Crain's Chicago Business by crainschicago

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HIGH FINANCE

Firms in the rarefied asset management and investment sector have a dismal record on diversity. A growing awareness of the issue is prompting efforts to close the glaring gap — PAGE 19

JOHN R. BOEHM

PRIVATE INEQUITY Shundrawn Thomas is president of Northern Trust Asset Management.

Medicaid system prepares for pain

Conflict management: That’s the Rx for NU Rebecca Blank will be put to the test on diversity, town-gown relations and athletics as new president Rebecca Blank, the esteemed economist who’s on deck to become Northwestern University’s next president as well as its first female leader, isn’t afraid to lean into conflict. As chancellor at the University of Wisconsin-Madison, Blank frequently pushed back against then-Republican Gov. Scott

Walker’s plan to slash the public university system funding by $300 million and the state Legislature’s move to strip tenure protections from faculty. She waded through tense political relations—perhaps a skill she observed working in three presidential administrations—to stabilize the budget despite the cuts, expand financial aid to students of color and improve graduation rates.

BY STEPHANIE GOLDBERG Rebecca Blank It’s that ability to navigate adversity and impending crises that made Blank stand out in the six-month search to find a successor for President Morton Schapiro, who announced last See NORTHWESTERN on Page 14

Hundreds of thousands of Illinoisans could lose health insurance under Medicaid next year when the state resumes eligibility reviews that were suspended during the pandemic. Annual “redeterminations” of Medicaid eligibility were halted last year when the federal government declared COVID-19 a

public health emergency. As a result, Medicaid enrollment in the state swelled almost 30% to 2.7 million. Those numbers are expected to drop when redeterminations start up again after the emergency declaration expires on Dec. 31. For example, Cook County Health predicts that See MEDICAID on Page 34

CREDIT

BY ELYSSA CHERNEY

Why many beneficiaries face a loss of coverage

BOOTH INSIGHTS

YOUR VIEW

Entrepreneurs should play the long game with VC funding.

Our biggest issue isn’t the taxes. It’s the violence.

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2 OCTOBER 18, 2021 • CRAIN’S CHICAGO BUSINESS

Saving Illinois governments’ bacon

or as long as I’ve been covering local government—and that’s, well, longer than I care to admit—I’ve continually heard the same refrain: We’re (all but) broke. The income tax is flat and excludes too many types of income, the sales tax applies mostly to hard goods and not services, property taxes bother voters, yadda yadda yadda. Woe is us! There’s much truth to that, excessive spending on things such as overly rich pensions not withstanding. Just about everyone who’s taken a serious look at Illinois’ tax structure in recent years has concluded that it’s out of date, with the major revenue producers not growing as fast as the underlying economy. Now, though, there’s a sign that situation may be about to change—that a windfall of sorts is arriving. Whether the trend is real or not is a matter of debate. Either way, the latest data is absolutely fascinating.

The windfall of sorts is named internet sales tax collections. And something quite interesting, indeed, is happening with them. Until a few years ago, internet vendors essentially ignored local sales taxes. In fact, they bragged to their customers about how they could get stuff tax free. The only people who had to pay were merchants who had a warehouse or other physical presence in a state—“nexus” in the legal terminology. That dramatically changed in the U.S. Supreme Court’s 2018 Wayfair decision. It took states like Illinois a couple of years to update their tax codes, but now they have, and with more and more sales migrating from brick-and-mortar locals to the internet amid the COVID-19 pandemic, the revenue impact is becoming clear. Like in Cook County. In fiscal 2019, the county reports it collected an estimated $91.8 million from internet retail sales, and

$838.7 million from malls and the like. But this year, the figures are a projected $117 million and $779.5 million. By 2026, the tally should be $285.5 million from the internet—three times the level in 2019—with taxes from physical locations growing modestly to only $885.5 million. The trend is solid enough that officials have stopped predicting huge deficits in the figure and say the budget should be more or less balanced for the foreseeable future. The city of Chicago isn’t quite as optimistic. Still, using the same techniques the county used—essentially extrapolating national trends to the local economy—they project internet sales taxes will rise from $91.8 million this year to $121.4 million within three years. That’s more than the proposed 2022 inflation adjustment in the city’s property tax. Statewide data, unfortunately, is not available. The Illinois Department of Revenue, which collects

GREG HINZ ON POLITICS

all sales taxes, state and local, says the money just arrives in lump sums from each retailer and that it lacks the staff to sort things out. Fortunately, one other solid data source exists. That’s Illinois Comptroller Susana Mendoza’s office. It reports statewide collection of sales taxes for cities and counties remained lower in the just-ended fiscal year 2021 than it was in fiscal year 2018, though sales tax receipts for the Regional Transportation Authority are pretty much back to where they were. But collections of that portion of the sales tax that accrues to the state and not smaller governments have begun to spike, big time. Collections leapt from $11.74 billion in fiscal year 2020 to $13.25 billion

in 2021. Cook County officials and others say that’s consistent with the reality that the state is better positioned than local governments to make sure it gets its cut of internet sales taxes, though the locals are catching up quick. So just how meaningful—and how long lived—is this trend? “It’s really hard to know,” says Carol Portman, president of the Taxpayers’ Federation of Illinois. “There have been so many moving parts lately. The law changed at the same time that COVID arrived.” Still, Portman adds, the numbers are pointing at something. If that “something” means they won’t have to tax my house as much to pay the bills, I’m all for it.

Chicago can’t afford to stay on the current path

espite having a young, highly skilled population with relatively higher COVID-19 vaccination rates, Chicago ranks second to last—behind only San Francisco—among the 20 largest metropolitan statistical areas, or MSAs, in jobs recovered from pandemic losses. It couldn’t be clearer when looking at the link between the city’s lagging housing market, labor market, and how the city taxes and spends that it must change its strategy. Although pandemic demand resulted in a hot Chicago housing market this past year, the increase in housing values has likely not made Chicagoans feel any wealthier. That’s because property values increased at half the growth rate of property taxes in the past decade, leaving the city with the largest share of homeowners who were far underwater on their mortgages before the pandemic. Under Mayor Lori Lightfoot’s tenure, housing values grew less than the city’s property tax increase. The bad news is that city property taxes are set to increase again, despite payrolls in the Chicago area still down approximately 340,000 jobs, or 7%, relative to the pre-pandemic period. While the country’s largest MSAs are only missing 30% of COVID-19 job losses on average, the Chicago area is still missing 50% of COVID-related job loss. Cities that benefited from large increases in housing demand during the pandemic also saw large increases in employment, according to data from the Bureau of Labor Statistics and the All-Transactions House Price Index. Population growth and a surge in

housing wealth fueled employment growth in cities like Phoenix, Dallas and Tampa, Fla.—with Phoenix having surpassed the city’s preCOVID employment level. Research shows that amenities, the quality of social networks, local public services as well as taxes are typically reflected in property values. Higher property values raise household wealth, which fuels consumer spending and job creation. On the labor supply side, workers move to areas that offer more for less. Despite amazing natural amenities, a highly skilled labor force, a diversified economy that includes vibrant financial services and growing technology sectors, Chicago faces violent crime, corruption and Mayor Lightfoot’s latest budget suggesting that employment growth in the city is likely to remain stuck in neutral. Lightfoot’s proposed spending on social services is mostly reliant on new debt and federal aid, which means new programs are unlikely to stick. The main reason: 21.4% of the city’s own source revenue is tied up in rising pension costs, which now consume $2.3 billion of the city’s budget. This problem isn’t new. Pension costs are skyrocketing, squeezing city budgets by more each year and forcing lower public investments than what is necessary to address crime, youth joblessness, homelessness, worker skill shortages and a declining quality of municipal services. Our city should be investing in the future, not just paying for mistakes of the past. Chicago’s pension spending is already up nearly $1 billion during Lightfoot’s tenure.

The city’s most prominent business leader, billionaire philanthropist Ken Griffin, has recently been very outspoken about the possibility of moving his enterprise, its people and the economic activity it generates somewhere with different policies. As costs for the city and the state continue to increase, another high-profile move out of the city and the state would likely signal that America’s third-largest city is declining, leaving those who stay holding the bag. Chicago can’t afford to stay on its current path. Only a constitutional pension reform would free up the funds necessary to improve

ORPHE DIVOUNGUY ON THE ECONOMY

the quality of services, lift up the city’s most vulnerable residents and return the city to its glory days. The city needs new private and public investments more than ever to help Chicagoans that are currently feeling the pinch to find good-paying jobs. But Chicago needs Springfield to act before pension reform can be-

come a reality. Until state lawmakers get serious about providing relief, Lightfoot and the rest of the city’s leaders must start using their microphones to demand better. Chicago’s future depends upon it. Crain’s contributor Orphe Divounguy is chief economist at the Illinois Policy Institute.

B E ST I N C L A S S IN OVERALL CLIENT S AT S I FAC T I O N . B E Y O U R B A N K E R ’ S T O P P R I O R I T Y. W I N T R U ST.CO M / P R I O R I T Y

CORRECTIONS The Notable Nonprofit Board Leaders feature in the Oct. 11 edition should have said: Joseph Lacher Jr. is chair of JDRF’s international board of directors. Jazmin Cheefus Kelly is working as an attorney at Accenture. Carlos Cardenas is board chair of the National Museum of Mexican Art.

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Banking products provided by Wintrust Financial Corp. banks. Source: 2021 Coalition Greenwich Market Tracking Program

10/15/21 5:02 PM

CRAIN’S CHICAGO BUSINESS • OCTOBER 18, 2021 3

Apartment building boom is back on

Amanda and Mike Valente

With downtown rents at record highs, the deal drought is over

JOHN R. BOEHM

BY ALBY GALLUN

A Bucktown firm that makes homes look market-ready is going national Renovation Sells, a three-year-old firm that does light remodeling to prep homes before they go up for sale, lined up five franchisees in the first few weeks BY DENNIS RODKIN

hree years ago, Mike Valente and some partners spotted an opportunity in the Chicago real estate market: doing cosmetic fixes for homes on the market, to enhance their appeal to buyers. “We were a novelty then,” Valente, head of the Bucktown firm Renovation Sells, says. “But now we’re the norm.” Since launching in early 2018, Renovation Sells has spruced up kitchens, baths, flooring and other details in more than 300 Chicago-area homes for their sellers, Valente says. It’s a four-per-

son firm: Valente and his wife, Amanda Valente, design partner Briana Gershenzon and John Bura. The next step: Go national. Since early September, Renovation Sells has signed up five franchisees, in Naperville; Dallas; Denver; Charlotte, N.C.; and Charleston, S.C. “It’s superfun to spend your day making homes more beautiful,” says Sarah Drawert, a former management consultant who is now a Renovation Sells See RENOVATION on Page 32

Wintrust and Old Second vied for West Suburban Bank prize But when the final pact was struck, did shareholders get the best deal? BY STEVE DANIELS The competition to acquire the parent of West Suburban Bank, one of the area’s dwindling number of privately held, multibillion-dollar banks, was intense. But in the end, the family that controls the Lombard-based lender chose a suitor that, for

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most of the sales process, was not a top bidder. Wintrust Financial—the area’s largest, locally headquartered commercial bank—topped the offer of the eventual winner— much smaller Old Second—but lost out in the end after Old Second matched Wintrust’s bid, according to a recent Securities &

Exchange Commission filing. The proxy detailing how the deal came together, filed on Oct. 1, laid out the narrative of how a six-bank horse race to acquire $3 billion-asset West Suburban narrowed to two—Wintrust and Old Second. The document doesn’t See OLD SECOND on Page 34

RENOVATION SELLS HAS SPRUCED UP KITCHENS, BATHS, FLOORING AND OTHER DETAILS IN MORE THAN 300 CHICAGO-AREA HOMES.

In the Fulton Market District, workers are preparing a site at the corner of Randolph and Peoria streets for construction of a 43-story apartment tower. About four blocks west, work is underway on a 236-unit rental building after its developer secured a $60 million loan for the project in August. In the South Loop, crews broke ground last month on the Reed, a 41-story riverside tower with 224 apartments and 216 condominiums. With downtown rents back at all-time highs, the apartment development drought is over. Investors and construction lenders are eager to finance new projects again after closing their pocketbooks last year, as rents and occupancies spiraled downward during the coronavirus pandemic. Without financing, many developers just had to wait out the downturn. They’re not waiting any longer. “There’s a lot of money chasing deals now, so you have more options,” says Darren Sloniger, president and chief investment officer of Marquette Cos., a Naperville developer that recently scored a construction loan for a 210-unit project at 140 N. Ashland Ave., just west of Fulton Market. Loan terms “are exponentially better today than they were in July 2020,” Sloniger says. “I didn’t have much negotiating leverage (with construction lenders) back then.” The construction comeback marks a resumption of an apartment boom that has transformed downtown Chicago since the end of the Great Recession, when it See APARTMENTS on Page 35

CHOICES, CHOICES Lombard-based West Suburban Bank had its choice of competing bids from Old Second and far larger Wintrust Financial. Headquarters

Old Second Aurora

Wintrust Financial Rosemont

Assets

$3.3 billion

$46.7 billion

First-half net income

$21 million

$258 million

Return on equity

13.10%

11.90%

$386 million

$4.8 billion

30.80%

36.30%

Market capitalization Year-to-date stock performance Source: SEC filings

10/15/21 4:27 PM

4 OCTOBER 18, 2021 • CRAIN’S CHICAGO BUSINESS

ON BUSINESS

Boeing is playing catch-up in the space race

here’s a lot more than bragging rights at stake in the new space race between Boeing and upstarts like Elon Musk and Jeff Bezos. Behind the tweets and taunts is a battle for advantage on a new economic frontier expected to generate massive wealth in the decades to come. Bank of America predicts the global “space economy” will triple in size to $1.4 trillion by 2030. Boeing, Musk and others aim to supply the tools—rockets, space capsules, satellites and other technology—underpinning that burgeoning economy. With vast experience as a NASA contractor dating back to the early days of the U.S. space program, Boeing would seem to have entered the contest with a commanding lead. But it’s Musk who’s been showing the way lately, as Boeing lurches from one embarrassing setback to another. While Musk, Bezos and Richard Branson take billionaires and celebrities on headline-grabbing space trips, Boeing struggles to show it can ferry astronauts safely to the International Space Sta-

BOEING’S MISCUES COME AS MUSK IS DRIVING CHANGE AND INNOVATION IN SPACE. tion. On Oct. 8, we learned that a crewless test run of Boeing’s Starliner capsule won’t happen until next year as Boeing works to fix faulty valves that forced postponement of the test. Starliner flunked its first test in 2019 when it couldn’t dock at the space lab. As a result, NASA took the unusual step of transferring two astronauts who were training on the Starliner to Elon Musk’s Dragon capsule. The Dragon has carried astronauts to the space station three times since last year. The humbling episode is just the latest for Boeing’s space business. In 2020, NASA cut Boeing out of the competition for a new lunar lander contract that eventually went to SpaceX. Even when it wins, Boeing runs into snags. NASA named Boeing in 2014 as prime contractor on the Space Launch System, a powerful new rocket for moon missions. But the project is billions of dollars over budget and years behind schedule, potentially imperiling NASA’s goal of landing an astronaut on the moon by 2024. Boeing’s miscues come as Musk is driving change and innovation in space. The famously cheeky entrepreneur speaks in grandiose terms of making humans “a multiplanetary species” while he upends the industry

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with radical, yet highly practical new ways of doing things. Musk’s most consequential innovation in space technology is the reusable rocket. An industry establishment accustomed to junking rockets after one use scoffed at the idea of using a single rocket for multiple launches. Musk proved it could be done, with far-reaching implications for the industry. Morgan Stanley figures reusability cuts the cost of launching a satellite to $60 million from $200 million, with potential to go as low as $5 million. Morgan Stanley also predicts satellite costs will plummet to $500,000 from hundreds of millions. As costs fall, a universe of new commercial possibilities opens up. Affordable rockets and satellites will enable new spacebased businesses to thrive, from telecommunications to weather forecasting, space tourism and perhaps even asteroid mining. Lower costs would spur demand for space equipment, which should be good for Boeing. The company sells satellites, rockets, tracking systems, and an array of other equipment and services for extraterrestrial ventures. Boeing doesn’t disclose sales or profits for its space unit, which is part of the company’s much-larger defense business. Yet space could provide a welcome gusher of revenue growth as Boeing works to get its commercial jet business back on track. Unfortunately, Boeing is stumbling just as the industry enters a new era, not a good look when new customers are looking for capable, reliable suppliers. Acknowledging that space is attracting new competitors and private capital, a Boeing spokeswoman says, “We have a significant amount of new technology and product developments underway,” pointing to new military and commercial satellites, space station upgrades, the Space Launch System and Starliner. She adds, “Our business model is changing and we’re committed to serving existing and emerging customers.” Boeing will always be a player in space. To play a lead role, it will have to change with the industry. That means driving technology forward while competing on price with Musk and others. And it means adapting as the space market transforms from a narrow field dominated by government and a few big contractors into a wide-open commercial arena fueled by boundary-breaking innovation. Musk has shown he can play that game. Can Boeing?

Pritzker moves to steer electric vehicle investment to Illinois The governor is pushing an incentive package worth hundreds of millions—possibly the largest in state history BY GREG HINZ Gov. J.B. Pritkzer is making a huge bet on the electric-vehicle manufacturing industry, unveiling an incentive package worth hundreds of millions of dollars that may be the largest in state history. Included are a wide range of tax breaks, from payroll credits and exemption from utility and some sales taxes, to assistance with job training and favored treatment in obtaining government permits and road construction funds. Pritzker wants the muchanticipated package approved in the General Assembly’s twoweek fall veto session, which opens Oct. 19. The package is aimed at keeping Ford’s Chicago assembly plant and Stellantis’ similar Belvidere facility in operation— and poised to win as the American auto industry races to convert from gasoline-powered to electric vehicles. It’s also intended to lure new companies to the state, big and small, but especially Samsung, which is weighing bids from Illinois and Ohio to build an enormous battery factory that officials here want to go across the road from electric truck producer Rivian in downstate Normal and reportedly could employ as many as 7,500 workers. The Pritzker camp has been signaling much of the summer that a big proposal was on the way, one that they believe builds on the recently approved green-energy package. It certainly is big—especially for a state government entirely run by left-leaning Democrats. “Time is of the essence. We know companies now are making decisions that will have implications for decades,” Andy Manar, deputy governor for economic development, told me in a phone interview. “We have to make our best efforts to show them that Illinois is the best place for their business.”

INCENTIVES

The proposal, to be introduced in bill form in the next few days, is the product of months of discussions with industry leaders and, more recently, legislative leaders, including state House Speaker Emanuel “Chris” Welch and state Senate President Don Harmon. The latter haven’t yet committed, but, “they understand the timing,” after Ford Motor last announced billions of dollars in electric-vehicle facilities in Tennessee and Kentucky, facilities which received hundreds of millions of dollars in incentives from each state, Manar said. Illinois Manufacturers’ Association President Mark Den-

ISTOCK

JOE CAHILL

zler termed the package “a very good step forward.” Some further discussions are necessary, he added, but the plan, if approved, will help Illinois compete for the type of facilities that have been going elsewhere. The centerpiece of Pritzker’s plan is a refundable state income tax credit of 75% or 100% of withholding from workers at electricity manufacturing and supply plants, for up to 15 years. The larger, 100% figure would apply to newly hired workers at a facility located in an “underserved area” of the state. Belvidere, the South Side Ford plant and Normal all are located in underserved areas. Companies also would get refundable credits of 25% or 50% of withholding from current workers, if a minimum number of net new employees was added. For a large manufacturer, that would be at least 500 new jobs created over a 60-month period, paired with a capital investment of at least $1.5 billion. Other incentives: Training costs would be eligible for an income-tax credit, 25% in some cases and 50% in underserved areas. A sales tax exemption would be granted to qualifying companies on their purchase of building materials. They’d also be exempt from state utility taxes on electricity and natural gas. Half to 75% of taxes on wages of construction workers who build EV facilities would be waived. The state will establish a task force to study ways to expedite permits, and promises to prioritize any needed road construction. Asked directly if the incentives are enough for Illinois to compete, Manar replied, “That will be determined.” He added, “We listened to the stakeholders.” Credit recipients would have to report on diversity in hiring and on their board composition, and outline a plan to boost

hiring of minorities. One thing not in the package is relief from local property taxes. Sources say Chicago Mayor Lori Lightfoot objected to doing that at a time when she’s raising property taxes to pay for pension costs. That possible break will have to be “the subject of broader discussion,” Manar said. As is the case with the incentives for data farms that Pritzker pushed through the Legislature, the EV package would require contractors building electricvehicle facilities to reach project labor agreements with local unions. But there is nothing in the package now that would apply to people who work in the plant after construction.

REACTIONS

Denzler, of the state manufacturers’ association, said he’d like to see both property tax relief and something to lower utility bills in the package. The latter is particularly important to battery manufacturers such as Samsung that have high power demands in the manufacturing process. Reaction to the package is starting to come in, and it’s pretty positive. The peppiest comment came from a spokesman for Senate President Harmon: “Illinois has the opportunity to be the capital of electric auto making,” he said. “We are certainly open to and interested in Gov. Pritzker’s ideas to accomplish that.” The spokeswoman for Speaker Welch was more restrained, describing conversations with Pritzker’s office as “very preliminary.” She added, “We have not seen any bill language. It’s difficult to comment any further since our caucus has not even had the chance to be briefed on the issue.” No reaction yet from House GOP Jim Durkin, with his Senate counterpart, Dan McConchie, saying Republicans definitely are interested but need more information.

10/15/21 4:54 PM

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6 OCTOBER 18, 2021 • CRAIN’S CHICAGO BUSINESS

The Muddy Waters home at 4339 S. Lake Park Ave.

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City landmarks home of blues great Muddy Waters

The home now carries official recognition of ‘who this man was and what he did,’ says his great-granddaughter BY DENNIS RODKIN

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The Chicago City Council landmarked the home of blues great Muddy Waters on Oct. 14, capping a months-long effort by preservationists and the musician’s family to gain official recognition of the historic house in North Kenwood. Mississippi-born as McKinley Morganfield, who took the stage name Muddy Waters, he bought the red-brick two-flat on South Lake Park Avenue in 1954 and lived there until the late 1970s, when he moved with his children to Westmont. It remains in the family’s hands 67 years after he bought it and is being turned into the Mojo Museum by Waters’ great-granddaughter, Chandra Cooper. While living on Lake Park Avenue, he had his biggest musical successes, including three singles that reached highest on the R&B charts: “I’m Your Hoochie Coochie Man,” “Mannish Boy” and “Just Make Love to Me.” Waters influenced many blues musicians, as well as rock ‘n’ rollers, with the Rolling Stones, Bob Dylan and ZZ Top among them. The basement of the Lake Park Avenue building was rehearsal space, according to historical write-ups. Landmarking the house amounts to the city officially honoring “who this man was and what he did while he was living in that house,” Cooper has said. Having official recognition from the city will also help her fundraising for the museum. Cooper did not respond to requests for comment. The two-flat, built in the mid1880s, was owned by the musician’s estate after he died in 1983. Cooper has owned the house since 2000, according to the Cook

County recorder of deeds. In the past two years, both the National Trust for Historic Preservation and Landmarks Illinois have made grants toward restoration and preservation of the house. Cooper told Crain’s in May that replacement of the old leaky roof was complete and work would begin on the interior rehab. The effort to get the house landmarked kicked off in May.

IMPORTANT FIGURES

The declaration comes during a year when Black historical figures in Chicago have received heightened attention. Among other developments: In January, the council landmarked the West Woodlawn home of Emmett Till, a Black Chicago teenager who in 1955 was killed by white racists in Mississippi. In July, a memorial to anti-lynching activist Ida B. Wells, sculpted by Richard Hunt, was dedicated on a site where CHA housing named for her used to stand. And in August, a petition drive launched calling for renaming the historic Clarke House, built in 1836, for Bishop Louis Henry Ford, the noted Black pastor who saved the house from demolition in the 1940s. Last week’s resolution to landmark the Waters home received no objection when introduced by Ald. Tom Tunney, 44th, as part of a trio of landmark nominations. Mayor Lori Lightfoot declared it passed unanimously. There was no time to break out the champagne and reefer in celebration, nor to play the Muddy Waters song by that name, as the council was in the middle of a long meeting where, among other things, Lightfoot pitched a $4.4 billion borrowing plan.

CRAIN’S CHICAGO BUSINESS • OCTOBER 18, 2021 7

Will Wall Street warm to this shopping mall owner? BY ALBY GALLUN The New York Stock Exchange welcomed the Chicago real estate world’s newest-listed public company last week, just days before saying sayonara to another local property owner. Shares of InvenTrust Properties, a Downers Grove-based shopping center owner, began trading Oct. 12 on the NYSE, the culmination of a tortuous journey that has included two recessions, billions of dollars in acquisitions and dispositions, and a long wait for shareholders eager to cash out. The real estate investment trust has been a public company since it was founded 17 years ago, but its shares never traded on a stock exchange until last week. It’s too early to guess how the company will be received on Wall Street. After a rough 2020, shares of shopping center REITs have soared this year, though retail real estate still faces an uncertain future as more consumers shop online. With a stock market capitalization of about $1.7 billion, the smallest among its peers, InvenTrust aims to expand through acquisitions, mainly in the Sun Belt. It’s not carrying

a lot of debt, so the REIT has the financial capacity to load up on more properties without stressing its balance sheet, according to a report from Green Street Advisors, a California-based research firm. “We believe our strong and flexible balance sheet provides a unique opportunity for self-funded growth over the next couple of years,” InvenTrust President and CEO Daniel Busch said in a statement.

REIT EVOLUTION

InvenTrust shares, which closed at $26 on their first day on the NYSE, were trading for around $25 late in the week. Shares of another local shopping center REIT, meanwhile, are about to end their run on the NYSE. Oak Brook-based Retail Properties of America, which listed its shares on the exchange in 2012, has agreed to a takeover by Indianapolis-based Kite Realty Group. Kite shareholders will vote on the deal Oct. 19. Investors who have owned Retail Properties stock since it started trading on the NYSE have made out well. Including dividends, the shares have returned 171%, versus 71% for a Bloomberg index of shopping center REITs.

Both Retail Properties and InvenTrust used to be part of the empire created by Inland Real Estate Group, an Oak Brook-based real estate conglomerate that launched several big, nontraded REITs in the years before the Great Recession. Inland formed the precursor to Retail Properties in 2003. It followed up in 2004 with an offering for Inland American Real Estate Trust, the company that became InvenTrust. As it raised $8 billion in equity over the next few years, Inland American stood out as the biggest U.S. REIT not listed on a stock exchange, amassing a diverse portfolio, including hotels, shopping centers, office buildings, even charter schools. The company struggled after the real estate bust, and many investors found themselves trapped, unable to sell their shares because the stock didn’t trade on an exchange. As the market recovered, Inland American decided to shrink and sell off its nonretail properties, changing its name to InvenTrust in 2015. Today, the company owns 65 properties, mainly in the South, with a focus on grocery-anchored shopping centers.

COSTAR GROUP

Shares of Downers Grove-based InvenTrust Properties began trading on the NYSE last week, the culmination of a tortuous journey that has included two recessions, billions of dollars in acquisitions and dispositions, and a long wait for shareholders eager to cash out.

InvenTrust’s portfolio includes South Frisco Village shopping center outside Dallas. As a listed REIT, InvenTrust will face tougher scrutiny from Wall Street analysts and money managers, investment pros who didn’t follow the company before. Its high concentration of grocery-anchored properties is a plus: Necessity-based retail with limited e-commerce competition tends to be more popular with investors.

But Green Street predicts that InvenTrust shares will trade at a lower valuation than those for other shopping center stocks. The REIT’s corporate expenses are high, relative to the size of the company, and InvenTrust shares could sag as many of its longtime investors decide to cash out, Green Street says in its report.

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8 OCTOBER 18, 2021 • CRAIN’S CHICAGO BUSINESS

Entrepreneurs should play the long game with VC money

upfront and I blow that amount in a year or two, I’m unlikely to get another meeting with that investor in the future. I developed a system that I think benefits both sides to a great degree and can salvage those relationships, even if the project goes belly up. The idea is to do a much smaller rollout of the business and prove the concept on the “unit level” as a way to prove your business analysis is sound. Here’s a scenario: You have a new chocolate bar that you want to roll out and you need early funding. You might very well be able to get $15 million from a VC to do a THE IDEA IS TO DO A MUCH SMALLER national product inROLLOUT OF THE BUSINESS AND PROVE troduction, but that’s a lot of money to risk. THE CONCEPT ON THE “UNIT LEVEL” Instead, you could consider one geoAS A WAY TO PROVE YOUR BUSINESS graphical unit, say Milwaukee, at a cost ANALYSIS IS SOUND. of $1.5 million, as a dot-com catastrophe was the dam- smaller proof of concept. Doing it age done to relationships between this way allows you to work closeentrepreneurs and their backers. If ly with your VC on detailed analI convince a VC that my can’t-miss yses and benchmarks over a year opportunity is worth $20 million or so. If the launch is successful

Scott Meadow is a clinical professor of entrepreneurship at the University of Chicago’s Booth School of Business.

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

and your projections are on point, that VC is going to see that you’re a projections whiz and feel more comfortable backing a later round or future projects.

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ack before the dot-com bubble burst more than 20 years ago, money from venture capitalists to entrepreneurs was flowing freely—in hindsight, much too freely. Despite the economy’s recent struggles, it feels eerily reminiscent of those days again as VC spending continues to break records. While it might be a time in which an entrepreneur could ask for, and receive, more early funding for a concept, smart entrepreneurs should actually ask for less—at least initially. One of the ramifications of the

What if Milwaukee is a bust? Sure, you’ve lost $1.5 million of the VC’s money, but that’s far better than the $15 million you could have lost. And you’ve had time to build a relationship with that investor to show that you are a thoughtful entrepreneur who is a worthy risk. This works on other unit levels as well. Maybe your product can debut at the facility level, maybe at a single hospital or retail store. The tech level might put software into a single brokerage, and the

biotech level might take one drug from development to sale to a national pharmaceutical maker before launching a full-fledged drug discovery company. There are certainly times in which a quicker rollout is necessary or more money can be had. But taking that more conservative path might be the difference between rolling out one product with the backing of a deep-pocketed investor or being able to build on that relationship for decades’ worth of ideas.

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Infrastructure: A $1 Trillion Opportunity The impact of the $1 trillion infrastructure bill to Chicago and the region could be extraordinary. We look at how the new legislation will benefit Chicago and the region from fixing roads and bridges, to addressing public transit, and expanding broadband access, among others. Join Illinois’ two U.S. Senators, Richard Durbin and Tammy Duckworth, as they discuss their plans and vision with Crain’s political reporter, Greg Hinz.

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A Conversation with John O. Hudson III President and CEO of Nicor Gas technology, and transportation for economically vulnerable communities.

ver the last 20 years, John Hudson has been an ardent champion in helping to transform communities with groundbreaking philanthropic initiatives. From serving as chief executive of philanthropic arms of Alabama Power Company and Southern Company Gas, supporting core programming for national educational institutions such as Morehouse College, to starting Bronze Valley, a nonprofit investment platform and community development financial institution that supports early-stage technology companies created by diverse founders, Hudson has focused on advancing the communities where he lives and works. Recently as president and CEO of Nicor Gas, he has spearheaded the development of Northern Illinois Community Initiatives (NICI), a nonprofit that invests in communities that lack resources to launch or complete critical neighborhood revitalization initiatives. Focused on Illinois towns outside of the city of Chicago, NICI is committed to providing support to some of the area’s so-called “forgotten cities” to build economies of scale. Leveraging his previous successes in forming past coalitions with businesses, governments, and community leaders in other areas of the country, Hudson is advocating for more investment in infrastructure,

At the helm of Nicor Gas, Hudson is responsible for the delivery of clean, safe, reliable, and affordable natural gas to 2.2 million homes and businesses in more than 650 northern Illinois communities. Based on previous community endeavors, he wanted to strengthen support for areas that were in economic distress before the pandemic. With the launch of NICI, the organization will work to support beyond funding; NICI will increase awareness, advocacy and collaboration with trusted partners who share Nicor Gas’ and Hudson’s commitment to community advancement. Nicor Gas and Southern Company Gas are funding the work of NICI with $20 million in seed money and a $250,000 Impact Grant to spur economic development and advocacy in these areas. Q: What is the biggest focus for NICI? A: NICI is focused on helping our most economically-challenged communities regain their strength. For a variety of different reasons, many of our affected areas are shadows of once-thriving communities. Our organization wants to help them launch new chapters to focus on regaining their economic stability. We focus on four key areas: financial assistance, community investment, collaborations, and advocacy. Each of these areas has the power to help us successfully identify and implement key community initiatives. Beyond providing financial assistance, NICI will align local leaders and community groups to form partnerships and mobilize resources. The organization will collaborate with residents, local

leaders, and influencers to not only prioritize communities that are most in need, but also identify projects that will benefit from bridge funding or a brain trust. NICI will support a variety of entrepreneurship initiatives in an effort to create a culture of innovation in communities challenged by economic hardship. We strive to make strategic investments in commercial and business growth that have the potential to change people’s lives and environments. Highimpact initiatives will yield growthenabling infrastructure like technology and transportation; commercial corridor redevelopment, agriculture, and manufacturing collaboratives; entrepreneurship support and venture capital investment in local businesses. Wealth building, workforce development and job readiness training will also help prepare people for gainful employment. Q: What communities is NICI primarily focused on and how were they selected? A: When you drive through a town like Harvey, Illinois, with shuttered factories and boarded-up homes, you see remnants of what once was. But if you look closer, you will see what can be once again. We founded NICI to invest in communities hardest hit by deindustrialization, systemic and environmental racism and other mitigating factors that affect job creation, wealth building, healthcare, and education. These inequalities have been exacerbated by the COVID-19 pandemic, and bolder, more forward-looking economic development strategies are critical to help communities like Harvey revitalize their towns. Across northern Illinois, there are several under-resourced communities that have experienced disparate economic impacts before and, of

course, during the pandemic. Many of these communities were built on solid foundations and at one time attracted industries that provided middle-income jobs. Now, residents are living in food deserts, consigned to shop in convenience stores lacking fresh produce and quality proteins, and they are living in neighborhoods where half the homes are uninhabitable. So, in addition to investing in commercial projects, NICI will form partnerships with local economic development agencies, grassroots community groups and collaboratives to support residents’ basic needs. Q: Why is this a key commitment for Nicor Gas? A: We want to ensure that our customers are able to meet their basic needs. Having access to clean, safe, reliable, and affordable energy is as critical as having comfortable housing, warm clothing, and nutritious food. And we understand that natural gas, especially in a cold climate region such as ours, is foundational to provide reliable energy for families and to support a diverse economy. We’re all navigating through the challenges and uncertainties associated with a global pandemic that has devastated our economy. So, imagine what it has done to communities that were already struggling? As a vital community leader and resource, it is Nicor Gas’ responsibility to ensure that our communities are sustainable and strong for our families, customers, and neighbors. I am honored to be able to lead the charge to help revitalize our communities so that we can rebuild the towns and cities that have already weathered immeasurable economic and societal storms for future generations.

surpassing 100% of normal levels for an 11-week period. Preliminary CTA data shows that ridership was also up, hitting 57% of normal levels. Contributing to the Loop’s increased activity were declining COVID-19 cases and people returning from end-of-summer vacations, the Chicago Loop Alliance says. Additionally, Urbanspace, a new food hall at State and Washington streets, opened in September, which the alliance estimates attracted some people to the Loop. “September and the early weeks of October brought a variety of good news for the Loop,” Chicago Loop Alliance President and CEO Michael Edwards said in a statement. “Businesses continue to show interest in and sign leases for Loop office space, and the city’s COVID-19 numbers are trending downward in an encouraging way. As vaccines become available for children younger than 12, and as the city continues to make progress with adult vaccinations, we are very encouraged that we’ll see a continued recovery for the Loop.” Other establishments that re-

CONTRIBUTING TO THE LOOP’S INCREASED ACTIVITY WERE DECLINING COVID-19 CASES AND PEOPLE RETURNING FROM END-OF-SUMMER VACATIONS. opened in early October—like Loop mainstay Petterino’s, which reopened Oct. 5, and Chicago’s theatre scene, which resumed this month—should continue to attract residents and tourists alike, the group says. Developers and restaurateurs are continuing to eye the neighborhood to open new establishments as well. Fifty/50 Restaurant Group announced plans this week to open a charhouse in Willis Tower, betting on workers and tourists returning to the Loop next year. To encourage Loop tourism, from July 11 to Sept. 12, the Chicago Loop Alliance hosted Sundays on State, a weekly street festival that featured arts, recreation, food and shopping. Pedestrian counts compared with the same Sundays in 2019 were within an 11 percentage-point range, according to the alliance, with the two final events in September meeting or exceeding normal pedestrian levels. The series is estimated to have had a $12 million economic impact on the Loop. There’s evidence that businesses are also still looking in the Loop for office space. Freight tech firm Loadsmart leased nearly 35,000 square feet at 175 W. Jackson Blvd. this month, where it plans to house 200 employees by the end of the year.

CRAIN’S CHICAGO BUSINESS • OCTOBER 18, 2021 13

Sterling Bay adds 9 floors to Fulton Market office project The developer is betting on a growing pool of tenants looking for smaller floor plates in a post-pandemic world BY DANNY ECKER Sterling Bay has redrawn plans for a new office building on the eastern edge of the Fulton Market District with a taller, thinner structure it thinks tenants will prefer in the wake of the COVID-19 pandemic. The developer is seeking city approval to build a 26-story office building at 360 N. Green St., according to a zoning application submitted last week to the City Council. The proposal would reshape the 458,000-square-foot property city officials greenlighted for Sterling Bay in 2018, on the block bounded by Green, Kinzie and Peoria streets along the northern edge of the Metra tracks running through the former meatpacking district. The redesigned project would be nine stories taller but include substantially smaller floor plates and be set back farther from the tracks, plans show. A Sterling Bay spokeswoman said the move is meant to cater to companies’ changing tastes amid a public health crisis that’s given rise to remote work and pushed many tenants to consider shrinking their office footprints. It’s unclear how much smaller each floor would be under the new Gensler-designed plan, but the total square footage

would remain the same as what was approved before, despite being about 60% taller. The pivot runs counter to the pre-pandemic popularity of office buildings with larger floor plates that allow companies to occupy large amounts of space without having to split it up among multiple floors. That trend helped draw tenants in recent years to sprawling properties like the redeveloped Old Post Office and the Merchandise Mart. But Sterling Bay is betting on a post-COVID revival of bite-sized floor plates that were mostly out of style before the crisis, and that there will be a deeper pool of takers moving forward for smaller-sized offices with fewer columns and more window lines. Sterling Bay’s new pitch comes as it develops another Fulton Market office building with relatively small floor plates at 345 N. Morgan St. That 11-story, 200,000-square-foot project is under construction as the developer is in advanced talks with supply chain management company Havi Group to lease roughly half of its floors. The 360 N. Green building was originally proposed as part of a three-building plan Sterling Bay laid out in 2018 for office buildings at 330, 333 and 360 N. Green St. The developer completed the

19-story building at 333 N. Green St. in early 2020 and has leased it up with tenants including ad agency WPP and professional services giant Ernst & Young. Office demand has been strong in Fulton Market this year while activity has been sluggish elsewhere downtown. Companies that have signed on for new offices in the neighborhood this year

include consumer products giant Kimberly-Clark, money manager Calamos Investments, restaurant reservation platform Tock, agriculture technology firm Hazel Technologies and online agricultural supply marketplace company Farmers Business Network. That momentum has been key to keep pace with the new supply slated to come to the trendy cor-

ridor in the years ahead. Sterling Bay’s Morgan Street project and a new 150,000-square-foot building under construction at 1045 W. Fulton St. are adding to the available space at properties developers have already built. Almost 2.3 million of the roughly 6.5 million square feet of completed offices in Fulton Market as of the end of the third quarter have yet to be occupied, according to data from CBRE.

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14 OCTOBER 18, 2021 • CRAIN’S CHICAGO BUSINESS

NORTHWESTERN from Page 1 spring that he’d step down at the end of August 2022. Schapiro said he’s long planned to vacate the role after his contract extension expires, but his departure comes after a particularly difficult year that saw tense exchanges with students following protests against campus police and controversy over the short-lived selection of a new athletic director, who was accused of enabling sexist and racist treatment of school cheerleaders. “What we liked about Rebecca Blank is that . . . she had succeeded in difficult situations before,” said Northwestern Faculty Senate President Robert Holmgren, a molecular bioscience professor who served on the 34-member search committee. The new job will put Blank to the test once again. Northwestern has evolved in profound ways since Blank left the faculty, where

she was one of the first tenured women in the economics department, more than two decades ago. For one, it’s ascended the rankings of the country’s most elite institutions and become even more competitive, with the undergraduate admissions rate dropping from nearly 33% in 2000 to 9% in 2020. Northwestern has also ramped up its efforts to secure sponsored research funding and approached the $1 billion mark last year, increasing more than 74% since 2011.

PRIORITIES

Outside of academics, Northwestern has poured millions into its athletic programs and brands itself on city billboards as Chicago’s “Big Ten team,” upsetting residents who object to expanded stadium use and prompting questions about the school’s spending priorities. Blank, who chairs the Big Ten Council of

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Presidents & Chancellors, has experience in the sports arena and helped devise the strategy that allowed football teams to play through the COVID-19 pandemic. She maintains that student athletes are students first and foremost—which appears to be in line with the university’s stance that football players shouldn’t receive union protections like employees. For Holmgren, there’s no doubt that Blank will meet the challenges. He said committee members signed nondisclosure agreements and that he can’t share specific discussions that took place about the candidates, but stressed her track record overcoming major administrative hurdles. That’s important moving forward, he said, as higher education emerges from the pandemic and institutions grapple with their remote work and course delivery expectations. “She had to run (UW-Madison) when the governor wanted to eliminate tenure, and that would have had a catastrophic effect on the eminent research faculty,” he said. “She was able to weather that storm, and the institution is in a stronger place than when she arrived.” In interviews with the media this week, Blank recalled the tenure battle as the most trying period of her chancellorship. After lawmakers removed tenure protections from statute in 2015 and added language saying they could be laid off under some circumstances, more than 10% of faculty entertained offers to jump to other universities, which would have drained talent from Wisconsin’s top research institution. Blank worked with faculty and the state Board of Regents to institute a campus tenure policy, though some professors argued the language wasn’t strong enough to safeguard against future cuts. Northwestern students, however, will be paying more attention to Blank’s stance on diversity, equity and inclusion. At UW-Madison, Blank has drawn backlash from students over failing to meet with them, not enough progress in enrolling Black students, and resistance to removing a campus statue of Abraham Lincoln. Leaders of Northwestern University Graduate Workers, which advocates as a union for graduate students without formal recognition from the school, called on Blank to support labor movements and activism on campus. The group issued a statement saying it was worried about her interactions with students of color after researching complaints from peers at UW-Madison. “The search for a new president, conducted with little transparency, leaves us with great unease about the priorities and agenda of incoming president Blank as well as concerns about a continuation of Shapiro’s failures towards our community,” the group said in a statement.

JOHN R. BOEHM

Northwestern’s next president will be put to the test on diversity, other issues

Northwestern has ascended the rankings of the country’s most elite institutions. In its announcement of Blank’s selection Monday, Northwestern sought to highlight the gains she’s made in this area, noting that she spearheaded a program called Bucky’s Tuition Promise that pays four years of tuition for Wisconsin residents whose families earn $60,000 or less. Blank has also advocated for providing targeted financial aid to students with the most need, instead of broadly reducing tuition for all Wisconsin residents, and launched a fund, which already raised more than $40 million, that awards scholarships to increase student diversity, recruit and retain faculty of color, and supports research on social and racial justice.

‘SELF-EVALUATION’

Blank largely withheld specifics about how she’ll tackle these issues at Northwestern during an interview Monday, saying she hasn’t spent enough time on campus or talked with stakeholders. She added that all campuses are undergoing “a real self-evaluation” about how they can improve the experiences of students and faculty of color. “Most of us are predominantly white institutions often sitting in predominantly white neighborhoods,” Blank said. “One of the advantages of Northwestern is that it’s in a much more diverse, larger community than Madison, which hopefully provides all sorts of opportunities for greater diversity. . . .” Just about 2% of undergrad-

uate students at UW-Madison identified as Black in 2020, 3.6% identified as mixed race and 6% identified as Hispanic, according to school data. Of 36 major public research institutions, only one—Iowa State—enrolled a smaller percentage of students of color than UW-Madison, while only five enrolled a smaller number of minority students, according to 2018 data. About 87% of Wisconsin’s residents are white, according to 2019 Census estimates. Blank will also have to forge a positive relationship with the Evanston community. Disputes over Northwestern’s ambition to host professional sports and revenue-generating events at Ryan Field have created conflict with some neighbors in the past, and the issue could return as the stadium undergoes a massive renovation, which will be funded by a portion of the Ryan family’s recent $480 million donation. Evanston Ald. Eleanor Revelle, whose ward includes most of the campus and Ryan Field, said she’d like to see Blank engage with residents outside of campus and try to create personal connections. She said she can’t recall a time that outgoing president Schapiro attended a City Council meeting, for example. “Football was a big passion of his, and people could see him walking to and from work—from his presidential abode back and forth to campus—but I don’t think I ever saw him in other places,” Revelle said.

10/15/21 4:41 PM

CRAIN’S CHICAGO BUSINESS • OCTOBER 18, 2021 15

Skokie research buildings sell for $75 million The deal showcases the Chicago area’s burgeoning reputation as a hub for startup and growth-stage life sciences firms—and the rising value of properties that house them

pears to be a hefty return for the Skokie-based real estate firm that Less than five years after buy- sold them. The Lamon buildings are part ing a research park in Skokie for $77 million, American Landmark of the nearly 23-acre Illinois SciProperties has sold off a portion ence & Technology Park that of the campus for almost the same American Landmark Properties bought in January 2017 for $77 amount. A venture of Chicago-based million. The campus along Niles Singerman Real Estate this month Avenue and Searle Parkway in the paid more than $75 million for northern suburb also includes a the adjoining properties at 8025 178,246-square-foot office buildand 8045 Lamon Ave. in Skokie, ing that is fully leased to Northaccording to sources familiar with Shore University HealthSystem and is also on the market, with the sale. The deal for the buildings, bids expected to be north of $40 which total about 286,000 square million. It’s unclear how much Amerfeet, highlights Chicago’s burican Landmark spent during its “THERE’S A GREAT VIBRANCY, A GROWTH ownership tenon capital imTRAJECTORY TO THE BIOTECH AND LIFE ure provements and SCIENCE COMMUNITY IN CHICAGOLAND.” leasing commissions at the propSeth Singerman, president and managing partner, erties it just sold, Singerman Real Estate which combined are 81% leased. The geoning reputation as a hub for firm, which couldn’t be reached startup and growth-stage phar- for comment on the sale, took maceutical and biotechnology out a $73.5 million loan on the companies, and the rising value of property in 2017 and amended properties that house them. The the mortgage to $78.5 million in transaction also netted what ap- 2019, Cook County property re-

BY DANNY ECKER

cords show. Now, it has cashed out at a big number for just part of the campus as the COVID-19 pandemic funnels more venture capital into pharmaceutical and biotech research, a trend that has driven up investor appetite for high-quality lab space properties. American Landmark is also close to completing an $18 million redevelopment of a 1970s-built, 135,000-square-foot office building at 8030 Lamon Ave. into more lab space, according to Jones Lang LaSalle, which oversees leasing on the campus.

A BET ON CHICAGO

Singerman’s purchase is a noteworthy wager on the local life sciences scene by an investor that has owned lab buildings in major biotech markets like Boston and San Diego, but not in the Chicago area until now. The Chicago area has a track record of watching locally born bioscience companies leave for more mature research markets like Boston, San Diego and the Research Triangle in North Carolina, mostly because of a lack of high-quality lab space for such companies to grow. But developers have landed

The Illinois Science & Technology Park campus in Skokie financing to start building more of it in Chicago over the past two years, supplementing local hubs of research like the Illinois Science & Technology Park campus and helping send a message to life sciences companies that they don’t have to defect to grow. “There’s a great vibrancy, a growth trajectory to the biotech and life science community in Chicagoland, which is anchored by world-class institutions and several market-leading, global pharmaceutical companies,” said Seth Singerman, president and managing partner of his namesake real estate firm. “We think that fosters the growth of several early-stage companies, and we’re

excited about the prospect to support them.” Singerman confirmed the Skokie purchase, but declined to disclose the exact sale price. Tenants in the buildings Singerman bought include clinical device maker Vetter and renewable ethanol manufacturer LanzaTech. The available space in the 8025 building was left behind by Fresenius Kabi as the drugmaker consolidated local operations into property it owns, as well as gene therapy-focused Northwestern spinout Exicure, which expanded and relocated early last year to a Lincoln Park building that Chicago developer Sterling Bay converted into lab space.

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16 OCTOBER 18, 2021 • CRAIN’S CHICAGO BUSINESS

Windows on all sides inspired airy redesign of this Gold Coast co-op “H

ow do you not love a space with windows on four sides,” Geoffrey Ruttenberg says of his home on the fourth floor of a vintage Gold Coast co-op building. Built in 1922 by a group of physicians, the building has only full-floor units and space between it and neighbors on all four sides. The design may have been a response to the flu epidemic of the 1910s, Ruttenberg says; it would allow for fresh air to flow around and through the residences. Regardless of the intention, the design allows each unit “to have light and air all around you,” he says, a feeling that he emulated with his redesign. Ruttenberg, a real estate developer and son of a real estate developer, knows homes. He is a principal in Third Generation Partners, a development firm he runs with his sister and brother. Their father, Buzz Ruttenberg, is the founder and chairman emeritus of Belgravia Group, a prolific Chicago-based residential builder. In 2019, when he saw a full-

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floor unit that had been in one family’s hands for half a century was for sale in a handsome old Walton Place building, “I knew I wanted it,” Ruttenberg says. Because it hadn’t been updated in decades, “it would be a blank canvas for me to improve. I don’t want to pay for somebody else’s improvements, because that’s what I do.” The utilities had been kept up to date in the Walton Place building, which is owned cooperatively by its unit owners, but the condo’s interior needed a refresh. In the rehab, Ruttenberg stripped away finishes that had long ago worn out, doubled the size of the kitchen and went for what he calls “continuity of the look,” such as with minimally detailed kitchen cabinets that also show up as built-ins in other rooms. Now planning to rehab another home, Ruttenberg put the four-bedroom, 4,500-squarefoot home on the market last week. Priced at $1.6 million, it’s represented by Carrie McCormick of @properties. Potential buyers should keep

VHT STUDIOS PHOTOS

When doctors constructed this 1922 Walton Place building, was it designed in response to the last pandemic? A vintage fourth-floor unit takes advantage of light and air flow with a contemporary rehab. BY DENNIS RODKIN

in mind that co-ops differ from condos in that their utilities and other fees are built into month-

ly assessments. Thus they come with higher assessments than condos, but typically without

utility bills. The required down payment is usually a higher percentage for a co-op, as well.

10/14/21 4:06 PM

Thursday, November 18, 2021 | 12:00–1:30 PM Central | Hyatt Regency Chicago Although Mahatma Gandhi is often credited with saying “Be the change you wish to see in the world,” it has been reported that he actually said, “If we could change ourselves, the tendencies in the world would also change.” YWCA has embodied the spirit of Gandhi’s remarks through the implementation of our social enterprise approach and innovative programs and services. Each of this year’s outstanding honorees also serve as examples for leading social change in their approach and dedication to social responsibility, community impact, and gender and racial equity. Amid a challenging and formative chapter in history, Leader Luncheon 2021 will serve as a reminder and inspiration for others to lead by example as we embark upon the future with purpose and perseverance. Buy individual tickets or learn about sponsorship options at

C O M M U N ITY LEA D E R S H I P

Elizabeth Thompson President, The CAFE Group

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18 OCTOBER 18, 2021 • CRAIN’S CHICAGO BUSINESS

PEOPLE ON THE MOVE

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

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Anthony Balthazor has joined Wintrust Bank as group senior vice president, Commercial Middle Market Banking. He will lead a team of middle market bankers. Most recently, Anthony served as a senior vice president and team leader in the Commercial Bank Middle Market group, and he led the Family Office initiative at Huntington National Bank. He brings more than 18 years of progressive commercial middle market banking experience, and he holds a BA from Knox College and an MBA from DePaul University.

BANKING / FINANCE Illinois Bank & Trust, Chicago Illinois Bank & Trust is expanding its footprint into Rosemont, IL and is proud to announce that Jeffrey S. Armstrong will be leading this office as the Chicagoland Market President. Jeff has over 25 years of banking and commercial lending experience, he has a strong background in relationship building and portfolio management. Jeff will work with a variety of businesses and is looking forward to continuing to serve the Chicagoland area and help businesses achieve their financial goals.

Schechter Investment Advisors (“SIA”), an independent registered investment advisor firm, has announced the addition of Paul Wehner, MBA, and Wehner Karen Scott, MBA, as Senior Investment Advisors. Wehner and Scott, formerly of Coe Capital Management, will remain based in Chicago for Schechter. Scott

GOVERNMENT City of St. Charles, St. Charles Heather M. McGuire has been appointed City Administrator of the City of St. Charles. McGuire comes to west suburban St. Charles as active redevelopment of its vibrant downtown riverfront continues. She brings experience negotiating economic development incentives and managing major infrastructure projects. McGuire earned her B.A. from DePaul University and her J.D. from the Northern Illinois University College of Law.

INFORMATION / DATA TECHNOLOGY Kin + Carta, Chicago Kin + Carta has appointed Maria Gordian to its board of directors as a non-executive director effective November 1. In this role, Gordian will leverage her more than two decades of diverse consulting experience to provide objective guidance as the company seeks to balance considerations around people, planet, and profit. She will assume her non-executive duties alongside her role as a senior partner in the Healthcare and DEI practices at Bain & Company. CONSTRUCTION SERVICES Pepper Construction, Chicago Pepper Construction welcomes Cam Mallett as Director of the company’s growing Mission Critical practice. Cam will leverage his extensive national network to lead the team in business development and will also be responsible for overseeing project delivery. Cam brings 20 years of Mission Critical experience. He addresses the bigger picture in each engineering, construction, and operational challenge by employing an adaptive approach to problem solving and tailoring services to meet client needs.

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INFORMATION / DATA TECHNOLOGY Kin + Carta, Chicago Kin + Carta has bolstered its global leadership team with the promotion of Michelle McGuire to global chief of staff. In this role, McGuire will work closely with global and regional executives and leaders to drive high-priority initiatives, with a core focus on cross-regional engagement to support the roll out of the consultancy’s strategic plan. McGuire moves up from her role as director of digital products and services, Americas. She has been with Kin + Carta for seven years.

Croke Fairchild Morgan & Beres is pleased to welcome Paige Bolinger and Meredith Christianson as associates in the firm’s transactional practice. Paige advises founders, Bolinger startups, investors, and funds on a range of venture capital-related, decentralized finance and general corporate matters. A former inhouse attorney for a VC firm, she has executed a variety of investments in Christianson emerging companies and funds while simultaneously providing strategic and legal support across internal business units. Meredith’s practice focuses on M&A, joint ventures, corporate governance, and other corporate matters for public and private companies and private equity firms. She has advised on U.S. and international business transactions valued as high as $40B.

LAW Pilgrim Christakis LLP, Chicago James “Jim” Morrissey has been promoted to partner at Pilgrim Christakis LLP, a financial services litigation boutique based in Chicago. Jim served as an associate at the firm for six years, after beginning his career at the State Appellate Defender’s office in Chicago. He is a seasoned litigator who deftly represents financial institutions and related service providers in consumer protection cases, class actions, and government investigations. NON-PROFIT Chicago Neighborhood Initiatives, Chicago Ms. Kimberly Morris brings 10 years of experience managing economic development projects. She will help build CNI’s community relationships, design development strategy, generate support for citywide endeavors, and manage construction. Previously, Ms. Morris implemented programs to help organizations and the City of Chicago support small businesses, create jobs, and revitalize neglected areas. She has a Bachelor’s degree in Urban and Regional Planning from the University of IL and a MPA from UIC.

Dog Tag Inc., an organization that empowers veterans with service-connected disabilities, military spouses, and caregivers to find renewed purpose after serving our nation, welcomes Justin Miller as its Chicago Program Manager. Miller served in the U.S. Army for nearly a decade, deploying twice in Operation Iraqi Freedom. Miller earned an MBA from DeVry University, is active in Chicago’s veteran community, and was recently appointed to serve on the Illinois Veterans Advisory Council.

Raise Commercial Real Estate, the technologypowered brokerage that reimagines real estate from ideation to execution for forwardthinking companies, has hired industry veteran Beth Moore as Head of Strategic Growth working out of the company’s growing Chicago office. Beth will be responsible for accelerating growth and innovation while also guiding Raise’s enterprise sales, Flex playbook and national expansion efforts.

NON-PROFIT Junior Achievement of Chicago, Chicago Junior Achievement of Chicago is proud to announce the election of Kathy Scherer as Chairperson of the Area Board of Directors. Kathy is Central Region Market Leader & Chicago Managing Partner for Deloitte. She has held many JA leadership roles and serves as a JA classroom volunteer. The organization reaches K-12 students in 12 Chicago-area counties, focusing on financial literacy, work readiness, and entrepreneurship. Kathy is the first female Board Chair in JA of Chicago’s 81-year history.

NON-PROFIT One Million Degrees, Chicago One Million Degrees, a national leader in increasing community college enrollment and persistence, has named Aneesh Sohoni, Chief Executive Officer. He joins OMD from Teach For America, where he was Executive Director of the Greater Chicago-Northwest Indiana region. He has devoted his career to advancing education equity and opportunity. He succeeds Paige Ponder, who served OMD for nine years, building a proven model of student supports and corporate partnerships here, now expanding to Colorado.

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Salo has promoted Mary Cook to managing director, Midwest finance. In this role, Cook will continue to lead Salo’s Chicago finance team and begin to build its Midwest presence starting with Milwaukee. Cook’s involvement since she joined in 2017 has helped the Chicago market grow rapidly.

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EXPANDING IMPACT: Large foundations are putting their dollars where their values are. PAGE 20 SOCIAL GOALS: Private-equity firms can focus on more than the bottom line. PAGE 22 ACTING INTENTIONALLY: Use financial leverage to open doors of opportunity. PAGE 22

CRAIN’S CHICAGO BUSINESS HIGH FINANCE

JOHN R. BOEHM

Phil Alphonse is a senior partner at Vistria Group and co-head of the private-equity firm’s education practice.

PRIVATE INEQUITY Firms in the rarefied asset management and investment sector have a dismal record on diversity. A growing awareness of the issue is prompting efforts to close the glaring gap BY STEVE HENDERSHOT

he world of high finance has a well-known diversity problem: Despite its efforts to elevate more minorities and women, the industry’s upper reaches remain overwhelmingly white and male. There has been progress at the lower rungs. Half of entry-level employees at North American asset management firms are women, and minorities account for about 40% of associate-level positions at North American private-equity firms, according to research from consultancy McKinsey. Yet that diversity gradually melts away along the path to the C-suite, where only 19% of jobs are held by women at those same asset management firms, and minorities fill fewer than a tenth of the spots at those same PE firms. Similarly, a 2020 analysis of the banking industry by the U.S. House Financial Services Commit-

tee found that women comprised 29% of senior executives and minorities 19%— roughly half of those groups’ overall representation at the same banks. And research by the Knight Foundation shows that just 1.3% of U.S.-based assets under management are under the control of firms whose ownership includes substantial diversity. “We’re not ascribing bad intent,” says Shundrawn Thomas, president of Northern Trust Asset Management. “But ultimately, this is going to be measured in real outcomes, and real, meaningful progress—the representation actually has to go up, participation has to go up, the equity has to go up.” The stakes are especially high, given the outsize compensation levels for the financial elite, as well as the role the inSee INEQUITY on Page 20

SPONSORS

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INEQUITY Continued from Page 19 dustry plays in distributing capital throughout the economy. A more diverse financial sector would directly boost minority wealth creation by minting a new class of Wall Street (or LaSalle Street) titans. Additionally, those new leaders could bring valuable new perspectives to their firms. Research from Harvard economist Paul Gompers suggests that diversity can lead to improved investment decisions. So what’s the holdup? It turns out that identifying the cultural blind spots and barriers that make it challenging to recruit and develop diverse talent is difficult work—even for leaders such as Thomas, an outspoken advocate for diversity, equity and inclusion, and someone who encountered many of those barriers himself while rising through the ranks.

CULTURAL BARRIERS

Thomas was working on Wall Street as an analyst at Morgan Stanley when he got his first sense of the cultural barriers that would challenge his ascent. The South Side native, who stumbled into finance when he took elective courses in accounting and applied economics at Whitney Young High School, handled the work just fine. But Thomas was thrown for a loop when he realized that nearly everyone in his analyst class could talk at length about their mutual Ivy League friends or the Michael Lewis book “Liar’s Poker”—while golfing. It was clear that his new job came with an assumed, shared lifestyle—one that was completely unfamiliar for Thomas, who attended college at Florida A&M University in Tallahassee, a historically Black institution.

“The biggest gap to traverse was the cultural competency of going into a place where many of the people that you’re working with might be second- or third-generation (financiers),” Thomas says. That was two decades ago, and it was clear to Thomas that the culture wouldn’t be bending to accommodate him. It was equally clear that he needed access to those informal gatherings. “When the starting point is that everyone has the intellect, right, then the decisions in terms of who to spend time with, who to promote, who to invest in—those are really driven relationally, and anything that creates an impediment to those connections makes it more difficult,” Thomas says. “What I realized is, it didn’t have to be golf, but it did have to be something.” Thomas found a way, asking his colleagues for book recommendations, reading every one, and then initiating conversations to discuss the books. He also met a senior executive each morning as the executive got off the subway, and they walked into the office together. But that’s extraordinary effort. As firms attempt to decipher why more diverse candidates aren’t rising through the ranks, they must adjust their ladders to be more accommodating to a broad range of climbers. One solution is formal mentorship and sponsorship programs that place the burden of forging strong relational connections on senior employees, rather than newcomers.

EMPHASIS ON MENTORSHIP

At Chicago-based private-equity firm Vistria Group, for example, mentorship is part of the evaluation criteria for every employee, and the onboarding for junior staff members is handled by established staff in their practice groups.

“We’re now in a phase where we all have to spend more time in talent management, and more time mentoring people,” says Phil Alphonse, a senior partner at Vistria Group and co-head of the firm’s education practice. “Private-equity funds are traditionally tough places to intern, because they’re lean and everyone’s running hard in different directions. It’s not that often where someone wants to slow down and show you, ‘This is how it all works.’ “Given the pace at which we work, that’s just not how people are oriented. But we have to change that. We have to spend that extra time, particularly for kids that are coming out of underserved communities.” It’s not only about making nonmajority employees feel included, or even about ensuring that they receive the on-the-job training needed to thrive, Alphonse says. When informal access to high-level employees is restricted to a select set, the scales are tipped when it comes to advancement and promotion decisions. “You may not mean for it to happen, but what happens is the other folks aren’t beneficiaries” of the same information and access, Alphonse explains. It’s important, then, that mentorship efforts are designed to accommodate mentees, rather than vice versa. One example from Alphonse: If an employee has a family, then a meetup might take place at a kid’s soccer game, rather than on the golf course. That notion of accommodation and inclusivity also extends to flexible scheduling and work-fromhome arrangements, both of which gained traction amid the pandemic, but also can seem at odds with the industry’s grind-it-out work ethic. For employees with families, some of that hard work may more

easily take place after hours or from a home office, and making space for that can be a critical element in developing and retaining diverse talent. “We all need to work together to make sure that our teams can still do their jobs without the pressure of trying to do them at the same time,” says Angela Miller-May, chief investment officer at the Illinois Municipal Retirement Fund. “We’ve proven that we can work from home and get the job done.” Mentorship alone doesn’t account for candidates’ struggles to advance in the finance industry. Unintended biases can also creep into hiring and promotion processes as well. One hurdle is the notion of hiring for “fit“—which often means favoring candidates who most resemble an organization’s existing or former leaders. “The right fit often means I look like everybody else, I have the same opinions as everybody else, and we all went to the same schools,” says Justine Phoenix, a vice president at Boston-based asset management industry association Nicsa and head of its Diversity Project North America.

FOCUS ON ‘VALUE-ADD’

Instead, Phoenix says, diversity-focused firms have begun explicitly prioritizing “value-add” ahead of fit when hiring: “As we’ve gotten to the point where we realize diversity is a benefit to organizations, now the question becomes, ‘Is this candidate going to be unique, and be able to provide that difference of thought?’ ” But that remains a goal, rather than the industry’s reality. A new Nicsa survey indicated a yawning void between the value employees ascribed to diversity and inclusion and the degree to which they saw it implemented. The perception gap

INDUSTRY PERCEPTIONS

What’s the asset management industry’s commitment to attracting and retaining diverse talent? Committed Somewhat committed Hispanic or Latino 21% 60% White 51% 28% Asian or Pacific Islander 22% 48% Black or African American 12% 48% Male 47% 30% Female 22% 53% Overall 50% 25% Note: Data was collected from almost 1,200 respondents representing a diverse set of firms and organization types within the industry. Source: Nicsa’s 2021 DEI Perception Survey of the Asset Management Industry

was most acute in responses from women and Black employees. At Northern Trust Asset Management, Thomas has found cutting bias from the promotion process to be more difficult than expected. One step was to examine midlevel hires and promotions where managers had traditionally been given broad discretion. Once Thomas determined that female and minority candidates seldom earned those sorts of promotions, the firm added structure to its process, tracking the gender and ethnicity of people promoted by individual managers and considering that information as part of those managers’ evaluations. Northern Trust Asset Management also infused DEI into its more formal, HR-driven searches by requiring that a diverse candidate be considered for every opening.

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Breaking with tradition, foundations seek out diverse asset managers Some see investing as a tool to ‘advance diversity in a relatively nondiverse industry’ BY STEVE HENDERSHOT The rise of impact investing— investments made with the dual goals of generating financial returns and also driving social change—has been among the most powerful developments in finance over the last decade. Impact investments accounted for $2.3 trillion in 2020, or about 2% of all assets under management globally, according to the International Finance Corporation. Classic examples include investing in clean-energy projects, ed-tech startups or mixed-use developments in underserved communities, ventures that are intended to make money but also provide broader societal benefit. As im-

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pact-focused strategies have proliferated, investors have also begun thinking more broadly about how their portfolios might foster social change—such as increasing the diversity of their field. “Investment is a tool to advance diversity in a relatively nondiverse industry,” says Laura Kernaghan, senior director of investments at the Chicago Community Trust. The trust manages its portfolio of more than $3.5 billion by partnering with a range of external investment managers, and beginning in 2015, the nonprofit foundation began requiring that a certain percentage of its portfolio be invested with investment managers whose ownership groups consist mostly of women or minorities. Those in-

vestments have grown to account for more than 25% of the trust’s primary pooled investment portfolios. That’s a meaningful boost for diverse managers, given their overall share of the market. The John S. and James L. Knight Foundation estimates that as of 2019, substantially and majority diverse-owned firms accounted for only 1.3% of assets under management in the U.S., despite research showing comparable performance. Kernaghan sees the Chicago Community Trust’s approach as a corrective to an industry that has defaulted to established choices at the expense of worthy newcomers. “We’re making manager choices that we think are consistent with the achievement of our investment

objectives, but we’re also being very intentional about doing so in a way that doesn’t restrict us only to those managers who have traditionally been viewed as safe choices,” Kernaghan says.

MAKING A DENT

The Chicago Community Trust and Knight Foundation are among a cadre of foundations to pursue similar strategies, and that sector appears to be making a dent, investing 16.6%, or $11.1 billion, of its collective assets under management with diverse-owned firms in 2021, according to a Knight Foundation-sponsored industry survey. Investments with minority-owned managers increased 1.2% since 2020, while investments with

Angela Miller-May is chief investment officer at the Illinois Municipal Retirement Fund. women-owned firms were flat. Because diverse-owned investment firms are often smaller and less established, they can be challenging to locate and to vet.

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Shundrawn Thomas is president of Northern Trust Asset Management. When that change still failed to produce a representative number of diverse candidates, Thomas looked deeper and discovered that the firm’s screening panels consisted almost exclusively of white men. Once that changed, diverse candidates started to win promotions with greater regularity. The firm’s 18-member executive committee now includes 10 diverse members, including Thomas. Of course, minimizing the subjec-

tivity of the promotion process is no guarantee that a diverse candidate will or should get the job. But, even in cases where those candidates are passed over, a transparent, objective process can let candidates know that they were equally considered. “There is (diverse) talent within that band with seven to 12 years of experience, where people have made a commitment to the industry. And what they’re looking for is greater dialogue; greater transpar-

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ency; and more opportunities to understand how they can stay, thrive and advance in their organizations, because they’re seeking a higher level of leadership and impact,” says Nancy Sims, president and CEO of the Oakland, Calif.-based Toigo Foundation, a nonprofit devoted to boosting diversity within finance. “At some point, a lack of that clarity can lead to someone becoming less engaged, and to consider leaving that particular institution.” an increase in those investments from approximately a third of the fund’s portfolio to 48%. “It’s looking beyond the names that you always picked, and looking to innovative and unique strategies that can really increase the returns across the portfolio,” says Miller-May. “We made it everybody’s responsibility to look for diverse managers, to analyze them and to present opportunities for them to become finalists, and as we have increased those opportunities, our returns have increased as well.”

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That’s no excuse, says Angela Miller-May, who joined the Illinois Municipal Retirement Fund as chief investment officer in August after serving four years in the

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same role at the Chicago Teachers’ Pension Fund. CTPF had already committed to investing with diverse managers prior to her tenure, and Miller-May oversaw

Generalist asset managers are getting in on the act, too. For example, Northern Trust Asset Management has an internal Minority Brokerage Program that hires diverse-owned brokerage firms to execute some equity security trades, and this year expanded that program’s target by 50%. “This is how we use our economic power beyond just the parochial interest of our organization,” says Shundrawn Thomas, president of Northern Trust Asset Management. “That’s how we create an ecosystem that actually drives di-

The financial industry may be better at bringing in entry-level diverse candidates than promoting them, but that’s not to say it has the hiring game figured out. Traditionally, top firms have concentrated their recruitment efforts on a small group of elite schools, including the Ivies, Northwestern University’s Kellogg School of Management and the University of Chicago’s Booth School of Business. Yet, there are only so many slam-dunk, elite candidates who identified a career in finance early and have spent years burnishing their résumés accordingly. That’s a challenge for those top schools as well as for firms. “There is a pitched competition for the candidates that are applying to business school that have the bona fides” to attend a top-tier school, says Bernie Banks, associate dean for leadership development and inclusion at Kellogg. “That pool, everybody’s competing for them. So, you’re either going to have parity amongst the various schools, or you’re going to have to enlarge the pie.” Enlarging the pie means, for example, looking for candidates who excelled as undergraduates at less-prestigious institutions, or who vary from the traditional profile by majoring in something other than business. The challenge reminds Banks, a former squadron commander in the U.S. Army, of a staffing crisis that the Army confronted at the dawn of the cyberwarfare era. The Army had always required its recruits to pass a series of physical fitness tests, but “why is it necessary they have to be able to run two miles in 14 minutes? I could care less if they can run; I need them to code,” Banks recalls. Kellogg has begun recruiting more broadly, as have financial firms. In June, three East Coast private-equity firms announced a 10-

year, $90 million partnership with a coalition of historically Black universities, and locally, firms such as Northern Trust Asset Management have followed suit with their own efforts to recruit both at historically Black colleges and universities and other schools outside their traditional targets.

versity, equity and inclusion.” Private-equity firms have an additional means of advancing diversity: pushing for DEI gains within their portfolio companies. Chicago-based PE firm Vistria Group, for example, tracks the racial and gender makeup of the executive teams at its portfolio companies, as well as the diversity of the layer of managers sitting just below the executive team on those companies’ organizational charts. The diversity of those teams is considered alongside additional, industry-specific DEI goals—and, of course, a broader range of performance targets—in decisions regarding executive bonuses and the allocation of equity. Vistria also asks that its portfolio companies include diverse candidates in any executive-level hiring processes. “We want them to pick the best people, but we also emphasize that the slate needs to be diverse. If you don’t have a diverse slate, the odds of getting a diverse team are zero,” says Phil Alphonse, senior partner and co-head of the education practice at Vistria. Vistria also asks its portfolio

companies to ensure that their external vendors and partners include diverse-owned firms, though Alphonse stresses that those targets are set on a case-bycase basis, after discussions with the portfolio company’s management team and consideration of the industry and circumstance. “There’s an art to this, because we want to ensure that what we’re doing makes sense for the business,” Alphonse says. “At the end of the day, what we want to do is deliver high performance.” The Chicago Community Trust’s Kernaghan sees progress, both in the slowly rising percentage of funds invested with diverse managers and also with what she says is a more dramatic surge in the attention paid to the issue over the last year. “We’re not waving the ‘mission accomplished’ flag, but this is something that we think that we’ve done well on so far,” Kernaghan says. “We have a long way to go, but I’m very hopeful and encouraged by the movement on this topic. The conversation has changed, and that’s been very meaningful.”

TAKING NEW STEPS

Another aspect involves recruiting earlier and pitching the value of a career in finance to students who may not have considered one or who have a negative perception of the industry after the financial crisis of 2008. These steps haven’t been necessary for firms accustomed to hiring second- or third-generation financiers, but if the goal is to expand the pool of candidates, then it becomes essential both to spread the word and to invest in the early stages of talent development. “One big barrier is that we’re all looking for the best candidate right now, and we’re forgetting that we have to give people an opportunity not only to prepare, but even to become interested,” says Byron Slosar, CEO and founder of New Yorkbased HIVE Diversity, a startup that pairs financial industry clients with prospective employees. That idea resonates with the Illinois Municipal Retirement Fund’s Miller-May, who took a circuitous route to asset management and earned her MBA from DePaul University’s Kellstadt School of Business—and now is responsible for the fund’s $54 billion portfolio. “We all have biases, but I think the key is to recognize and understand those biases, and then deliberately act without them,” says Miller-May. “I hear repeatedly, ‘We can’t find diverse talent,’ and I’m here to say, ‘We’re not hiding from you.’ The question is, ‘Where are you looking?’ ”

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IMPACT INVESTING

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Private-equity firms can elevate ESG, diversity— and their returns P

José María Liberti is the Joseph Jr. and Carole Levy chair in entrepreneurship and a clinical professor of finance at the Kellogg School of Management at Northwestern University.

rivate-equity firms have a unique opportunity to advance environmental, social and governance agendas and, in the process, distinguish themselves for more than their returns alone. This opportunity comes at a time when ESG is on shaky ground among public companies because of incompatible fiduciary duties—what is considered in the best interest of their shareholders may not necessarily be in the best interest of employees, consumers, suppliers and society as a whole. PE firms, however, have the freedom to set their own mandates without the stakeholder burdens borne by public companies. This allows PE firms to maximize more than the value of equity alone by also pursuing ESG, which can be complementary to—not competitive with—enhancing their returns. At a time when it is increasingly challenging for PE firms to generate high returns (in part, due to the rising cost of acquiring portfolio companies) having a bona fide ESG agenda can further distinguish firms and their portfolios. But there’s more to it. The obligation of businesses to promote the public good is increasingly in the spotlight, and the glare is particularly harsh for companies accused of

missing the mark. A former Facebook employee turned whistleblower, for example, has accused the social media company of “conflicts of interest between what was good for the public and what was good for Facebook” and allegedly choosing “to optimize its own interests.” PE firms should pay attention. Pursuing ESG could address their image problem by showing that they do, indeed, create long-term value for society as a whole and not just shortterm gains for their investors. It’s also no secret that, for PE firms and the financial industry in general, there is a business opportunity here as well, given the large appetite for ESG investing. Family offices, for example, have demonstrated their increased interest in ESG, leading to expectations that these investors will likely increase their allocations to ESG funds and companies in the near future. PE firms could meet this demand by demonstrating their approach to generating long-term societal benefits. PE firms’ commitment to ESG needs to be expressed in more than mere “greenwashing” marketing language. Rather, by showcasing their criteria for ESG investment, PE firms would not only gain credibility

John P the pre the Joh Cathe MacA Found for promoting societal agendas, they could also further the cause of providing better measurement for how companies and funds pursue and achieve these goals. One important way to enhance social goals is by promoting diversity within PE firms and their portfolio companies. For years, the PE industry has been criticized for its lack of diversity, as firms remain largely white and male, as is the case within the alternative investment segment overall. Alternative investment industry data show that women accounted for about one-fifth (20.3%) of employees at the end of 2020, and women in senior ranks accounted for only 12.2%. According to Deloitte, Black employees account for about 4% of investment professionals, and among those originating deals, Black employees account for about 3%. While increasing diversity in terms of gender, race and ethnicity remains important, diversity of ideas should not be overlooked. When firms are

inclusive of people with different backgrounds, perspectives and experiences, this generates diverse ideas and fosters greater creativity—from finding the next deals to courting investors. Over time, as PE firms increase their own diversity, they will also develop larger pools of connections from which to draw when managing their portfolio companies. Increasing inclusion and promoting ESG can also help PE firms recruit and attract talent, especially younger professionals. The attraction lies in the stories PE firms can tell of transforming small or struggling companies in their portfolios into stronger, larger and more vibrant workplaces with sustainable business models that benefit employees, customers, investors and society as a whole. While PE firms will remain transactional, their focus can be on more than only the bottom line. PE can become more relational as well, with a positive impact that’s measured in meaningfully advancing societal goals.

STRATEGIES

Opening doors of opportunity requires intentionality

Helene D. Gayle is president and CEO of the Chicago Community Trust, which is a sponsor of Crain’s Equity.

hen you ask young people in Chicago what field they want to pursue, very few will mention a financial services career. There’s a reason for that. In a city where wealth disparities continue to grow, financial services can be a lucrative career path. But it’s an industry that is notoriously homogeneous. According to a recent study by the John S. & James L. Knight Foundation, 98% of financial assets are controlled and directed by white males. Recognizing that change begins at home, we, at the Chicago Community Trust, took a look at management of our $3.5 billion-plus investment portfolio. Could we use that financial leverage to diversify the asset management industry and open doors of opportunity for those who have been excluded for so long, while maintaining strong returns? So far, the answer is a clear yes. We began working to diversify our asset managers nearly a decade ago. While we have made significant progress toward our diversity goals, we have come to recognize that it is an ongoing journey. Overcoming years of exclusion

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and disparity in the investment world cannot be achieved simply by flipping a switch; it is an evolutionary process requiring constant attention and refinement. Today, between 25% and 30% of the assets that we manage are invested with diverse managers, and we continue to achieve our investment return objectives. Indeed, increased diversity has provided our team with a broader array of talent and a wider range of viewpoints. Often, diverse managers can identify investment opportunities that more traditional managers might overlook. Besides the work we are doing within our own organization, we help lead the Financial Services Pipeline Initiative, a collaboration of 20 Chicago-based financial firms working to strengthen recruitment, retention and promotion of diverse financial managers in Chicago financial institutions. While we have seen gains through these efforts, there’s still a long way to go. We encourage companies and organizations across our region to be intentional about bringing more people

of color into the financial services sector. Here are a few strategies you might want to pursue: w Hire interns from diverse backgrounds and universities to work in the financial services industry. Many firms limit their hiring to a few top-rated universities. But according to a study in the September 2020 Harvard Business Review, employers can get a much better deal by hiring the right students from a broader base of institutions. This should include candidates from historically Black colleges and universities, or HBCUs. Local programs like the John W. Rogers Jr. Internship Program in Finance at the University of Chicago, the Greenwood Project and the aforementioned Financial Services Pipeline Initiative have identified and enrolled qualified students who could fill the bill. w Offer existing employees from diverse backgrounds the opportunity to rotate through your investment department. You might find talented employees already on your payroll who are interested in pursuing this career path. And

they might find another way to advance within your company. w Encourage your external investment partners—including consultants, advisers and investment managers—to offer a career path for diverse individuals. Consider the group of people you work with as teammates in this effort and make their commitment to diversity a reflection of your own. w Support local chapters and events of organizations committed to advancing diversity in the financial services industry. The Robert Toigo Foundation and the National Association of Securities Professionals are two examples. In our ongoing quest to make Chicago a more equitable, open and prosperous community, we need to be intentional about opening doors of opportunity across all sectors of our economy—especially lucrative ones like financial services that can build wealth and foster careers. It’s one important step on the path to achieving growth and prosperity for all.

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VALUES IN PRACTICE

A commitment to diversity in asset management

I John Palfrey is the president of the John D. and Catherine T. MacArthur Foundation.

t is no secret that the money management and investment business in the United States has been dominated largely by firms led and owned by white men. Capable investment firms led by and owned by women and people of color have faced unequal challenges in attracting investment capital due to a variety of reasons, including discrimination, implicit bias, lack of opportunity for entry to the field, lack of mentorship, the amount of assets under management and closed networks. It’s time to address these inequities and to create an even playing field. At the MacArthur Foundation, we determined several years ago that we needed to take additional steps to ensure that we invest our $8 billion endowment with more diverse firms than we have in the past. We began reviewing our internal processes to ensure we are not constrained by implicit bias or our own experiences and preferences. We believe with the changes we have made, and continue to make, we can identify more investment firms led or owned by women and people of color and invest more funds with them. We continue to learn, too, through a part-

nership with the consulting firm Lenox Park and our colleagues at the Kresge Foundation. A series of studies commissioned by the Knight Foundation have shown that women and managers of color continue to hold a disproportionately small share of investment dollars in big foundation endowments. While there has been modest improvement in the past few years, change is slow to come. These studies also show that diverse-led firms produce comparable investment returns to their nondiverse peers. Other studies, such as the work of University of Michigan professor Scott Page, have shown that diverse organizations tend to outperform nondiverse organizations over time. Investing with diverse managers is consistent with our fiduciary duty to ensure the long-term viability of the foundation’s endowment and it is the just thing to do. At MacArthur, we seek to be accountable and transparent for our progress toward investing more of our funds with a more diverse set of asset managers. We are committed to reporting annually on our progress. While we recognize that there can be many reasons why assets under management can increase or

decrease over a specific period of time, our aspiration is to have at least 20% of our assets with U.S.-based managers invested with firms led by managers of color and/or women by 2024. This is a near-term goal; we will continue to build from there. We hope this effort contributes to a more equitable investment field. To be clear, as we have diversified our investment managers in recent years, we have also continued to generate strong returns, and our return objectives for our endowment remain the same. Our initiative to do better in terms of the diversity of our asset managers is part of a larger commitment at the MacArthur Foundation that we call the Just Imperative. Through both our grantmaking, our impact investments, and the way we operate, we seek to address historic and present-day inequities along the lines of race, ethnicity, disability and gender. We recognize that we have market power that we can put to work toward addressing these forms of inequity. We hire a lot of firms to assist with our grantmaking and programmatic works. We urge all our fellow foundations— and leaders of any type of organization,

for that matter—to join us in committing to a strategy of business diversity, a call to action by Ariel Investments CEO John Rogers that we, too, seek to heed. That means seeking out and hiring diverse partners among the law firms, learning and evaluation firms, accounting firms, marketing firms and all those with whom we do business—as well as asset managers. And when we choose white-led firms as our partners, we commit to encouraging those firms, too, to become more diverse within their own ranks. MacArthur is committed to improving the diversity of the businesses we work with as well as the diversity within those firms—and within MacArthur Foundation’s team as well—over time. All business leaders have a role to play to address historic and present-day inequities in who we invite to bid for our work, how we manage the hiring processes and with whom we choose to work. I hope we all might commit today to bringing about a more equitable, inclusive, and vibrant economy in Chicago and across the world in the years to come through a deep and enduring commitment to the practice of business diversity.

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24 OCTOBER 18, 2021 • CRAIN’S CHICAGO BUSINESS

CRAIN’S LIST CHICAGO AREA’S LARGEST COMMERCIAL BUILDING SALES Ranked by purchase price. Includes transactions completed between July 1, 2020, and June 30, 2021.

Property name

Sale price (in millions)

Property type

Year built

Building square footage

Buyer(s)

Seller(s)

Listing broker

Normandy Properties LLC

Sterling Bay

JLL

SHVO, Deutsche Finance America

The John Buck Co.

JLL

MCDONALD’S HEADQUARTERS 110 N. Carpenter St., Chicago 60607

$412.5

Office

2018

575,208

333 SOUTH WABASH 333 S. Wabash Ave., Chicago 60604

$376.0

Office

1972

1,206,741

1K FULTON 1000 W. Fulton St., Chicago 60607

$354.8

Office

2015

531,190

Office Properties Income Trust

American Realty Advisors

Eastdil Secured LLC

ESSEX ON THE PARK 808 S. Michigan Ave., Chicago 60605

$190.0

Multifamily

2019

463,960

ICONIQ Capital LLC

Oxford Capital Group LLC

JLL

MICHELIN WILMINGTON 29900 S. Graaskamp Blvd., Wilmington 60481

$130.0

Industrial

2015

2,028,954

Silver Creek Development

Transwestern Real Estate Services

Eastdil Secured LLC

CH ROBINSON 1515 W. Webster Ave., Chicago 60614

$110.3

Office

2018

207,000

APEX Capital Investments Corp.

Sterling Bay

Cushman & Wakefield

GLENMUIR LUXURY RENTAL HOMES 2604 Rockport Lane, Naperville 60564

$103.7

Multifamily

2000

332,047

BH Equities LLC

The Connor Group

Newmark

930 WEST EVERGREEN 930 W. Evergreen Ave., Chicago 60642

$99.8

Industrial

1998

339,000

Prologis Inc.

Greenfield Partners

Cushman & Wakefield

INTERCHANGE 55 LOGISTICS PARK Bluff Road, Romeoville 60446

$98.0

Industrial

2019

1,340,000

Prologis Inc.

Macquarie Bank Limited, CT Realty Investors

Colliers International

CIRCLE PARK APARTMENTS 1111 S. Ashland Ave., Chicago 60607

$98.0

Multifamily

1983

437,370

The Related Cos.

HGK Management Co.

Marcus & Millichap

4220 SOUTH KILDARE 4220 S. Kildare Ave., Chicago 60632

$94.5

Industrial

1951

633,000

Scout Capital Partners

Madison Partners Realty, Brennan Investment Group, Marc Realty

CBRE

RIVERSTONE APARTMENTS 308 Woodcreek Drive, Bolingbrook 60440

$93.5

Multifamily

1995

766,977

Alliant Strategic

Jackson Square Properties

JLL

LAKEHAVEN APARTMENTS 732 Bluff St., Carol Stream 60188

$87.8

Multifamily

1984

427,280

Golub & Co.

F & F Realty

JLL

ROCK CREEK LOGISTICS CENTER 3300 Channahon Road, Joliet 60436

$87.5

Industrial

2018

1,220,140

Kohlberg Kravis Roberts & Co. L.P.

AEW Capital Management

CBRE

THE AVENTINE AT OAKHURST NORTH 2800 Pontiac Drive, Aurora 60502

$86.3

Multifamily

1998

459,000

Hayman Co.

JVM Realty Corp.

CBRE

400 NORTH WOLF ROAD 400 N. Wolf Road, Northlake 60164

$84.0

Industrial

1957

914,949

Apollo Global Management LLC

CenterPoint Properties

CBRE

555 WEST MONROE 555 W. Monroe St., Chicago 60661

$73.3

Office

2002

429,316

State of Illinois

Principal Financial Group Inc.

JLL

HAMPTON IN HIGHLAND 2300 Azalea Drive, Highland, Ind. 46322

$68.5

Multifamily

1974

Beitel Group, Scharf Group

PCRM

PENDRY CHICAGO 230 N. Michigan Ave., Chicago 60601

$65.6

Hospitality

1929

220,000

Montage Hotels & Resorts, Rodina Group

Becker Ventures

AMAZON CHICAGO-PULLMAN 10500 S. Woodlawn Ave., Chicago 60628

$65.1

Industrial

2020

144,207

Inveria

Ryan Companies US Inc.

Colliers International

FORMER NAVISTAR FACILITY 10400 W. North Ave., Melrose Park 60160

$62.9

Industrial

2009

2,000,000

Bridge Industrial

Navistar

JLL

SPRINGS AT CANTERFIELD 1900 Canterfield Pky E, West Dundee 60118

$55.3

Multifamily

2018

260,000

Pensam Capital

Continental Properties Co.

Berkadia Real Estate Advisors

WALDORF ASTORIA CHICAGO 11 E. Walton St., Chicago 60611

$54.5

Hospitality

2009

1,128,060

Mansueto Properties, Lodging Capital Partners

Walton Street Capital

Hodges Ward Elliott

LIFE TIME ATHLETIC 1100 Skokie Blvd., Northbrook 60062

$54.0

Retail

2019

93,000

Spirit Realty Capital

Life Time Fitness Inc.

4027 SOUTH WELLS 4027 S. Wells St., Chicago 60609

$54.0

Industrial

DFA Chiago LLC

Chicago Title Land Trust Co.

Eligible sales are located in the seven-county Chicago area of Cook, DuPage, Kane, Lake, McHenry, and Will counties in Illinois and Lake County in Indiana. List excludes most portfolio sales, defined here as when more than one property is traded for a single price. NA: Not available

Data provided by CoStar, with supplemental data from CBRE, Cushman & Wakefield and Real Capital Analytics; additional research by Sophie Rodgers (sophie.rodgers@crain.com).

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CRAIN’S CHICAGO BUSINESS • OCTOBER 18, 2021 25

CRAIN’S CHICAGO BUSINESS 2021

NESS

2020

CRAIN’S CHICAGO BUSINESS

Great design, lots of light and attention to detail: Here are the best new offices in the Chicago area 2021

NESS

Employees who have returned or are soon returning to recently remodeled or new offices will find they’ve got lots of options. Winners chosen from a robust list of 52 entrants in Crain’s 13th Coolest Offices contest have spaces designed to accommodate individual, heads-down work as well as conduce collaborating. Stadium seating is still a thing, but so are work labs, chic cafes and outdoor rooms accessed via retractable garage doors. Green (living) walls are still going strong, while art is no longer an afterthought, with Chicago-centric pieces in many offices. Here, Crain’s contributing editor Jan Parr, (a former design magazine editor) and design writer Zlata Kozul Naumovski suss out spaces that could entice even the most dyed-in-the-wool work-from-home enthusiast into coming back to the office.

BY ZLATA KOZUL NAUMOVSKI

ACTIVECAMPAIGN

KENDALL MCCAUGHERTY, HALL + MERRICK PHOTOGRAPHERS

Space: Two floors in a commercial building in the Loop Who did it: Eastlake Studio: Nicole Tabata, director/architect The office is cool because: The addition of a grand staircase at the heart of the office connects the existing office to a new 50,000-square-foot expansion above, doubling the company’s total square footage. “It forms a dynamic gathering space, expands the existing communal area and connects the two floors,” said Tabata. A 27-foot-high feature wall of millwork cut in a geometric pattern to expose fresh moss spans both floors and includes a pair of oversize projector screens. Coolest feature: Hands down, employees like the full-service coffee shop, offering espressos and smoothies from a live-edge wood bartop. Why employees like it: Employees love the collaborative feel of the space, especially since returning to the office after having worked remotely during the pandemic. The communal spaces like the monumental stairs, movie theater, coffee bar and rooftop offer ideal opportunities for both work collaboration and socializing. “The huge variety of social and meeting spaces gives the ActiveCampaign team options on how and where to work, whether that is for individual focus time, video conferencing or large presentations,” Tabata said. “As people head back to the office, these choices help to decrease the density of any one workspace, and provide comfort and convenience for the hybrid workers.”

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10/15/21 1:47 PM

26 OCTOBER 18, 2021 • CRAIN’S CHICAGO BUSINESS

COOLEST OFFICES 2021: THE WINNERS

CB2 Space: A former industrial warehouse on Goose Island originally built in 1912 for Raymond Bros. Impact Pulverizer and designed by Chicago architect Henry Raeder Who did it: R2 Cos.: Gary Stoltz, architect; CB2: Michael Harris, architect Cool because: Incredible amounts of natural light pour in, continuously spotlighting the space, the people and the products that surround and inspire them. At all times, headquarters are outfitted with the latest collections and products, making design not just the foundation of the brand, but also the backdrop to employees’ days. “Work and product are merged intentionally to provoke movement and progression as seasons and collections change,” said Jessica Neal, marketing manager at CB2. The office enables employees to engage with each other—whether they’re doing first looks or photo shoots—in a way that bolsters creativity and collaboration. Coolest feature: Stadium-style seating that offers a spot to host quick meetings, share company updates or socialize. A close second is an outdoor area for happy hours or late work sessions accessed by opening a garage door. Why employees like it: CB2 associates overwhelmingly like working among

the backdrop of collections throughout the year. “Our space is basically a showroom for the brand,” Neal said. Associates also like the flexible workspaces offered. On any given day, people are stationed in phone booths, in a cafe area, on a newly designed sofa or in a conference room.

CLIFFORD LAW Space: A commercial building in the financial district Who did it: Lucien Lagrange, architect Cool because: Spaces are equipped with state-of-the-art technology. Attorney offices, the conference room, the lounge and the mock trial room have wall-mounted LED monitors (some as large as 90 inches) with Poly webcams, microphones and speakers that can be easily used for Zoom meetings. Additionally, artwork collected by founder Robert Clifford is integrated seamlessly throughout spaces, reflecting his love for Chicago. Coolest feature: The kitchen, affectionately called the Bistro for its French aesthetic. Staff gets to enjoy beautiful views of the city skyline while drinking espressos and eating croissants. Why employees like it: The open-concept design allows for ample light throughout the office, especially the light coming in from the Bistro.

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M O

S le m 19 W W C a w in p o M C n p th ro W lik p el so an sa si th fo ed w cu

CRAIN’S CHICAGO BUSINESS • OCTOBER 18, 2021 27

FLAVORCHEM Space: A converted warehouse in Downers Grove formerly called the boneyard because it served as a collection site for old equipment and furniture Who did it: GMA Architects: Lauren Sahs, designer; Brian Campbell, project manager; Matt Meives, architect Cool because: It doesn’t feel like an office. Though clean, modern and extremely functional, the space screams fun and is designed for collaboration. Each application center—Bakery, Drinkology, Candy Bar and Collaboratory, in which Flavorchem scientists work to create finished food and beverage products for clients—has a different design.

Application spaces, offices and an expansive R&D kitchen were intentionally designed for collaboration, comfort and productivity. Natural light enhances an overall welcoming feel. Coolest feature: The Collaboratory, cloaked in a dramatic faux cement wall covering and decked out with plants and laboratory equipment, has a sciencelab-meets-trendy-bar vibe. A close second is the snack and beverage bar, offering coffee and confections to clients in the welcome lobby. Why employees like it: The building has a ton of room for small- or large-group collaboration as well as spaces for individuals to work on projects in their own dedicated space.

mother’s room, a quiet room, adjustable standing desks, treadmill desks and a pingpong table. There’s also a green roof, water-reducing plumbing fixtures and sustainable furniture by design impresario Knoll. Coolest feature: A unique mix of historic and modern architecture, such as 100-year-old beams and original brick facade juxtaposed against steel and glass. Why employees like it: It’s all theirs— the company occupies all 83,250 square feet of office and retail space

over five floors in the building. Employees are able to enjoy a sense of community through the placement of the Good Ambler cafe—open to the public—and reception area at street level. A garage-style door on the top floor opens to a large balcony outfitted with soft seating, tables and large island with grill, while an on-site store entices with snacks from company brands such as Oreo, Triscuit, Cadbury and Sour Patch Kids. Grabbing lunch or a drink after hours for team building and networking at some of the city’s hottest spots is literally steps away.

t d , m s y s y d -

h l g

t e

MANSUETO OFFICE Space: On the third floor of the Wrigley Building, an iconic downtown commercial office building completed in 1924 Who did it: Perkins & Will, led by Tim Wolfe, interior design director Cool because: It’s an urban oasis in a bustling city. Whether enjoying the warmth of the built-in fireplace or taking in views of the Chicago River, employees and guests at this investment office run by Morningstar founder Joe Mansueto are immediately put at ease. Coolest feature: An undulating Japanese ash veneer feature wall with glass portholes offers a peek into some of the intimate private phone or meeting rooms. Why employees like it: It has a Zenlike and tranquil ambiance, with juxtaposition of original floors and modern elements. “The natural light is awesome. It bounces off the wood walls and fills the entire space with warmth,” said Angela Jurgensen, executive assistant to Joe Mansueto. She also cited the variety of workspaces, which “allow for seamless collaboration when needed, but employees can also choose to work independently in one of the focus rooms.”

P025-P031_CCB_20211018.indd 27

MONDELEZ INTERNATIONAL Space: A five-story building composed of new construction and original structures, one of which dates to 1894 and another to 1916, in the meatpacking district Who did it: Solomon Cordwell Buenz (office); Hartshorne Plunkard Architecture (reception/retail restaurant) Cool because: It’s located in Fulton Market, a historic neighborhood turned bustling food hub where employees can eat at the city’s best restaurants and an on-site bakery and cafe called the Good Ambler. To personalize spaces, local artists created custom pieces that celebrate the company and pay homage to its historical location. Art pieces range from a larger-than-life stack of Oreo cookies to a map featuring 50 preserved raw ingredients sourced globally. Design elements focus on wellness and sustainability: open stairwells, a nursing

10/15/21 1:47 PM

28 OCTOBER 18, 2021 • CRAIN’S CHICAGO BUSINESS

COOLEST OFFICES 2021: THE WINNERS

SHURE Space: A modern glass commercial office building originally designed by Helmut Jahn in 2001 in north suburban Niles Who did it: Perkins & Will, led by Tim Wolfe, interior design director Cool because: It provides a whole new look and feel for associates of the audio products company. The massive wood and steel pavilion brings a sense of scale to the seven-story atrium and creates space for associates to collaborate, foster connections or simply find respite. A glass barrel roof offers incredible access to light. Coolest feature: Sidney’s Cafe, named after founder Sidney Shure. The neon “Ignition” and “Coffee Is a Fruit” signs let you know exactly where to fuel up. The cafe opens to a grassy area outside where musically talented artist associates entertain with live music while others barbecue during their “Eat to the Beat” events. Why employees like it: The firm has a “work anywhere” philosophy, and the redesigned space supports more flexible ways of working. Within the pavilion and Sidney’s Cafe, workspaces vary from large-group meeting areas to individual quiet booths complete with audio/visual technology. “We no longer wanted associates to be tethered to their desks but rather seek out spaces conducive to fostering creativity, collaboration and even quiet (me) time,” said Pat Knoll, vice president, global facilities. “The pandemic came along and accelerated flexible working at a pace far greater than we could have ever imagined.”

STERLING BAY Space: New commercial building with office and retail spaces in Fulton Market Who did it: IA Interior Architects: Neil Schneider, design director Cool because: It was inspired by the concept of inclusivity and designed to welcome all the professionals and trades the firm works with. The design exudes a warm, casual elegance with a subtle industrial vibe. A blend of raw elements—stone slabs, exposed concrete, open decks—pairs beautifully with inviting features such as tufted leather, wood veneer and warm lighting.

P025-P031_CCB_20211018.indd 28

Coolest feature: A hand-painted glass mural behind the reception desk abstractly references the clients, professionals and craftsmen who work on Sterling Bay projects.

S th b W C th C sp ra w b o so C m ar w in b W h

Why employees like it: Thriving on hospitality, at the heart of the space is a dining hub where employees, partners and clients can casually convene. A cozy den with a fireplace is one of several lounge settings.

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CRAIN’S CHICAGO BUSINESS • OCTOBER 18, 2021 29

SWEENEY SCHARKEY & BLANCHARD Space: A commercial building in the Loop originally designed by Perkins & Will in 1971 Who did it: Marshall Erb Design: Marshall Erb, principal and founder Cool because: This isn’t your father’s law office. Modern and welcoming, it strays from the traditional notions of what a law firm should look like. White oak replaces mahogany, exposed ceilings offer an industrial vibe, and glass panels lining the conference room allow natural light to flood in while making the office feel open and airy. Made of rift-cut white oak, custom credenzas and floating desks with waterfall edges have clean lines and are finished in light tones. Eschewing generic corporate decor, spaces are curated with abstract art that reflects the taste and personality of the firm’s members.

Coolest feature: The lounge. Attorneys mull over cases, watch breaking news and host firm events in style in the open-concept space.

Why employees like it: The modern design and unique use of space encourages a strong work ethic. The softer colors, fresh floral arrangements and the natural light from the floor-toceiling windows increase overall mood and productivity. The simplistic beauty of the office’s decor and artwork sets the tone for the firm itself.

Space: Most of the fourth floor of the Old Post Office, including a loft between the fourth and fifth floor Who did it: Stantec Cool because: The design celebrates the history of the building, the city of Chicago and the retail giant. Workspaces cater to large-group collaboration as well as focused individual work, allowing employees to choose between traditional conference rooms or more lounge-like spaces featuring sofas and casual seating. Coolest feature: Funky artwork. Eight murals were painted by Chicago street artists, and more than 80 original works—including photography, paintings and multimedia—were created by Walgreens employees. Why employees like it: The space has an industrial feel with exposed con-

P025-P031_CCB_20211018.indd 29

crete floors, high ceilings and amazing city views. Employees get to enjoy building amenities such as a gym, expansive food hall, rooftop with walking trail, basketball courts, event space and, soon, a street-level Walgreens retail store (set to open this winter) that will serve as a testing ground for new ideas and retail innovation. (See more on the Old Post Office on Page 31).

PHOTOS BY CHRISTOPHER BARRETT

WALGREENS

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30 OCTOBER 18, 2021 • CRAIN’S CHICAGO BUSINESS

COOLEST OFFICES 2021: HONORABLE MENTIONS

FEATURES WE LOVE

These spaces from other contest entrants get a shoutout for special design features

B H

BEST ENTRY DOOR: Prologis’ bright orange dock door, reflective of the doors found in its industrial buildings, is just the kick employees need on Monday mornings.

BEST VIEW: Check out Chicago’s greatest natural resource from a lounge at Northern Trust. MOST UNIQUE FEATURE: The Rush Wellness center offers a sleep pod for power naps in a neat little room with scenic wallpaper.

BEST SECRET ROOM: Gain entrance to a speak-easy complete with poker table, billiards table and dazzling blue bar at Prologis by pulling the candlestick on a fireplace mantel.

BEST HALLWAY LIGHTS: Neon ceiling lights serve as directional markers at CDW. A color-coded, way-finding system differentiates each floor of the technology solutions provider’s vertical campus as visitors travel through the space.

BEST STAND-IN FOR ART: Trading jackets in various iterations of blue line a wall at IMC Trading.

P025-P031_CCB_20211018.indd 30

BEST ELEVATOR NUMBERS: No need to fumble for your glasses. Komatsu’s gargantuan markers let you know exactly what floor you’re on.

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Th d re in ci N in si re lim te w C G C co ci Si as H h th le o F lie N at em m “W th ap in

CRAIN’S CHICAGO BUSINESS • OCTOBER 18, 2021 31

COOLEST OFFICES 2021: OLD POST OFFICE

BEST REUSE OF A HISTORIC BUILDING

The Old Post Office sat vacant for two decades, but in the largest historical redevelopment in the nation, the building, erected in 1921 and spanning three city blocks, is now a thriving work hub. Nearly $1 billion has been spent restoring, replacing, replicating and cleaning significant architectural features and readying the 2.8 million-square-foot limestone structure to accept new tenants. The unprecedented overhaul was spearheaded by developer 601W Cos. in conjunction with design giant Gensler and general contractor Bear Construction, along with historical consultants, preservation experts and civil engineers. Since November 2019, companies such as Cisco Systems, CoinFlip, PepsiCo, Home Chef and Walgreens (see Page 29) have taken up office and retail space in the iconic building. It is more than 90% leased, according to Jamey Dix, principal of leasing firm the Telos Group. FERRARA CANDY was one of the earliest tenants to plant headquarters in November 2019. “It is obviously a very attractive place to bring prospective employees,” said Abbye Lakin, senior manager, corporate affairs, at Ferrara. “When we announced our move to the Post Office, we saw an increase in applications across the board.” The firm intentionally kept some of the historical

P025-P031_CCB_20211018.indd 31

features in their space, such as original scales and a package mail chute, while incorporating one of its iconic copper drums used to pan candy into the design. CBOE GLOBAL MARKETS was another early tenant. Its headquarters spreads across two adjacent structures with sculptural staircases connecting the spaces and invigorating movement throughout. At each staircase, massive, two-story murals attract attention, while rolling tickers create a sense of buzz. Cboe proudly displays its history with signature pieces, including historic trading jackets and cables symbolizing the technology and energy that fuel options trading. “The dynamic space inspires us all to be more creative, collaborative and innovative in everything we do,” said Marc Magrini, vice president, administration. Staffing firm TRUEBLUE took advantage of the Old Post Office’s massive floor plates, high ceilings and expansive windows when it moved in in June. The company’s office design features an open, town square-like area with a backlit drop ceiling. It provides a unique gathering space for collaboration and wellness. “It nurtures employee engagement and thoughtful interactions,” said Curry Edwards, TrueBlue director of real estate. “Our office captures the build-

CBOE GLOBAL MARKETS

TRUEBLUE

ing’s industrial past and allows us to contrast that with a sleek, midcentury modern interior design.” For all occupants, amenities such as a concierge, 3½-acre rooftop park, rooftop bars, a stunning tenant lounge, expansive fitness center and event space were huge draws. “Tenants in the Old Post Office enjoy some of the best amenities of any office building in Chicago,” said Dix. “Paired with the location, historic redevelopment and impressive tenant roster, these are some of the best things about the Old Post Office.”

10/15/21 1:47 PM

32 OCTOBER 18, 2021 • CRAIN’S CHICAGO BUSINESS

CLASSIFIEDS

æ`ÛiÀÌ Ã } -iVÌ

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

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Before and after shots at a property on Claremont Avenue in Chicago.

Renovation Sells lines up franchisees nationally RENOVATION from Page 3 franchisee in Dallas. “It’s almost like working for HGTV.” For Drawert and other franchisees, the target customer is not a homeowner but a real estate agent, typically one who has a listing that looks dated with its oak cabinets and chrome faucets. The listing agents “are the ones who tell their clients that this place is going to do much better on the market if it gets some cosmetic changes,” Valente says, “and the clients trust them to know how to market homes.” On top of that, Valente says that “the single homeowner you work for, you might never hear from them again unless they sell their house again, but a real estate agent may bring you 10 or 15 projects a year.” The typical job costs $30,000, takes three weeks and, Valente says, is meant for “the seller who’s moving on. If you’re doing your kitchen and you plan to stay in the home, that’s not something we do. We do quick updates, and the projects we do go right to market.” The key there is that the cosmetic work is being done expressly to help the home look good on the market. Gershenzon, the partner in charge of design at Renovation Sells, has a palette of colors, materials and looks that are “in style but appeal to the mass of buyers,” Valente says. “We don’t get too funky.” The rehabs are big but not exclusive on white and gray, the neutral tones that pervade online real estate listings these days. “We

have a lot of two-toned cabinets now,” Valente says. “White uppers and gray lowers, or the colors that are in for kitchens this year. Green is a big color now.” In early October, paint company Sherwin Williams dubbed a light spruce shade of green it calls Evergreen Fog as the color of 2022.

CENTRAL CASTING

Design for all the franchisees’ clients will be handled centrally in Chicago. The franchisee will take detailed measurements and images, including three-dimensional Matterport tours, and forward it all digitally to Chicago, along with any comments from the listing agent. The franchisee later gets back a complete design, along with a shopping list for materials that includes links to places they’re sold. “They’re making it very easy for us,” says Scott Migli, who with his wife, Rachel, bought the Renovation Sells franchise for Charleston, S.C. He’s a consultant on school choice issues for state and local governments and she’s a schoolteacher. The couple didn’t get into this because they’re aspiring interior designers, but to have a business of their own. Recent empty-nesters, the Miglis had been looking at various franchises in the water and car care realms before they came across Renovation Sells. The Miglis ran the idea of quick-turnaround cosmetic rehab past friends in their area who are real estate agents or contractors “and everyone loved the idea,” Scott Migli says. “Everyone is look-

ing for homes that are up to the 21st century look. They don’t want to do it after they move in.” Homeowners typically pay for the work out of their sale proceeds, which means they don’t have to find the cash upfront, while they’re trying to scrape together the money for their next home. Chris McComas, an @properties agent who specializes in the West Loop, has hooked at least 10 of his sellers up with Renovation Sells in the past couple of years. “They spent between $20,000 and $50,000, and do they get it back?” he says. “The majority of them got their investment back plus a significant return” compared with similar properties that were not refreshed. Many of McComas’ clients are selling units that were built in the early to mid-2000s, he says. The sellers know today’s buyers don’t like dark cabinets and excessively patterned granite countertops— remember Uba Tuba?—but they feel overwhelmed about updating. With Renovation Sells, “the sellers don’t have to make any decisions,” McComas says. The firm “comes in with a turnkey solution, and the sellers can just sit back and have it done.” McComas says his West Loop clients who updated with Renovation Sells land buyers within 30 days. That’s less than half the 83day market time that the Chicago Association of Realtors reports for condos in the neighborhood. Valente says he does not have complete data on how fast or for how much above the market Renovation Sells projects have gone for.

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34 OCTOBER 18, 2021 • CRAIN’S CHICAGO BUSINESS

Why many Medicaid beneficiaries in Illinois are facing a loss of coverage MEDICAID from Page 1 enrollment in its CountyCare Medicaid managed care plan will fall 15% to 359,016 by November 2022. If the state’s five other private Medicaid plans see percentage declines of only 10% by September 2022, more than 270,000 people would be purged from the government-funded health plan for the poor and disabled. Although some may find coverage elsewhere, many will lose health insurance and potentially go without medical care. Their loss is also bad news for the state’s financially strapped safety-net hospitals, which provide care to a disproportionate share of Medicaid patients. Federal coronavirus-response legislation imposed a “continuous enrollment” requirement banning states from kicking people off Medicaid during the public health emergency. But once the emergency ends, states must return to normal operations, including annual redeterminations that aim to make sure people still qualify for coverage and root out fraud in the Medicaid program. An extension of the public health emergency would forestall resumption of redeterminations. The declaration, which is up for renewal every 90 days, has been extended six times since January 2020. “We’re awaiting guidance at the federal level around what’s going to happen with the public health emergency and also at the state level to see how exactly that process is going to be rolled out,” says CountyCare CEO Aaron Galeener.

After nearly two years without redeterminations, “there could be a lot of clean up,” says Jane Longo, deputy director of the Illinois Department of Healthcare & Family Services, or HFS, which oversees Medicaid in the state. “We always have problems with addresses— people move around a lot. But we will work hard to keep people on. We want everybody who’s eligible to stay on.”

PAPERWORK

Many people lose coverage not because they’re no longer eligible, but because they fill out redetermination forms incorrectly or fail to respond to notices, which are sometimes mailed to the wrong address. “With most contact information on file with the state being incorrect and the COVID-19 realities, such as evictions and homelessness (or) temporary housing, we anticipate that a lot of members will lose coverage even if they are still eligible,” says Glenn Harston, spokesman for the Illinois Association of Medicaid Health Plans, or IAMHP, which represents all the insurers in Illinois’ program. Coverage gaps are hard on patients, particularly those managing chronic conditions, as well as doctors and hospitals that depend on Medicaid to pay them for providing care. Even beneficiaries that take too long to complete the necessary paperwork risk getting reassigned to another plan that contracts with different health care providers. HFS doesn’t predict how many Illinoisans could lose coverage— either due to redetermination

MEDICAID PURGE Cook County Health’s CountyCare Medicaid managed care plan expects a 10% decline in membership between September 2021 and September 2022 if redeterminations resume next year. A similar percentage decline at all Illinois Medicaid managed care plans would remove more than 270,000 people from the health coverage program for the poor and disabled. MEDICAID MANAGED CARE ENROLLMENT September 2021

September 2022*

Aetna Better Health

420,571

378,514

Blue Cross & Blue Shield of Illinois

656,686

591,017

Meridian Health Plan

870,877

783,789

Molina Healthcare

319,330

287,397

YouthCare

34,988

31,489

CountyCare

411,676

369,374

Total

2,714,128

2,441,580

2022 decrease vs. 2021 42,057 65,669 87,088 31,933 3,499 42,302 272,548

Note: September 2022 estimates based on CountyCare projection. YouthCare is administered by Meridian. CountyCare operates only in Cook County. Sources: Illinois Department of Healthcare & Family Services; Cook County Health

process issues or because they’re no longer eligible. In addition to income considerations, people will come off the rolls if they left the state or died. CountyCare was the only Illinois Medicaid managed care plan that provided an estimate of likely membership losses. Blue Cross & Blue Shield of Illinois declines to “speculate on future enrollment numbers,” while Meridian and Molina Healthcare didn’t return calls and Aetna deferred to the IAMHP.

PREDICTION

Nationally, the number of Medicaid enrollees could decline by about 15 million in 2022 if the public health emergency ends later this year, a recent analysis by the Washington, D.C.-based Urban Institute predicts. Some advocates are urging the federal government to provide

enhanced financial and administrative support to help states ease disruption as they resume their normal Medicaid operations, including eligibility reviews. The Centers for Medicare & Medicaid Services recently told states they can take up to 12 months to determine eligibility. HFS is considering that option, Longo says, noting that a phased approach could prevent large numbers of people from falling off the rolls at once. “Time pressures increase the risk of errors, especially when states are allowed to use old information and data to determine that a beneficiary is no longer eligible—for example, income from summer employment earned by working adults who later were laid off in the fall,” George Washington University researchers wrote in a January analysis. Issues with the state’s redetermination process existed long be-

fore COVID-19 started spreading. In 2019, Illinois announced plans to hire hundreds of workers to resolve delays of at least 45 days for initial Medicaid applications and at least 60 days for renewals. With the redetermination process paused during the public health emergency, HFS chipped away at its backlog of new Medicaid applications. Longo says the number of unprocessed applications has dropped to 5,000 from 147,000 in January 2019. Now HFS is looking at ways to simplify redetermination, with the goal of making it easier for residents to apply and stay on the rolls. For example, adults are removed if their income rises above the threshold, but allowing them to keep coverage for a full year— despite the increased cost to the system—could improve health outcomes by encouraging continuity of care, Longo says.

Wintrust Financial and Old Second vied for the prize: West Suburban Bank OLD SECOND from Page 3 name the banks other than Old Second, but sources confirm Rosemont-based Wintrust is “Party E” in the filing’s rundown of the negotiations that took place from March 19 to June 8 when Old Second raised its offer. Wintrust in late April raised its initial bid by 10% to $330 million from $300 million, according to the filing. Earlier that month, Old Second had submitted a price range from $315 million to $325 million. On June 8, Old Second increased its offer to $330 million, and Wintrust walked away, the document states. The deal was agreed to on July 25 and announced the next day. Wintrust executives have complained to others within the market that they felt the Acker family, which founded West Suburban nearly 60 years ago and runs it now, favored Old Second and that there was little point continuing. A Wintrust representative declines to comment.

GENEROUS

The pending Old Second deal, now worth about $322 million in cash and stock, is generous to the Acker family, which controls

P034_CCB_20211018.indd 34

the bank but owns less than 20% of the shares. Unlike many privately held banks, which often are majority owned by families, West Suburban’s shareholder base is broad. Employees own another 13.3%. All told, insiders, including employees, own about 39%. A shareholder vote on the deal hasn’t yet been scheduled, although it’s expected well before the end of the year. Keith Acker, president of West Suburban Bank, will take home $1.5 million in cash per his change-in-control agreement and another $2.2 million under his deferred compensation plan, according to the filing. In addition, he has an employment contract to remain as an executive vice president next year, making a $417,485 salary. Matthew Acker, senior vice president in charge of consumer banking, is receiving an $817,050 change-in-control payout. In addition, he has a two-year employment contract, under which he will be paid a $245,105 annual salary plus a likely $180,000 bonus, based on meeting certain “performance objectives” from May 2022 to August 2022. The Ackers didn’t respond to an email requesting comment.

“They are the No. 1 on our list of strategic partners since I took over as CEO in early 2015,” Old Second CEO James Eccher said in a July 26 conference call with analysts. He also didn’t respond to a request for comment. The deal is another in a series of Chicago-area bank sales in which sellers rejected higher offers than what they accepted, or took steps limiting what competing suitors might have paid. In many of those cases, insiders fared well under the deal arrangements, but shareholders might have done better. These examples include another major pending deal—the sale of Chicago-based First Midwest to Evansville, Ind.-based Old National. The all-stock transaction, now worth $2.2 billion, was billed as a “merger of equals,” where the lack of a large premium would mean big upside for shareholders. The deal hasn’t closed, but so far it’s a loser for First Midwest shareholders. Since the June 1 announcement, First Midwest shares are down 9.5%. Wintrust shares over the same period have risen nearly 3%. One winner is clear, though. First Midwest CEO Michael Scudder is in line to be paid approxi-

mately $5 million annually in the three years after the deal closes as executive chairman, even though Old National’s CEO will run the combined company. That’s substantially more than he’s gotten as CEO of First Midwest. Likewise, Chicago-based MB Financial rejected a higher offer from the Toronto-based parent of BMO Harris Bank in order to merge in 2019 with Cincinnati-based Fifth Third. Former MB Financial CEO Mitch Feiger is now a Fifth Third director. Since the deal’s May 2018 announcement, BMO Financial Group shares have outpaced Fifth Third’s by 5.4 percentage points.

PERFORMANCE

The question now is whether West Suburban’s decision to link up with Old Second will suffer a similar fate. Wintrust shares since the Old Second deal was announced are up nearly 18% during a strong period for bank stocks, while Old Second’s have increased 12.6%. Stock performance matters, because 65% of what West Suburban shareholders are getting from Old Second is in the form of stock. At $46.7 billion in assets, Wintrust is more than 14 times larger

than Aurora-based Old Second, which had $3.2 billion as of June 30. With nearly $3 billion in assets, West Suburban’s addition will nearly double Old Second’s size—essentially making successful integration of the deal a “bet the bank” proposition for Old Second. Wintrust is spread throughout the Chicago area and also has a significant toehold in southern Wisconsin. In addition, its revenue streams are diversified, with an unusually large, national business in financing insurance premiums for businesses and a mortgage lending arm that reaches well outside the Chicago area. Old Second, by contrast, is confined mainly to the western suburbs and rises and falls as those communities do. In effect, the acquisition of West Suburban doubles down on that geographic concentration. In the meantime, at least judging by history, Wintrust won’t take this lying down. The bank has opened branches in affluent suburbs, like Evanston, after community banks sold and made significant market-share inroads that undermined the value of the acquisitions for the buyers.

10/15/21 4:36 PM

CRAIN’S CHICAGO BUSINESS • OCTOBER 18, 2021 35

MOMENTUM

The momentum is starting to build in the city. Developers have drawn up plans for nearly 17,000 apartments in the greater downtown, according to Integra Realty Resources' Chicago office. They won’t all hit the market at the same time. Many projects are still in the planning phase, awaiting approvals from the city. Some are years away from construction; others may never make it out of the ground. To take the step from plans on paper to a groundbreaking, a project needs financing: equity from an investor and debt from a construction lender. More developers are taking that step. A random survey of proposed apartment buildings in downtown Chicago turned up at least nine with more than 2,700 units that have entered the construction phase in recent months, or are very close to securing their financing. Getting a loan last year was “just really challenging,” says mortgage

RENTAL REBOUND? Apartment developers are on track to complete just 1,600 units in downtown Chicago next year, the lowest annual total in a decade. With builders ramping up again, deliveries are likely to rise in 2023 and beyond. UNITS ADDED 4,000 3,000 2,000 1,000

’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 Source: Integra Realty Resources

Note: 2021 and 2022 are projected.

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

P035_CCB_20211018.indd 35

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

140 N. Ashland Ave. Developer: Marquette

MARQUETTE

Units: 210 apartments

Captio

The Reed 234 W. Polk St. Developer: Lendlease

1450 N. Dayton St. Developer: Structured Development Units: 450 units (apartments, affordable condos and co-living units)

says the firm isn’t ready to discuss the development’s financing package yet. Securing financing is still harder than it was before the pandemic. Rising construction costs have become a financing obstacle for certain projects, and some investors and lenders are leery of Chicago amid concerns about rising property taxes and crime, developers say. “There’s quite a few players who are not in the market,” says J. Michael Drew, founder of Chicago-based Structured Development. “There’s just a perceived higher risk.” But Structured has found financing for a 450-unit residential development on the Near North Side, near the intersection of North and Clybourn avenues. Drew expects to open a construction loan and break ground in early to mid-November, declining to discuss specifics. The project would include 34 condominiums that meet the city’s affordable housing requirements and 124 shared, or co-living, rental units,

Units: 224 apartments, 216 condominiums

LENDLEASE

began. Developers built nearly 27,000 apartments in downtown Chicago in the past decade, according to the Chicago office of Integra Realty Resources, an appraisal and consulting firm. No other sector—office, hotels, or condominiums—was busier downtown over that time span. More multifamily projects also mean more business for the local construction industry, which suffered in 2020 as the value of Chicago-area construction starts fell 25%, according to Dodge Data & Analytics, a Hamilton, N.J.-based research firm. Residential starts, which include apartments, fell 34%. Today, the residential market is a bright spot in a local construction industry that’s still shrinking: Local construction starts fell 17% through August from the first eight months of 2020, to $7.3 billion, but residential starts rose 31%, to $3.5 billion, according to Dodge.

broker Dave Hendrickson, senior managing director in the Chicago office of Walker & Dunlop. Today, “nothing is overheated. It’s just a good balance in the market, and there is actual competition for construction loans.” That means lenders are offering better terms than they did last year. Interest rates on construction loans have dropped from 1.25 to 1.50 percentage points, and lenders are willing to provide a loan equaling 65% of a project’s cost, up from 50% to 55% last year, Hendrickson says. Better loan terms translate into higher returns for developers, and higher returns make it easier for developers to attract equity partners to their projects. Developers are especially busy in Fulton Market, a West Loop neighborhood once known for food wholesalers and trendy restaurants that has exploded with new office buildings, hotels and residential projects. Chicago developer Fulton Street Cos. is close to signing a joint venture agreement for the Foundry, a 32-story, 433-unit apartment tower on the 1200 block of Fulton St. that the City Council approved in August, says Alex Najem, the firm’s co-founder. Najem expects to close on a construction loan for the $195 million project in mid-November, allowing it to acquire the site and clear it for development. He says he’s not ready to disclose his joint venture partner. He’s still in talks with two lenders for a construction loan. Competition among lenders is “very strong,” Najem says, noting that he recently received an offer from one that would finance 75% of the project’s cost at a 4.5% interest rate. With a lower loan amount, he could borrow at a rate in the mid-3% range, he says. Chicago developer Related Midwest is already moving forward with foundation work on 900 W. Randolph, a 43-story high-rise that will include 300 apartments and cost about $200 million. A Related Midwest spokeswoman

Developers are moving forward with several big apartment projects in downtown Chicago. Here’s a sampling.

with market-rate apartments rounding out the mix, he says.

GROWTH

Apartment development in the city took off after the Great Recession, peaking in 2017, when developers completed 4,348 units downtown, according to Integra. From 2015 through 2020, downtown gained an average of nearly 3,600 apartments annually. But the momentum, which was already slowing, stalled as the pandemic swept into Chicago last year. As a result, Integra estimates that downtown will add just 1,600 apartments in 2022. With construction picking up again, those numbers should start rising in 2023. Though, given the length of time it takes to build a high-rise, many projects starting in the coming months probably won’t be ready for occupancy until 2024. Until then, downtown could be a landlord’s

The Foundry 1201-1215 W. Fulton St. Developer: Fulton Street Cos. Units: 433 apartments

FULTON STREET COS.

APARTMENTS from Page 3

GOING BIG

CHICAGO DEPARTMENT OF PLANNING & DEVELOPMENT

Apartment construction boom is back on after pause

market—high demand and low supply—allowing developers to fill up their new buildings at high rents. “If you can deliver in ’23, I think you’re going to be very happy as a developer,” Hendrickson says.

Vol. 44, No. 42 – Crain’s Chicago Business (ISSN 0149-6956) is published weekly, except for the last week in December, at 150 N. Michigan Ave., Chicago, IL 60601-3806. $3.50 a copy, $169 a year. Outside the United States, add $50 a year for surface mail. Periodicals postage paid at Chicago, Ill. Postmaster: Send address changes to Crain’s Chicago Business, PO Box 433282, Palm Coast, FL 32143-9688. Four weeks’ notice required for change of address. © Entire contents copyright 2021 by Crain Communications Inc. All rights reserved.

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