE OFFICE Find your next corporate tenant or leaser. Connect with Suzanne Janik at sjanik@crain.com for more information. BUSINESS FOR SALE REAL ESTATE CAREER OPPORTUNITIES CAREER OPPORTUNITIES CAREER OPPORTUNITIES CAREER OPPORTUNITIES CAREER OPPORTUNITIES CAREER OPPORTUNITIES ANNOUNCEMENT ChicagoBusiness.com Chicagoland’s latest business news and events. Announced today, McCatty Real Estate Services Inc has agreed to purchase a 32 unit townhome development from Jeanes Con struction Co Inc. e site is located on the Northeast corner of Wolf Rd and 153rd Street in Orland Park. “We look for ward to building luxur y ranch duplexes on that site featuring walkout basements and 3 car garages” Mccatty said. Mike has had numerous residential and commercial projects and developments in the area over the past 20 years including 6000 closed transactions totaling over a billion in sales. McCattyrealestate.com 708.945.2121 Centur y 21 A liated
32 AUGUST 29, 2022 • CRAIN’S CHICAGO BUSINESS
Nationwide, homes sold in an average of 14 days on the market, according to data released separately Aug. 18 by the National Association of Realtors. at’s down from 17 days last year and the fastest in NAR’s records, which go back to May 2011. e speed of sales is in large part a function of low inventory. Home shoppers who wanted to get a buy made before interest rates go higher found the shelves were bare. e number of homes on the market in July was down 17.1% from a year ago in the city and 19.6% in the metro area, according to the Illinois Realtors data.
In both cases, the previous record was set exactly a year earlier, in July 2021. at month, metro-area homes went under contract in 21 days on average and city homes in 31.In the ve years before the COVID-19 pandemic-era housing boom, 2015 to 2019, the average July market time in the metro area was a little over 40 days, and in the city, a little over 36 days. at is, metrowide, homes are selling at more than twice the speed they did in the before-COVID times.
Source: Illinois Realtors Chicago Metro area DAYS ON MARKET CLASSIFIEDS To place your listing, contact Suzanne
Another re ection of the super-low inventory: e number of homes sold in the Chicago area dropped sharply in July. In the nine-county Chicago metro area, 10,400 homes sold last month, according to the Realtors’ monthly data. at’s down 25.6% from July 2021. Except for the early months of the pandemic in 2020, when the market was brie y paralyzed, it’s the biggest drop since August 2011, when the housing market was struggling to rise out of the crash of a few years earlier.It’salso by far the biggest drop in sales compared to the pre-pandemic norm, a sign of droop that rst appeared in May home sales data. While home sales in 2022 have steadily been below the comparable months in red-hot 2021, Crain’s has been tracking the 2022 gures against a ve-year average for the 2015-2019 pre-pandemic years. July sales in that period averaged 11,916. July 2022 sales were down 12.7% from the average. e same holds true for the city itself. In Chicago, 2,426 homes sold in July, down 27.6% from July 2021, and down 13.7% from the pre-pandemic average July sales tally of 2,813.e number of sales is clearly not keeping up with the before-COVID times, but because of the surging volume of house trading that began in mid-2020, the pipeline of homes simply may not have enough potential supply to keep up. e drop in sales was sharper here than nationwide. NAR reported that home sales were down 20.2% nationwide in July. It does not provide su cient data to make a comparison to pre-pandemic salesLocalvolume.home price growth was moderate in July. e median price of homes sold in the metro area was $325,000, an increase of 4.8% from the same time a year ago. It’s roughly in line with the increased price trend, which has been in the range of 4.5% to 7% all year. In Chicago, the median price of homes sold in July was $350,000, an increase of 1.4% from July 2021. It was the second month of positive, if shallow, price growth after ve months when prices were at. e growth here is slim compared to the nationwide gure. Home prices were up 10.8% nationwide in July, according to the National Association of Realtors. e Illinois Realtors data uses the U.S. Census Bureau de nition of the Chicago metro area, which comprises Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will counties.
Local faster BY DENNIS RODKIN house on Hood Avenue in Edgewater was on the market days before going under contract. It sold in July for $775,000. and metro-area homes that sold in July went faster, on average, than at any time in 14 years of record-keeping. Summer months are typically faster than the rest of the year, but this year it was particularly true, as eager buyers snapped up new listings in a tight-inventory market. The previous speed record was exactly a year earlier, in July 2021. Jani
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Homes in the Chicago area sold at warp speed in July, reaching a record low for days on the market, according to data released this month.eaverage time a home in the metro area spent on the market before a contract was signed was 18 days, according to an Aug. 18 report from Illinois Realtors. at’s the shortest time in the association’s records that go back to January 2008.
homes selling
than ever The number of days Chicago-area homes spent on the market before going under contract hit a record low in July
In the city, homes went under contract in an average of 25 days. at’s also the fastest on record.
This
Mary Dillon puts her reputation on the line to lead a turnaround at Foot Locker and Bubbles Academy; and a food hall operated by Hogsalt Hospitality—that bring in neigh borhood residents on a regular ba sis, not just when they want to buy a new out t, says Tisha Maley, a consultant who advises Chicagobased JMB. “It’s not just about shopping anymore,” she says. “What we tried to create is an environment where people come in multiple times on a weekly basis.” e strategy has paid o , at least in the current market. e 900 North mall is more pro table than it was before the pandemic, with new tenants paying higher rents than the ones they’re replacing, says Patrick Meara, JMB’s Real ty’s chief operating o cer. He de clines to disclose speci c nancial data.JMB developed the 450,000square-foot mall as part of a 66-story mixed-use tower that in cludes o ces, condominiums and the Four Seasons Hotel Chicago. Completed in 1989, the property at the corner of Michigan Avenue and Walton Street, remains a lega cy investment for JMB, one of big gest names in Chicago real estate back in 1980s and 1990s but now a low-pro le company. Co-founder Neil Bluhm is known better today for his gambling business, Rush Street Gaming, and his real estate private-equity rm, Walton Street Capital, both based at 900 N. Mich igan.Originally known as Avenue Atrium, the 900 North Michigan Shops mall was the second of its kind on the Mag Mile after Wa ter Tower Place, which opened in 1975 just two blocks south. An chored by a Bloomingdale’s de partment store, it was supposed to be a higher-end version of Wa ter Tower. But some wondered whether another mall was really necessary.“isisa benign kind of pro i gacy, although some might argue it borders on hedonism-like big amy or two Disneylands put to gether or owning a second BMW for the days when one or the other gets dusty,” Paul Gapp, the Chicago Tribune’s architecture flourishes while other vertical malls fight to survive on the
VERTICAL MALL TREND
JMB doesn’t have to think about that for now. e rm spent $52 million on a major renovation at 900 North in 2018 that is paying dividends now. Figures from Placer.ai, an an alytics rm that tracks mall foot tra c using mobile-device loca tion data, con rm that the mall has fared better than North Bridge or Water Tower. During the rst seven months of the year, foot traf c at 900 North was down 17.4% compared with the same period in 2020. But it dropped 33.4% at North Bridge and 49.9% at Water Tower.e 900 North Michigan mall caters to a wealthier clientele than the other Mag Mile malls, an ad vantage in the current market. Luxury retailers have prospered over the past two years or so, while many midmarket stores have struggled. Chains like Banana Re public, Riley Rose and Abercrom bie & Fitch, for instance, closed stores at Water Tower. e mall is just 46% occupied today, accord ing to Cushman & Wake eld. Many luxury tenants, including Cartier and Chanel, meanwhile, have left the Mag Mile for Oak Street, which has thrived over the past couple of years. Being just a block from Oak Street is another plus for 900 North, close enough to attract high-end shoppers who seem impervious to in ation and recession fears. Luxury retailers like the location because they can rent space at a lower cost than they would pay for storefront space on Oak or Rush streets, says broker Luke Molloy, senior vice president in the Chicago o ce of CBRE. “It’s a lot cheaper Gold Coast option—you have access to the same customers,” he says. More luxury retailers mean higher sales per square foot, a key gure that factors into how much rent a tenant can a ord. Excluding Bloomingdale’s, retailers at 900 North rang up sales of $890 per square foot, up from $820 in 2020, according to broker Greg Kirsch, executive managing director in the Chicago o ce of Cushman & Wake eld. Water Tower’s sales per square foot totaled $609 before the pandemic, he said. Unlike Water Tower, which lost Macy’s in 2021, 900 North also has pro ted from having a healthy de partment store. Bloomingdale’s expanded in 2020, when it closed a separate home furnishings store in the Medinah Temple in River North and created a new home goods department at 900 North. e move “has been huge,” Meara says, boosting tra c at the mall and allowing JMB to lease nearby space to complementary home-goods tenants, like Scan dia Down. “You get a lot more cross-shopping.”JMB alsohasmade a deliberate e ort to attract tenants that ca ter to locals rather than visitors. In addition to Equinox, the 900 North Michigan mall includes a Tricoci Salon & Spa, a tailor and a music school. e neighborhood focus was a big reason that Janet Mandell, a boutique that rents out luxury clothing brands, leased a 7,100-square-foot space on the mall’s 6th oor that will open this fall.“It’s more community-based, whereas Water Tower and North Bridge are more touristy,” says owner Janet Mandell. e mall also may attract the kind of wealthy, social clientele that she’s trying to reach: It costs anywhere from $500 to $1,000 to rent a dress and matching pair of shoes from her shop.
Foot Locker declined to make Dillon available for an interview. She will be taking over for Richard Johnson, 64, who has been CEO since December 2014 and plans to retire. In 2021, his total payout was almost $4.2 million. A longtime Chicago executive, Dillon previously was CEO of U.S. Cellular and global chief market ing o cer at McDonald’s and held positions at PepsiCo. She plans to retain her role as chair of the Economic Club of Chicago until her term concludes June 30. In a note to members Aug. 19, she said she will continue living in Chica go, leaving open the question of whether Foot Locker’s corporate headquarters might move to the new CEO’s hometown. e chain has 70 stores in the Chicago area. “I’m very excited about this next chapter of my career and feel fortunate to follow my tenure at Ulta Beauty with this new op portunity to lead one of the bestknown names in global retailing with stores in 28 countries,” Dillon said in her note.
Mag Mile
* Figure represents change in volume from first seven months of 2019 to same period in 2022.
critic, wrote in 1988. e pro igacy didn’t end there. Over the next 12 years, North Michigan Avenue gained two more vertical malls: Chicago Place, at 700 N. Michigan, in 1991, and the Shops at North Bridge, a Nordstrom-anchored mall at 520 N. Michigan, in 2000. Chicago Place didn’t make it as a vertical mall. Its owner repur posed its indoor retail space into o ces more than a decade ago, though the property still includes a Saks Fifth Avenue department store and street-front retail on the MagWaterMile.Tower and North Bridge, meanwhile, prospered until the e-commerce boom and the COVID-19 pandemic, when many retailers closed stores or went out of business. Both malls lost so much value that their owners decided it no longer made sense to keep them. In December, Macerich, a Santa Monica-based real estate in vestment trust, transferred its stake in North Bridge to its partner, the Alaska Permanent Fund, taking a $28.3 million loss in the process. en, in April, New York-based Brook eld Property Partners re linquished its ownership stake in Water Tower Place to its lender, MetLife, an acknowledgement that the mall was worth less than the debt owed on the property.
Turning around both malls will take time and money. Adding to the challenge is their verticality: ough having multiple oors of retail space makes sense in a city where land is scarce and expen sive, persuading shoppers to ride up multiple escalators to nd a store has always been a challenge. It’s only become tougher with rise of online shopping, which has made shoppers value conve nience even more. Brokers say North Michigan Av enue su ers from a glut of vertical mall space, predicting that the owners of North Bridge and Wa ter Tower will repurpose some of their upper- oor space into other uses, including entertainment.
Here’s how the three vertical malls on North Michigan Avenue compare in terms of opening date, size, major tenants, occupancy and change in foot traffic.
Ulta started out as a suburban discount beauty retailer, with a di erent vibe than it has today— at one point, it sold toothpaste, notes analyst Dave Swartz at Morningstar. Dillon’s predeces sor began the transformation, but she took it to the nish line and beyond, shedding the dis count image by adding high-end brands and making Ulta the go-to brick-and-mortar launching pad for brands such as Kylie Jenner’s beauty brand Kylie Skin. She also dramatically expanded Ulta’s on line operation, which now gener ates 30% of sales. “It could be she sees this as her
DILLON from Page 3 opportunity to transform Foot Locker from a mall-based Nike retailer to something completely di erent,” Swartz said. “ ere ar en’t a lot of great shoe store chains anymore; they’ve been in decline. It’s possible that Foot Locker, since it’s been a survivor, it could be successful.”oughFoot Locker’s revenue is about on par with Ulta’s—the beauty retailer notched $8.6 bil lion in sales in the scal year that ended in January—its store count is much higher. Ulta has about 1,300 stores, all in the U.S., while Foot Locker has almost 2,900 in 28 countries. e larger scale sug gests that success at Foot Locker might have an even greater upside than Dillon delivered at Ulta. “I think she’s completely fo cused on one thing: the size of the challenge,” said Harry Kraemer, former CEO of Baxter Internation al and a professor at Northwest ern University’s Kellogg School of Management. “She brings the ability to do it.” e challenge comes with rich rewards. Dillon, 61, will receive a base salary of at least $1.3 million at Foot Locker, plus a $250,000 signing bonus and annual bonus es that could target 200% of her base salary. She’ll also get upfront stock incentive grants valued at $7 million and a promise of future awards worth $8 million annually, according to a Foot Locker ling with the Securities & Exchange Commission. AtUlta,Dillon’s base salary was almost $1.2 million. She elected to forgo two months of her salary in scal 2020, as many CEOs did in the depths of the COVID pandem ic. Still, her total compensation for scal 2020, her last full year at the helm of Ulta, was $8.1 million.
Source: Crain’s reporting, Cushman & Wakefield, Placer.ai.
MALL from Page 3 900 North
900 North Michigan Shops Opened in 1989 450,000 square feet Bloomingdale’s, Gucci, Equinox Fitness 98% occupancy -17.40% change in foot traffic* Water Tower Place Opened in 1975 818,000 square feet American Girl, Lego, Adidas 46% occupancy -49.90% change in foot traffic* Shops at North Bridge Opened in 2000 670,000 square feet Nordstrom, Hugo Boss, Kiehl’s 79% occupancy -33.40% change in foot traffic*
DILLON fromPage 3
CRAIN’S CHICAGO BUSINESS • A UGUS T 29, 2022 33
In Chicago’s Roseland neigh borhood, Shasta and Michael Grossett are listing their basement on NockNock at $40 an hour, and their backyard, also at $40 an hour.
“I think there are a million pos sible uses,” Ferguson said. Asked about renting out a bed room, a la the afternoon delight motels with hourly rates, Ferguson said that’s “probably not something you’d put on NockNock.”
Now you can rent out your kitchen or basement bar by the hour
See the full schedule in the Chicago Sun-Times on Sunday, September 4th.
In the basement, the furnished bar and lounge area is stocked with checkers and other games. In the fenced backyard, there’s a re pit, outdoor furniture, a lawn and the couple’s vegetable garden. Shasta Grossett says she envi sions renters using either or both spaces for birthday parties infused with nostalgia via the games that are on hand in the basement. NockNock, Grossett says, “is a little side hustle where we can make some passive income.” Property hosts’ backgrounds are checked and renters must provide a state-issued ID for veri cation, a NockNock spokesperson said.
Simon Elliott in the kitchen he and his wife, Alice, are o ering at $250 an hour. The Grossetts’ backyard is listed at $40 an hour.
NockNock’s founder, Charles Ferguson, is based in California but is launching the concept ex clusively in Chicago to start with, he said, because “it’s a big, com plicated city, with lots of di erent neighborhoods and types of hous ing”—the right setting to prove out the concept before setting up in other parts of the country. e startup has “three to ve” em ployees in Chicago, Ferguson said, and $3 million in startup funds from early-stage, small venture-capital rms and individual investors. e idea for NockNock struck when Ferguson had a meeting in Berkeley, Calif., about half an hour from his house and hoped to go for a run on a favorite trail afterward. “I wanted a place to stash my clothing and take a shower,” says Ferguson, formerly a lmmaker who direct ed the Oscar-winning 2010 doc umentary “Inside Job,” about the global nancial crisis in 2008. It’s already possible to rent en tire houses or bedrooms overnight via Vrbo, Airbnb and other outlets, or to rent out your swimming pool on Swimply, your piano practice room on PianoMe, your parking space on ParqEx, or your meetings and events venue on Peerspace.
NockNock is a startup where homeowners can rent out rooms they’re not using
An invitation to a magical weekend at the Printers Row Lit Fest Admission and programs are all free and public transportation can whisk you
BY DENNIS RODKIN e kitchen in Alice and Simon Elliott’s Irving Park house is nice— built new in 2021 with stainless steel appliances and quartz coun tertops—but while they’re at work, it sits“It’sunused.quitea nice space, but it’s just, like, not doing anything all week,” says Simon Elliott. at is, until last week, when the Elliotts’ kitchen debuted on a new, only-in-Chicago sharing site where homeowners can o er rooms in their homes for rent by the hour. ey’re listing the kitchen and adjacent entertainment space for rent on NockNock at $250 an hour, and separately, the skylit workout space on the house’s third oor at $100 an hour. In both cases, there’s a four-hour minimum rental. e Elliotts envision kitchen renters using it for large group lunch meetings or video produc tion and the gym renting to tness trainers to work with clients in the neighborhood.“Whenwe’re not here, we can make cash on the side,” Simon El liott said.
34 AUGUST 29, 2022 • CRAIN’S CHICAGO BUSINESS
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The Elizabeth Peabody School, built in 1894, was one of 49 CPS elementary schools closed in 2013. The kitchen in an apartment at the former Peabody school.
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Nick Vittore, Svigos’ vice president of real estate
Re-created transoms in an apartment interior. Restored coat and storage cabinetry that was originally used in classrooms has been placed in the wide common hallways.
BY DENNIS RODKIN ere used to be a teacher’s desk in each classroom at the old Elizabeth Peabody public school building on Augusta Boulevard in Noble Square. Now each one has a kitchen island. e Peabody school, one of dozens of Chicago Public Schools buildings shut down in 2013, is getting a second life as apartments at the hands of a company that has converted two other closed school buildings. In the rehab, Bu alo Grovebased Svigos Asset Management is creating one apartment in each former classroom and the princi pal’s o ce. Rents for the one- and two-bedroom apartments, some with ground-level outdoor spac es and indoor parking, run from $3,000 to $4,200, said Nick Vittore, Svigos’ vice president of real estate. “Some of the things we’re ob sessed with now, like high ceil ings and big windows for lots of light, were obsessions for the people who built these schools in the 19th century,” Vittore said. Fourteen-foot ceilings and tall windows were necessities in 1894, for daylighting class rooms and keeping sooty furnace smoke up above students’ heads. Now they’re part of what keeps the apartments feeling bright and spacious.ehistorical features of the Peabody School Apartments don’t end there. Svigos has re stored or re-created transom win dows, wainscoting and handsome old cabinetry throughout the 40,000-square-foot building. Out side, they’ve replicated a wrought iron fence design that was com mon to Chicago schools in the 1890s but had been removed by the time Peabody closed. Authenticity, Vittore said, is a guiding principle. In one apart ment, he noted that the laundry room door is a standard pre-hung item that the developer gets for $225, while the main interior door is a hefty wood original, re nished. “ at one cost us about $1,500,” Vittore said, “but we would do it again. It’s part of pre serving the historic character of theseSvigosbuildings.”hasaportfolio of about 250 apartments, mostly on the city’s North Side, including 81 in a trio of former CPS schools. In 2017, the rm completed conversion of the former Mulligan School on She eld Avenue in Lincoln Park into 24 apartments. In 2019, Svigos reopened the former Motley School (aka Near North Elementa ry) as 36 apartments. At Peabody, four of what will be 23 apartments are now occupied and rehab of the entire four-sto ry, 40,000-square-foot brick and limestone structure is nearing completion. Svigos bought the building for about $3 million. Vittore declined to specify the re hab cost, some of it funded with historic preservation tax credits. If they had built an entirely new structure of about the same size, Vittore said, it would accom modate at least 35 apartments, or a dozen more than the Peabody building has. at’s because new construction wouldn’t have the triple-wide staircases and hall ways that are features of school buildings. A single staircase landing at Peabody, he said, is nearly big enough to be a studio apartment.Peabody was part of a Chicago school-building boom that began in the years after the Great Chica go Fire in 1871 and continued for a few decades, as the city’s popu lation exploded with successive waves of immigrants. Named for Elizabeth Peabody, a 19th-century Massachusetts publisher and advocate for kindergarten pro grams, it was designed by William August Fiedler, who, as the board of education’s architect for four years, designed or rehabsignedners,HaymesPappageorgeKenforlic58constructionsupervisedofChicagopubschools.earchitecttherehab,DemuthatPartalsodeSvigos’ofthe Motley School, was a part of the Mulligan rehab team and, for a di erent developer, designed the rehab of Graeme Stewart School in Uptown into Remindersapartments.ofthePeabody’s pre vious incarnation include chalk boards in every apartment and an old cafeteria table that was re n ished and now stands beneath a pergola on the rooftop deck. Look closely at the re nished original maple ooring, and a series of screw holes might be visible. e screws were used for xing old desks in place.
These developers keep going back to school
CUSTOMER
The tall original windows are anked by chalkboards, a nish that appears in all the apartments. The dining table on the rooftop deck is an old cafeteria table found in the building.
“SOME
The Peabody school in Noble Square, one of dozens of CPS buildings shut down in 2013, is getting a second life as apartments |
CRAIN’S CHICAGO BUSINESS
The developers re-created a wrought iron fence design that, according to their research, was used at many Chicago schools in the 1890s. Ground-level apartments have outdoor space surrounded by new brick walls that match the school building’s brick. OF THE THINGS WE’RE OBSESSED WITH NOW, LIKE HIGH CEILINGS AND BIG WINDOWS FOR LOTS OF LIGHT, WERE OBSESSIONS FOR THE PEOPLE WHO BUILT THESE SCHOOLS IN THE 19TH CENTURY.”
CRAIN’S 312-649-5200 SERVICE 877-812-1590 312-649-5492 312-659-0076 REPRINTS 212-210-0707 editor@chicagobusiness.com Vol. 45, No. 34 – Crain’s Chicago Business (ISSN 0149-6956) is published weekly, except for the rst week of July and the last week of December, at 130 E Randolph St , Suite 3200, Chicago, IL 60601 $3 50 a copy, $169 a year Outside the United States, add $50 a year for surface mail Periodicals postage paid at Chicago, Ill Postmaster: Send address changes to Crain’s Chicago Business, PO Box 433282, Palm Coast, FL 32143-9688 Four weeks’ notice required for change of address. © Entire contents copyright 2022 by Crain Communications Inc. All rights reserved.
CHICAGO BUSINESS • A UGUS T 29, 2022 35 EDITORIAL
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