Crain's Chicago Business - 11/1/21 by crainschicago

TECH TAKEAWAY: Get to know Stan Chia, a former Grubhub exec who bet on a ticket startup and won. PAGE 6

ADVANCE SHOWING: Take a look inside Steppenwolf’s new theater. PAGE 8

CHICAGOBUSINESS.COM | NOVEMBER 1, 2021 | $3.50

Are Fritz Kaegi’s assessments too high or too low?

Bob Fisher, owner of Evanston Lumber and Marvin Window Gallery in Lake Bluff.

Landlords say the assessor is unfairly targeting them. An analysis of recent appraisal data suggests otherwise.

Supply chain woes are hitting home. Literally.

JOHN R. BOEHM

With everything from cabinets to water heaters scarce and prices for seemingly everything rising, 2021 is a year no one in the remodeling and homebuilding business will think of as ordinary BY DENNIS RODKIN

n an ordinary year, when summer turns to fall, homeowners start calling Villa Park contractor Jeff Kida to try to get their kitchens refreshed in time to host Christmas guests. “If they called me by Oct. 1, I could get it done,” says Kida, who heads the firm DDS Design Services and is president of the National Association of the Remodeling Industry’s Chicago-area chapter. This year, Kida was telling September callers, “I can’t get you anything, especially cabinets, before February.”

With widespread supply chain disruptions, 2021 hasn’t been a year anyone in Kida’s business would call ordinary. An Evanston lumberyard owner stockpiled the materials to build about 15 houses. A remodeling contractor pieced together leftover materials from past jobs to update a Calumet Heights home so the family of its elderly owner could get it on the market. A builder ordered $150,000 worth of windows See SUPPLY CHAIN on Page 31

Cook County Assessor Fritz Kaegi has whacked commercial landlords in Chicago with big assessment hikes this year, but it wouldn’t be a stretch to conclude that he went easy on many of them. Since Kaegi started assessing properties in the county in 2019, landlords have groused that he’s unfairly targeting them with big assessment increases. But a Crain’s analysis of 35 large office, apartment, hotel and retail properties in Chicago suggests otherwise, showing that the assessor’s office underestimated their values when compared with appraisals of the buildings performed since the beginning of 2018. Kaegi’s office recently valued the AMA Plaza office tower in Riv-

ALYCE HENSON

BY ALBY GALLUN

Fritz Kaegi er North at $483.4 million. An appraiser working for the property’s lender valued it in June at $550.5 million. The assessor estimated K Square Apartments in Lincoln Park were worth $77.5 million, well below their $122.5 million appraised value in October 2020. The assessor also came in lower with the McDonald’s See ASSESSMENTS on Page 28

Hospital mergers are about to go viral The breakup of Amita Health will spark dealmaking: ‘This puts two M&A targets back out into the field’ BY STEPHANIE GOLDBERG At a time when most hospital systems are looking to bulk up, Amita Health’s split sets the stage for more dealmaking in Chicago’s rapidly consolidating health care market. As the 19-hospital chain faces pressure to rein in costs and

compete with expanding rivals for a finite number of patients and doctors, its owners are unwinding the joint operating company they formed nearly seven years ago. The breakup of Lisle-based Amita leaves Catholic giant Ascension with See AMITA on Page 31

NEXT WEEK Meet the Chicagoans who are in our 32nd class—corporate VPs, entrepreneurs, government operatives, inventors and more.

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2 NOVEMBER 1, 2021 • CRAIN’S CHICAGO BUSINESS

GREG HINZ ON POLITICS

Respect cuts both ways, FOP

of people—including this one, three times—now have received their jabs, with minimal negative impact. Fact is that states which are lightly vaxxed, like Montana and Idaho and West Virginia and Georgia, recently have had death rates far higher than the nation or Illinois. Fact is that total pandemic death rates in the two big states most notorious for having no-mandate, no-mask governors, Texas and Florida, have almost caught up with states such as New York and New Jersey that were hard hit by the pandemic early on when little was known about the disease. Ergo, New York’s death rate per 100,000 residents is 287; right at its heels is Florida at 274, according data compiled by the New York Times. None of that stops the fools on the political right who are willing to sacrifice your life for their election. Like Illinois GOP gubernatorial hopeful Darren Bailey, who told a conservative conference a few days ago that the vax move “has a lot to do with money . . . Big Pharma.” It’s all “Marxism,” and potentially the ruination of the country, he argued. Back to Chicago, Lightfoot could have been nice and offered the cops the same deal she did for the teachers: Get vaxxed or get tested once a week at their place work at city EXPECTING OTHERS TO FOLLOW THE of expense. Lightfoot LAW? YOU SHOULD DO SO YOURSELF. being Lightfoot, she hasn’t, but instead has met nasty with nasty. date—it shouldn’t be surThat’s a mistake. But the prised if the public thumbs its city’s overall position here, nose at them. that FOP start seriously What is it that they don’t promoting vaccination to its get? In just the same way that members in the way that the Chicago has speed laws beChicago Teachers Union has, cause driving too fast endanis correct. Put a different way, gers the lives of others, the city if FOP and its allies in the City is rightfully asking that police Council want to be treated who regularly interact face nicely and with respect like a to face with the public take partner, they have to act that reasonable precautions to preway. They don’t need to act vent infecting the public with as Catanzara did when he lika disease that can hospitalize, ened the vaccine mandate to incapacitate for life or kill. what Hilter’s goons did when Now, FOP by no means is they ordered Jews into faux the only entity affected by this shower rooms that really were disease—and I’m not talking gas chambers, a comment COVID but the nobody-tellsCatanzara ended up apologizme-what-to-do disease. You ing for. know, like Tampa Bay BuccaIf your job is to expect—to neers tight end Rob Gronkowdemand—that people follow ski says in the USAA commerthe law, it’s generally a good cial, arguing that he’s entitled idea to do so yourself. If to benefits available only to Chicago police really want to members of the military bebe respected, it would help if cause he’s “special.” their union acted like it. Fact is hundreds of millions f a cop ever pulls you over for speeding, try telling them that, much as you’d like to cooperate, you’ll have to reject the ticket because, as a matter of conscience, you cannot compromise on your personal freedom to travel at the rate you prefer. When the cop gets up off the ground after laughing for about 10 minutes, you can try the judge, who you’d better hope laughs rather than sending you to jail. That’s pretty much my reaction as Chicago’s Fraternal Order of Police and especially its president, John Catanzara, continue to thumb their nose at Mayor Lori Lightfoot’s demand that police disclose to the city whether they’ve been vaccinated for COVID-19, and if they haven’t, submit to twice-a-week testing at their own expense. Yes, FOP makes a point or two worth discussing. But on balance, this situation couldn’t be much clearer. If a union that represents men and women sworn to obey the law can’t encourage them to do just that—instead, Catanzara the other day threatened political vengeance against any alderman who wouldn’t vote to strip Lightfoot of her power to issue a vax man-

Sam Zell’s office company to keep chasing that big deal Analysts have wondered if Equity Commonwealth would wind down. That’s not in the cards. But will investors have the patience to wait for a major acquisition? BY ALBY GALLUN Sam Zell’s office company came up short in its bidding war for a New Jersey warehouse landlord, but it’s not ready to call it quits yet. Equity Commonwealth, a real estate investment trust led by the billionaire financier since 2014, has decided to keep pursuing a big deal after shareholders in Monmouth Real Estate Investment voted in August to reject the REIT’s $3.4 billion buyout offer. An affiliate of Starwood Capital Group, led by another real estate titan, Barry Sternlicht, spoiled the deal by offering a higher price, and Chicago-based Equity Commonwealth decided not to come back with a better offer after the vote. Since then, analysts and investors have wondered whether Equity Commonwealth would just hand all its cash over to shareholders and wind down the company. That’s not in the cards right now, David Helfand, the REIT’s president and CEO, told analysts and investors in a conference call Oct. 28. “We’re just not ready to go quietly into the night,” he said, according to a transcript. “We have tremendous confidence in our team, we have a track record of execution and outperformance, and we remain optimistic and engaged. So our best judgment at this time is to continue to pursue investment opportunities.” The question is whether in-

vestors will have the patience to wait. The REIT has been selling off its office properties over the past several years, amassing $3 billion in cash for a big acquisition, even outside the office sector. Equity Commonwealth only owns four office properties today. Investors had a lot of faith that Zell, Equity Commonwealth’s chairman, and his team would find a deal, especially when the commercial real estate market appeared headed for a big crash last year. It looked like a promising opportunity would come along for Zell, who became an investing legend decades ago as a buyer of distressed assets. But a big wave of distress never came. In May, Equity Commonwealth settled on Monmouth, a Holmdel, N.J.-based company in what has become one of the hottest real estate sectors: industrial property.

‘SCANT RETURN ON CASH’

After terminating the Monmouth deal, the company could have just liquidated and given its shareholders their money. One reason to go out of business: The company is still paying its top executives and other employees even though it doesn’t have much of a portfolio left. Its general and administrative expenses total about $30 million to $35 million a year, about 1% of its current asset base. Its “scant return on cash makes it a costly endeavor for EQC to

continue its hunt for new opportunities,” Green Street wrote in a report after the Monmouth deal fell apart. Responding to a question from an analyst, Helfand said that’s money well spent. “There’s a cost of pursuing opportunity,” he said on the call. “And we’re, for sure, mindful of it. But I don’t think our cost is out of line in any way.” Helfand didn’t get into many specifics about the opportunities the company is pursuing. “We’re open to investments in a variety of sectors, both in and out of favor, if the sector and the specific opportunity offer appropriate upside considering the associated risks,” he said. Helfand also told analysts they won’t have to wait a long time for news of a deal. “I don’t want to say six months and I don’t want to say 12, because I don’t want to have to go back on my word if circumstances change,” he said. “But we recognize we’ve been at this a long time. We want to continue because we are optimistic, but there’s a limit. And there is another way to reward shareholders if we don’t find something in reasonable near term.” Equity Commonwealth shares were little changed after the Oct. 28 conference call, ending the week at $25.93 per share. That’s not much higher than their 52week low of $25.57 in late September. They’re down from a 52week high of $29.25 in February.

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

CORRECTION The Oct. 25 Most Innovative Companies feature should have said that Mars Wrigley’s more easily recycled single-layer packaging was debuted in Europe by M&M’s.

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

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CRAIN’S CHICAGO BUSINESS • NOVEMBER 1, 2021 3

Private equity’s latest target Accounting firms’ steady returns, high margins attract investor interest BY STEVEN R. STRAHLER

Illinois and Michigan legalized recreational marijuana at about the same time, with Michigan allowing its first sales in December 2019 and Illinois following a month later. Michigan was slow out of gate, with too few dispensaries, while Illinois roared off, held back by a lack of product as cultivators struggled to gear up for the new demand from consumers. The two states took very different regulatory approaches. Illinois strictly limited the number of retail and cultivation licenses. Michigan did not. Today, Michigan has 374 recreational retail licenses in operation, up from 179 a year ago. There are 506 active grower licenses, up

Christopher Geier is an unusual CEO for an auditing firm. He isn’t a CPA. Geier, who majored in criminal justice in college and later ran a turnaround consulting firm, was hired by Sikich in 2008 to start an investment bank. His rise reflects what’s happening in the accounting profession: Only 40% of Chicago-based Sikich’s revenue (an estimated $220 million this year) is derived from auditing; the rest comes from consulting and technology-related work. That shift is leading to another watershed for the accounting industry. Private-equity firms are circling and beginning to invest, attracted by the twin sirens of accountancy’s steady returns and by higher margins on the faster-growing consulting side. From accountants’ perspective, outside investors can help pay for artificial intelligence and other expensive software upgrades as firms chase cybersecurity and other techbased opportunities. But accounting chiefs like Geier and Alan Whitman of Baker Tilly are understandably wary of private equity’s ways of operating. They wonder how its leveraged investment model and history of selling off assets and laying off workers in order

See CANNABIS on Page 29

See PRIVATE EQUITY on Page 30

MICHIGAN

IS BEATING ILLINOIS Here’s why that matters. It’s another sign of the toll that Illinois’ licensing stumbles are taking on the development of a new billion-dollar industry here

JOHN R. BOEHM

AT THE CANNABIS GAME. BY JOHN PLETZ

ichigan found a surefire way to succeed in the weed business: double the number of stores and cut prices by half. Recreational marijuana sales in Michigan surpassed those in Illinois for the first time in July, and they were 3% higher in August and September, at about $125 million. Until then, Illinois enjoyed a double-digit lead in sales, reflecting the difference in population between the two states. But that advantage has been eroded by Illinois’ delays in issuing new retail licenses, which remain in limbo. It’s another sign of the toll that the stumbles are taking on the development of a new billion-dollar industry.

Why small offices might be a bigger deal post-COVID BY DANNY ECKER Sterling Bay is thinking smaller with its next big move in the Fulton Market District. The Chicago developer this month filed a zoning application to redesign its plan for a new office building in the trendy former meatpacking neighborhood—one the city approved three years ago—by asking for the right to build it with floors that each have almost 40% less space.

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It's a move that might have flummoxed much of the real estate world before the COVID-19 pandemic. Buildings with larger, open floor plates that allowed companies to pack their workers onto a single level won an outsize share of new tenants during the last decade, as proven by the leasing success at the redeveloped Old Post Office and the Merchandise Mart. The centerpiece of the 78 megaproject that developer Related Midwest proposed before the crisis is a

low-slung office building with floors spanning as large as 85,000 square feet. But as many tenants have sought to shrink their office footprints with the rise of remote work, the pool of users in the market for space that offers more window lines and natural light on smaller floors may be growing. That's casting a rosier light on buildings that previously might have been shackled by See OFFICES on Page 29

GENSLER

Bite-size floor plates handicapped some landlords before the pandemic. Shrinking workspace needs, however, could change all of that.

Sterling Bay has redesigned a city-approved office building at 360 N. Green St. in the Fulton Market District to make the floors almost 40% smaller.

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4 NOVEMBER 1, 2021 • CRAIN’S CHICAGO BUSINESS

McD’s makes a sale to speed up drive-thru times

The fast-food chain is selling its automated ordering technology unit to IBM in hopes that the tech giant’s expertise will help speed development and scale it up McDonald’s is selling its automated order-taking technology arm to IBM in hopes that the tech giant can help the fast-food chain speed up its use of the technology. CEO Chris Kempczinski announced the plan during the Chicago company’s third-quarter earnings call Oct. 27. They’ve seen “encouraging results” in restaurants with the technology so far, he said, but IBM will help scale it. “There’s still a lot of work that needs to go into introducing other languages, being able to do it across 14,000 restaurants with all the various menu permeations, etc.,” he said. “That work is beyond the scale of our core competencies, if you will.” McDonald’s acquired McD Tech Labs in 2019 and rebranded it from its previous name, Apprente. Back then, the Mountain View, Calif.-based startup had about 20 employees and was working to develop voice-recognition technology for the restaurant industry. McDonald’s bought it with a goal of speeding up drive-thru times. The idea is for the technology, powered by artificial intelligence, to learn from the orders it takes and get people through the line quicker. Now, McDonald’s “automated order taker”—a com-

bination of hardware and software deployed at the drive-thru speaker post—takes thousands of orders daily throughout the Chicago area. “The reason we’re doing this with IBM is to have someone that can take how far we’ve gotten right now with the solution and be able to finish the development and help us deploy this at scale,” Chief Financial Officer Kevin Ozan said during last week’s call. “So we’re going to use their expertise, certainly in AI and everything that they’ve learned from Watson.” Executives did not disclose terms of the deal with IBM. The fewer than 100 people associated with McD Tech Labs would go work with IBM, Ozan said.

DRIVING SALES

Speedier drive-thru times have been a goal for the fast-food behemoth since pre-pandemic, but throughout repeated COVID lockdowns, to-go orders became a lifeline and have continued driving sales. McDonald’s third-quarter sales beat expectations, even as it struggles with rising wage and commodity costs, in part because of its focus on takeout and delivery. The chain reported comparable sales, a closely watched restaurant performance metric, of 12.7% for the quarter that ended Sept. 30. That’s

BLOOMBERG

BY ALLY MAROTTI

McDonald’s third-quarter sales beat expectations, even as it struggles with rising costs, in part because of its focus on takeout and delivery. above analysts’ estimates of almost 10%. IBM’s acquisition of McD Tech Labs is subject to regulatory approvals and is expected to close in December. The McD’s Tech Labs team will become part of IBM’s Cloud & Cognitive Software division, according to a joint statement from IBM and McDonald’s. Continued larger check sizes— which the chain began noticing early in the pandemic—sales of its crispy chicken sandwich and in-

creased use of its new loyalty app also helped bolster McDonald’s sales. McDonald’s is leaning heavily on its loyalty app, launched earlier this year, to drive customer frequency. Kempczinski said early results are encouraging on that front, but there is still work to be done. The chain’s goal is for 40% of its customers to be known. Currently, McDonald’s only knows who about 5% of its customers are, including what they ordered previously. “Loyalty is certainly the way

you get that customer to engage and share information with you,” Kempczinski said. McDonald’s, like other restaurants, continues to face headwinds around the tight labor market and inflation, executives said last week. The company expects to see a 6% year-over-year increase in cost pressure in 2021, including labor and commodity costs, Ozan said. The increase has been “pretty well received by customers,” he said. Bloomberg contributed.

Investment firm wants to help clean energy go mainstream The new $300 million fund, from Lukas Walton and operators of S2G Ventures, will invest globally in sustainable energy, food and agriculture companies BY KATHERINE DAVIS A multifaceted organization focused on philanthropy and investing from Walmart heir Lukas Walton has launched a multimillion-dollar fund to back clean-energy companies. Walton’s firm, Builders Vision, announced Oct. 27 the creation of a $300 million fund, managed by Builders Private Capital, to invest in companies across the world developing technologies to fight climate change. Builders Private Capital also includes S2G Ventures, a sustainable food, climate and ocean venture capital firm, co-founded by OpenTable founder Chuck Templeton, which joined the Builders family last month. Builders Private Capital and S2G Ventures is led by Chief Investment Officer and Managing Director Sanjeev Krishnan, but Builders has brought on two new managing directors—Stephan Feilhauer and Francis O’Sullivan—to focus

JOE CAHILL

specifically on managing the new $300 million fund. Feilhauer is a veteran investor who came to Builders Private Capital from Sydney, Australia-based Macquarie Capital, where he oversaw growth equity investments in industrial tech and cleantech in the U.S. and Europe. O’Sullivan is also a veteran investor and researcher, coming to Builders from Ørsted, a Danish renewable energy company, where he managed the company’s early-stage and growth equity investment portfolio. Andrea Woodside, who previously led market research and investment management at a division of Goldman Sachs Asset Management, has joined Builders Private Capital as vice president of real assets. The firm’s umbrella company, Builders Vision, also encompasses a philanthropic arm called Builders Initiative and a strategic investing arm called Builders Asset Management. The entire organi-

WILL RETURN NEXT WEEK

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zation, operated and heavily funded by Walton, is oriented toward sustainable agriculture and seafood conservation, rural development and addressing the impacts of climate change. “It’s a platform to support people and organizations and portfolio companies around a healthy and humane planet, so a focus on climate at large,” Krishnan said.

GROWTH STAGE

With the new clean-energy fund, Builders plans to take a “flexible” and “multi-asset” approach. Rather than investing in early-stage startups and technologies, Builders wants to cut checks to midsize and growth-stage companies that have already proved market stability. The idea is that by powering established companies, the transition to clean energy can be achieved faster. “A lot of focus has been made on early-stage technology bets in the venture space, and if you look at the background of Frank and myself, we really come from the background of scaling up large companies,” Feilhauer said. “We’re really excited about taking these early-stage companies that have

Stephan Feilhauer, left, and Francis O’Sullivan will focus on managing the new $300 million fund. now grown up and that are now at the growth-equity stage, where they’re not requiring single-digit millions, but they’re requiring tens of millions and hundreds of millions for these technologies to be broadly deployed in the market.” The fund is closed but Builders has yet to make its first investment, Krishnan said. Builders Private Capital said the average check will be anywhere from $10 million to $50 million. The firm plans to invest in about 10 to 20 companies. Feilhauer said the fund will look

for companies working to decarbonize the industrial sector, transportation, supply chain and logistics, as well as entities working on fleet electrification and battery storage. “A lot of progress has been made in the energy transition,” O’Sullivan said. “We’re at a place today where clean energy as an element of the broader economy is really meaningful. But we urgently need to take a very significant step forward. We need to move from a meaningful role to a point where clean energy really is mainstream.”

10/29/21 3:14 PM

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6 NOVEMBER 1, 2021 • CRAIN’S CHICAGO BUSINESS

THE TAKEAWAY

Stan Chia

MANAGING DIRECTOR November 2021

300 N. LaSalle St. | Chicago, IL 60654 | 312.382.2200 www.gtcr.com

Travis J. Krueger

How does it feel to go public? Incredible. My team has rallied from some of the darkest days we had ever seen, personally and professionally, during the 2020 COVID crisis. Our industry was the first to go and the last to come back, and we have emerged stronger than before.

Jeffrey B. Heh

GTCR is pleased to announce the promotions of:

Chia is CEO of Vivid Seats, an online ticketing marketplace that merged with Horizon Acquisition, a special purpose acquisition company, and went public on Oct. 19. Formerly the COO of Grubhub, Chia, 40, recently was named Outstanding Tech CEO at 1871’s 14th Annual Momentum Awards. He and his wife live in Lakeview with their two sons, ages 8 and 3. By Laura Bianchi

Did you always know that Vivid Seats would be so successful? When they first approached me, I was not very interested because I thought it was a small startup. After I researched it, I realized it was unbelievable. In 2019, the gross order volume was $2.3 billion. I had never seen a company of that volume so under the radar.

Where did you grow up? I was born in Singapore. My family moved to New York when I was 1, so I know where the best bagels and pizzas are. But I spent my teenage years in Hong Kong and Singapore.

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A turning point? Serving as commander of a mechanized infantry platoon in the Singapore military from 18 to 21. I had been a bluehaired, band playin’ person until then, and the military was an accelerated maturing experience for me.

> Any tense moments in the military? During a jungle survival exercise in Brunei, my signal pack carrier and I were bushwhacking through the jungle. At one point, I was holding back a huge, thorny mutant branch with one hand and a machete in the other to let him get past when a giant spider landed right around my left rib cage.

> Eek! What happened? He bit me right through my heavy camo. Five to 10 minutes later, the world gets blurry and I don’t wake up until I’m in a hospital. The skin in that area was completely darkened by the venom. I spent a couple of weeks in recovery.

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On what do you splurge? American wagyu beef and Kurobuta pork from Snake River Farms in Idaho. It’s ridiculous how good that meat is. It has become a fairly significant monthly expense. I smoke it in my Big Green Egg and Traeger.

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LUXURY HOME OF THE WEEK

Wait. Blue hair? Yeah. I was trained in classical piano, but I played guitar in rock bands from high school until l had kids and adulthood caught up with me. I once starved myself during a high school international field trip and used my food allowance to bring home an electric guitar.

CRAIN’S CHICAGO BUSINESS • NOVEMBER 1, 2021 7

Housing project capitalizes on Obama site tion of the 34 units is complete, said Paulette Edwards, one of A month after former President two Coldwell Banker agents repBarack Obama broke ground on resenting the units, and finish his presidential center, a new work, including the final exteritownhouse development nearby or details, is underway. The first in Woodlawn is the first to capi- units will be ready for delivery by talize on the location, going with the end of November, Edwards said. the name Presidential Square. Since the former president and The 34 townhouses are at 62nd Street and Ellis Avenue, eight his wife announced their choice blocks due west of the Obama of a site in Jackson Park five years Presidential Center site in Jack- ago, there’s been talk of a wave of gentrification it might set off THE TOWNHOUSES ARE FOUR-BEDROOM in Woodlawn. includes an LAYOUTS, ABOUT 3,200 SQUARE FEET WITH That ordinance enTHREE FULL BATHS AND ROOFTOP DECKS. dorsed by Mayor Lori Lightfoot MAJOR CONSTRUCTION IS COMPLETE. that is designed to prevent disson Park. Priced from $659,000 placement of Woodlawn resito $699,000, they first went up for dents. Edwards said these new units sale on Oct. 23. The townhouses are four-bed- do not displace Woodlawn resiroom layouts, about 3,200 square dents because they’ve been built feet with three full baths and on land that has stood empty for rooftop decks. Major construc- at least a decade.

BY DENNIS RODKIN

Cook County land records show that the city took ownership of the land in 2002, after at least two developers failed to complete projects on the site in the previous eight years.

ASKING PRICES

The development firm doing Presidential Square, Premium Builders, bought the 1.1 acre site, roughly the equivalent of 15 standard Chicago residential lots, from the city for $175,000 in 2015. That was several years before a new ordinance went into effect that imposes affordability requirements on new construction slated for city-owned land. The asking prices on the townhouses are in line with recent new construction sales on South Kimbark Avenue at $650,000 and south Kenwood Avenue at $695,000, and come in well below the record $759,000 sale of a new construction home a block north on Ellis in early 2020. These new construction proj-

ects are all priced considerably higher than existing properties in Woodlawn. In the first nine months of 2021, the median price of single-family homes sold in the neighborhood was $280,000, and for attached homes (condos and townhouses), it was $235,000, according to data released last month by the Chicago Association of Realtors, Midwest Real Estate Data and ShowingTime. Premium Builders principal Lew Korompilas is not new to Woodlawn. He’s been building there since at least 2011, when he took over a previous developer’s site and completed a condo project there. He has since done several other new construction and rehab projects in the neighborhood.

Contact James Spanola, Vice President 2IƓFH Ř 0RELOH (PDLO MVSDQROD#UR\DO EDQN XV Putting community first since 1887.

Luke Tanen, who has worked at the technology organization since 2010, takes over from founder Tom Kuczmarski, who will serve as senior adviser Chicago Innovation, a local organization known for its annual awards ceremony for the city’s techies and innovators, has named a new leader as it heads into its 20th year in business. Luke Tanen is taking over the reins as CEO and president at Chicago Innovation. He was most recently the organization’s executive director, a role he’s held since 2012. Tanen, 36, first joined Chicago Innovation in 2010 as director. Tanen, who has appeared on Crain’s 20 in their 20s and Rising Stars in Tech lists, replaces Tom

MBA from Northwestern University. He also serves as chair of the innovation and technology membership committee at the Economic Club of Chicago. Additionally, Paul Kitti, who has organized and coordinated Chicago Innovation events and activities since 2014, has been promoted to vice president for marketing and events.

‘REINVIGORATED LEADERSHIP’

“After 20 years, it’s time to have a new and renewed and reinvigorated leadership,” Kuczmarski said. “Whoever I handed it over to, I wanted to make sure they had the same sense of values and the same vision that I had for the organization “I FEEL VERY OPTIMISTIC AND and for growing it. And has all of that.” CONFIDENT, EXCITED AND GRATEFUL Luke Chicago Innovation, which hosts its Chicago ABOUT THE FUTURE.” Innovation Awards evLuke Tanen, CEO and president, ery fall, has expanded its Chicago Innovation offerings and programs over the last several Kuczmarski, who founded Chica- years. When Tanen joined the orgo Innovation in 2002. Kuczmar- ganization, its only event was the ski, who also teaches at North- award ceremony. Now, the orgawestern University and owns his nization runs several other proown consulting firm, Kuczmarski grams aimed at women, elders, Innovation, will serve as a senior children and teens. Just last week, Chicago Innoadviser to Chicago Innovation govation launched yet another proing forward. Tanen earned a bachelor’s de- gram, called Ladder, specificalgree in communications and an ly tailored to mentor Black and

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The 34 townhouses are at 62nd Street and Ellis Avenue, eight blocks due west of the Obama Presidential Center site in Jackson Park.

Royal Bank offers commercial loans with attractive rates and terms.

Chicago Innovation names new CEO BY KATHERINE DAVIS

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Luke Tanen Latino innovators in the Chicago area. The program officially begins next year. Of the more than 330 companies that have won a Chicago Innovation award, 98% are still operating and 60 have been acquired with exit values exceeding $110 billion, according to the organization. Last year’s winners included startups like 2ndKitchen and NOCD, and corporate businesses like Abbott and Gensler. The event usually attracts more than 1,000 people at the Harris Theater, but due to COVID-19 concerns, this year’s event on Dec. 7 will be hosted at Morgan Manufacturing in Fulton Market and be capped at 400 people. Chicago Innovation is supported by about 35 corporate sponsors, which include Walgreens, SMS Assist, Accenture and Wintrust. A large part of Tanen’s new responsibilities will include fostering sponsor relationships and finding new companies interested in supporting Chicago Innovation’s work. “Chicago Innovation is bigger than it’s ever been,” Tanen said. “I feel very optimistic and confident, excited and grateful about the future.”

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PHOTOS BY TED COX

8 NOVEMBER 1, 2021 • CRAIN’S CHICAGO BUSINESS

The new Steppenwolf Theatre campus on Halsted Street north of North Avenue, with murals by Chicago artist Tony Fitzpatrick and the new Liz and Eric Lefkofsky Arts & Education Center to the left.

Look inside Steppenwolf’s new theater The North Side company offers a peek into what amounts to an entirely new campus ahead of its unveiling this week

BY TED COX

Gill recalled asking Shapiro teppenwolf Theatre’s new Ensemble Theater is basi- “where you think theater occurs.” cally encased in a concrete The reply: “Theater occurs, I shell etched in clashing think, between the audience and line patterns. Executive Director the actor in this ethereal space, E. Brooke Flanagan says it re- and it’s a collision. It can be danflects the “theme of collision” at gerous sometimes, it can be fun the core of the company’s new sometimes, but it’s always safe $54 million Liz and Eric Lefkofsky and it’s dynamic.” A shotgun corridor runs along Arts & Education Center. “Steppenwolf wanted some- the Halsted side, connecting the thing new and different, but not Front Bar, the main stage and the indifferent to the company and its new in-the-round theater. Forhistory,” said architect Gordon Gill. mally known as the Ensemble Explaining the “narrative behind Theater in Honor of Helen Zell the aesthetic,” he said the con- (like the Lefkofskys, a promicrete honors the theater founders nent donor), the 400-seat performance space has 100 and their strength, with complementa“STEPPENWOLF more seats than the old upstairs theater ry warm wood tones in the main building, and splashes of colWANTED which has been conor suggesting newer members of the en- SOMETHING NEW verted to a rehearsal semble. AND DIFFERENT, space. The theater itself is Flanagan and Gill impressive. “It’s a very gave Crain’s a tour BUT NOT adaptable house,” Gill of the new building INDIFFERENT TO said, “and very intiand what amounts It has a personto an entirely new THE COMPANY mate. ality, just like Steppencompany campus ahead of the formal AND ITS HISTORY.” wolf does: warm but rugged.” unveiling Nov. 2. Tracy Letts’ “Bug” Steppenwolf had Gordon Gill, architect resumes its pandembeen planning the expansion for 14 years, going ic-paused run on the main stage back to the tenure of Martha this month. An adaptation of Eve Lavey, the theater’s longtime ar- Ewing’s “1919” launches the Entistic director who died in 2017. semble Theater early next year, Flanagan said Gill went through followed by Yasen Peyankov’s rea dozen designs over those years. working of Chekhov’s “Seagull.” The new building also includes Gill credited Lavey’s successor, Anna Shapiro, and Flanagan’s the Loft, an upstairs area devotpredecessor, David Schmitz, with ed to classrooms that will allow advancing the project through the the company to bring students in three-phase, $73 million Building house and expand its education on Excellence campaign. The first program from 20,000 to 30,000 phase, creating the Front Bar and students a year, along with officsmaller 1700 Theater out of a for- es, a script library and a costume mer Ethan Allen furniture build- shop, moved over after Steppening to the north, was completed wolf sold its old office building at a few years ago. Now this new Halsted and North Avenue. “Who knew you could take building, on what was a parking lot to the south, is ready for ac- our old fortress of a building, an tion, along with the renovation of Ethan Allen furniture store and a the main theater building at 1650 parking lot and make this?” Flanagan said. N. Halsted St.

P008_CCB_20211101.indd 8

Executive Director E. Brooke Flanagan, left, and architect Gordan Gill show off Steppenwolf’s new Ensemble Theater.

Gill says the Ensemble Theater’s etched concrete is “rugged without being too industrial . . . honoring the founders of the theater” and their strength.

A former upstairs theater in Steppenwolf’s main building has been converted into rehearsal space, here with a set for Tracy Letts’ play “Bug.”

Steppenwolf’s new Arts & Education Center has room for a costume shop on site.

Chicago artist Tony Fitzpatrick contributed murals to the wall of the garage at the south end of the Steppenwolf campus.

10/29/21 2:54 PM

CRAIN’S CHICAGO BUSINESS • NOVEMBER 1, 2021 9

Enrollment drops at most city community colleges The state’s two-year institutions, which saw a 1.5% attendance decrease, ‘are still in a state of recovery,’ the community college board says in a report Community college enrollment continues to fall across Illinois with institutions reporting a 1.5% decline for the start of the 2021 school year, according to data from the Illinois Community College Board. The seven schools that comprise the City Colleges of Chicago network saw an 8.6% drop in fall 2021 enrollment, the data shows. That’s compared to a 29.5% plunge in fall 2020, when two-year institutions across the country experienced double-digit losses as the pandemic disproportionately discouraged vulnerable students from pursuing higher education. “Nationally, community colleges are still in a state of recovery,” says the Oct. 26 ICCB report, which notes the Illinois figures aren’t as bad as the 5.6% decline recorded nationwide or the 13.8% decrease seen in fall 2020. “Community colleges are open-access institutions and serve a significant number of at-risk students and the pandemic has exacerbated issues for many in that population ranging from fiscal to tech-

nological to emotional.” Community college attendance in Illinois has sputtered since its peak during the Great Recession and declined every year since 2017, hitting about 230,322 students this year. Across all seven of the City Colleges schools, enrollment dropped from 35,646 in fall 2020 to 32,586 in fall 2021. Kennedy-King College in Englewood was the only school in the network to grow even slightly, recording a 1.4% enrollment increase. But ICCB says the drop for fall 2021 is the smallest since fall 2010. Of the state’s 48 community colleges, 17 saw enrollment increase this year compared to just three in fall 2020. And a greater share of students are graduating with degrees and certificates than in previous years. About 61,774 students earned those credentials this year compared to 49,627 in 2006. “We are encouraged by our fall enrollment numbers and what they represent compared to the trends over the last several years where the annual rate of enrollment decline sat between 3%4%,” ICCB Executive Director Bri-

an Durham said in a statement. “We believe this data signifies an upward trend in students returning to advance their educations at community colleges throughout Illinois in the years to come.” ICCB points to the proliferation of online classes as a possible explanation for why this year’s declines weren’t as severe. In 2020 and 2021, online students made up 62% and 57% of total enrollment, respectively, compared to under a quarter of all students in pre-pandemic years.

ONLINE GROWTH

At City Colleges of Chicago, online enrollment grew significantly. About 21,170 of the its students were taking at least one online class in fall 2021, an increase of more than 200% from the year before, the data shows. All of the seven schools saw online enrollment more than double since last year. City Colleges has launched several new initiatives to expand access and drum up enrollment during the pandemic. Its Fresh Start program, unveiled in July 2020, allowed students who dropped out because of financial strains but were in good academic

ALAMY

BY ELYSSA CHERNEY

The City Colleges of Chicago network saw an 8.6% drop in fall 2021 enrollment. standing to return and finish their degrees debt-free. About 20,000 were eligible. The network also began the Future Ready program this summer, which allowed up to 3,000 students to enroll in some for-credit courses and professional certificates at no cost. It was funded by federal stimulus dollars. “The economic and health impacts of COVID have been particu-

larly hard hitting for Chicago community college students, many of whom were already contending with the challenges of housing and food insecurity before the pandemic,” the network said in a statement. “We will continue to offer comprehensive scholarships, grants, loaner technology, and supports to remove the barriers our students face in accessing college.”

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10 NOVEMBER 1, 2021 • CRAIN’S CHICAGO BUSINESS

EDITORIAL

Are Kaegi’s assessments too high or too low? Yes. at work beyond a genuine desire to get the numbers right and spread the tax burden more evenly and equitably, and he speaks on the subject with the zeal of a crusader, convincingly projecting a sense of moral outrage that anyone would question his motives. And to be fair to him, he’s just the assessor. He’s one piece of the puzzle. There’s an array of other forces at work here, including pols who see property taxes as a near-infinite source of financing for pet projects; the Cook County Board of Review, which has undone some of the assessor’s work; and a small universe of real estate appeals lawyers whose livelihood involves helping property owners hammer down their tax tab. Kaegi’s job, in the end, is to deliver what he and his team believe are accurate assessments of the value of the properties in his purview. He seems to believe politics and mathematics don’t mix. And in a perfect world, that would be true. But the assessor clings too tightly to this very basic definition of his job. As the leading figure in the ongoing debate over the tax system onto commercial landlords to score points in this county, like it or not, he needs to with homeowners. Owners of office, in- take a bigger leadership role to fix a system dustrial and hotel properties argue they’re that is in need of more substantive reform. already contributing well above their fair He needs to acknowledge that commercial property assessment hikes in the neighborhood of 75%—which KAEGI’S JOB, IN THE END, IS TO DELIVER aren’t uncommon right now—are jolting the economy and potentially WHAT HE AND HIS TEAM BELIEVE ARE undercutting investment at a chalACCURATE ASSESSMENTS OF THE VALUE lenging time for Chicago and Cook County. And he if he believes he’s in OF THE PROPERTIES IN HIS PURVIEW. the right, he needs to recruit others to his cause. And that’s politics. Now that he’s wrapping up a triennishare and point out that they’re paying 25% of fair-market value compared with al assessment cycle and heading into a homeowners and apartment landlords, re-election effort, now would be a good time for him to try a broader leadership who pay 10%. Kaegi denies there’s a political agenda role on for size. JOHN R. BOEHM

his doesn’t happen very often—at least not in the fractious times in which we live—but the ongoing argument between downtown landlords and Cook County Assessor Fritz Kaegi over commercial property tax assessments is a case where the two parties in the debate are both right. To put it simply, Kaegi is correct to raise assessments, but landlords are certainly right to worry about the impact, especially in light of the city’s still tenuous recovery from the pandemic-era disruption of the downtown office market. In this week’s issue, Crain’s Alby Gallun analyzes 35 large office, apartment, hotel and retail properties in Chicago and finds that landlords’ consistent refrain—that Kaegi is unfairly targeting them with big assessment hikes—doesn’t quite match with reality. Gallun’s number crunching shows that for this cross-section of the downtown market, the assessor’s office underestimated their values when compared with appraisals of the buildings performed since the beginning of 2018. Just as a for-instance, Kaegi’s office recently valued the AMA Plaza office tower in River North at $483.4 million. An appraiser working for the property’s lender valued it in June at $550.5 million. The assessor estimated K Square Apartments in Lincoln Park were worth $77.5 million, well below their $122.5 million appraised value in October 2020. And the assessor also came in lower with the McDonald’s headquarters building in Fulton Market. That property sold for $412.5 million in October 2020, and was appraised around the same time at $409 million. Kaegi’s estimated value: $213.6 million. What Kaegi is doing, at bottom, is delivering on the promises he made as a candidate during the 2018 campaign: fixing the

severely undervalued commercial property assessments set by his predecessor Joe Berrios and righting an out-of-balance ledger that, in his view, placed too much of the local property tax burden on homeowners. As Gallun points out, the assessor’s work so far—and he’s not done—has resulted in a major shift in the tax base. Kaegi has hiked commercial values so much that residential property accounts for 37% of total assessed value in five of the eight townships his office has reassessed so far, down from 48% in 2018. And that’s where politics comes in. Because residential property owners equal votes. And the commercial real estate community contends Kaegi and his cohorts are shifting more of the tax burden

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YOUR VIEW

Direc

What the feds can do to give Illinois an edge in EVs

Gov. J.B. Pritzker and the hen I think about the state Legislature have been future of Illinois’ econhard at work putting together omy, I think about a wide-ranging incentive packelectric vehicles. Our state can age, including tax credits and lead the pack if we make the right job training, to attract more EV investments now. producers, battery manufacWe’ve already seen success stoturers and charging companies ries here in Illinois with Rivian’s to Illinois. I hope to build upon revitalization of the previously their efforts as the Senate conabandoned Mitsubishi plant and Lion Electric’s recent announce- Richard Durbin rep- tinues to negotiate President ment to build a new electric bus resents Illinois in Joe Biden’s Build Back Better agenda. plant in Joliet. Thousands of Illi- the U.S. Senate. Part of the reconciliation bill noisans are already working to build the cars of the future and the bat- should be an expansion of the federal EV teries that will power them. But if we truly tax credit to help make the switch to a want Illinois to become the Silicon Valley next-generation vehicle easy and affordof electric vehicle manufacturing, it’s time able. I also support significant investments for the federal government to get serious in charging infrastructure to create jobs and ease the “range anxiety” many people about committing to green transportation.

EVs on the road in eight years. These are ambitious but achievable goals, and Congress should back them up. Just like the workers in our manufacturing plants, Illinois’ scientists and researchers will be critical in the transition to a greener economy. Argonne Lab, where Illinoisans WE ARE STANDING AT THE STARTING LINE National run the Joint Center for Energy Storage Research, is the No. 1 batOF AN ELECTRIC VEHICLE REVOLUTION tery research center in the country. IN OUR COUNTRY. Argonne’s next-generation batteries are the future of our power grid over $10 billion in clean transit and school and will help our electric vehicles travel buses to help the environment and reduce farther, faster and at a lower cost. We are standing at the starting line of an our children’s exposure to harmful diesel electric vehicle revolution in our country. fumes. Biden has set the goal of making 50% of If the federal government can complenew-car sales electric by 2030, and Pritz- ment Pritzker’s commitment to electric ker believes Illinois should have 1 million vehicles, Illinois is poised to win this race. feel when considering an electric vehicle. The bipartisan infrastructure bill before Congress would deliver the investment we need: $7.5 billion to build charging stations across the country. It also reduces more than just range anxiety—it invests

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

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10/29/21 4:28 PM

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CRAIN’S CHICAGO BUSINESS • NOVEMBER 1, 2021 11

YOUR VIEW

Older people in property tax shock need more than appeals

off the damage by encouraging eeks after the Cook homeowners to appeal. County Assessor’s OfIt’s not that simple for many fice began rolling out homeowners in Chicago and Cook its latest property valuations, County, especially older adults, older adults across Chicago and who lack the resources, comthe suburbs remain in a panic. puter savvy and time to launch a For many of them, their besuccessful appeal of their assessloved homes in gentrifying arment. Although an attorney is not eas of the city have skyrocketrequired to file the most basic of ed in value, leaving them with appeals, many older adults turn inflated valuations they do not Bob Gallo is state to them at significant expense to have the means to pay. director of AARP ensure a positive outcome. Assessor Fritz Kaegi has ac- Illinois. Others, feeling defeated, forgo knowledged that unspecified technical errors led to at least some of these an appeal altogether, and will be stuck with grossly inflated assessments, shrugging these absurdly inflated valuations as tax bills

are due. This greatly increases the pressure to sell that many homeowners in gentrifying areas already feel, and only accelerates the pace of displacement of long-term community members from the neighborhoods where they had hoped to spend their entire lives. It limits the ability of families to pass properties on from one generation to the next. And already struggling families of color are hit with another roadblock to achieving generational wealth. These problems need more attention than just the admission of technical errors by the assessor. We need bold action on property tax reform not only from his office, but also from the County Board of Commis-

sioners and especially the General Assembly in Springfield. A recent AARP survey of older adults from communities of color across Chicago found that nearly half of its respondents have considered moving out of Illinois in the past year, and housing affordability and high property taxes were among the most cited reasons for considering such a move. AARP Illinois calls on our elected leaders to take this problem seriously, and put forward real solutions that allow older adults, especially those in neighborhoods of color, to keep and pass on their property as a way of creating neighborhood stability and building wealth in these communities.

CRAIN’S CHICAGO BUSINESS

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10/29/21 3:38 PM

Advertising Section

PEOPLE ON THE MOVE

Chicago Innovation, Chicago

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

ACCOUNTING

BANKING / FINANCE

LAW

ORBA, Chicago

Wintrust Commercial Banking, Chicago

Ice Miller LLP, Chicago

Ice Miller LLP partner Michael Millikan was elected chief managing partner of the firm, effective January 1, 2022. Michael leads Ice Miller’s Business Group and has focused his practice on private equity, venture capital and mergers and acquisitions. As chief managing partner, Michael’s priorities include the continued expansion of the firm’s existing offices, the exploration of new markets, and the development and implementation of a new strategic plan.

Ice Miller LLP partner Rebecca Seamands was elected deputy managing partner of the firm, effective January 1, 2022. Rebecca is a partner in the firm’s Construction/ Infrastructure practice and has served on the firm’s Board of Directors.

ORBA, one of Chicago’s largest public accounting firms, is pleased to welcome Amber Taylor to the firm’s Audit Group. Amber is skilled in analyzing financial data, preparing individual and business income tax returns and performing various audit procedures.

ARCHITECTURE / DESIGN

Wintrust Commercial Banking is pleased to announce the addition of Jim Vail as senior vice president and team lead at Hinsdale Bank and Trust Company, N.A. Jim will lead a team of Middle Market bankers and focus on accelerating growth and supporting our clients in Illinois. Jim will also leverage his industry knowledge and expertise in Beverage Banking. Jim brings over 23 years of banking experience with JPMorgan Chase in both Middle Market lending and the beverage team (covering 15 states).

FINANCIAL SERVICES

bba Architects, Chicago BBA Architects, a custom, high-end residential design practice in Chicago, welcomes back Jennifer Hense, AIA. Jen was previously with the firm from 1999 to 2017, and now returns as part of the firm’s ownership. At BBA, Jen will work alongside her partners Gary Beyerl and Ed Twohey to lead projects through the design journey. Jen has a Bachelor of Architecture from Ball State University and has been licensed in Illinois since 2005.

IFF, Chicago

CONSTRUCTION Berglund Construction, Chicago Berglund Construction is pleased to welcome Jeffrey Wise, PMP, as Senior Project Manager for our Chicago Building Division. Jeffrey holds a Bachelor of Science in Construction Management and is a seasoned professional with more than 14 years of experience in the industry. He will be leading the construction of our behavioral health expansion project in Massachusetts.

IFF is pleased to announce that Dena Bell has been promoted to Managing Director of Development. Ms. Bell has been with IFF for 7 years and leads all real estate development work, from acquisition through stabilization, for Home First, LLC, an IFF subsidiary which creates affordable, accessible housing for people with disabilities. She is a graduate of the University of Illinois at Champaign-Urbana and has held previous roles with ShoreBank and Related Midwest.

LAW Croke Fairchild Morgan & Beres LLC, Chicago Croke Fairchild Morgan & Beres welcomes Brantley Hawkins as partner to help guide the expansion of the firm’s private funds and investment management practice. Previously, Brantley was a senior associate at Davis Polk & Wardwell where he advised clients on fund formation, structuring, investments, and operations. Earlier in his career, he served as in-house counsel for a New York-based hedge fund, guiding fund formation and supporting regulatory compliance. He is based in New York City.

LAW BANKING Byline Bank, Chicago Byline Bank is pleased to welcome Andrew Bennett to our team as Senior Vice President, Asset Based Lending. With over 25 years of asset-based lending experience, Andrew will continue to develop Asset Based Lending at Byline and build a team of specialists to support businesses throughout Chicagoland. At Byline, Andrew will use his unique expertise to provide financing solutions with an emphasis on growing relationships. Andrew comes to Byline from Fifth Third Bank.

CONSULTING

FINANCIAL SERVICES

Patterson Law Firm, Chicago

HealthScape Advisors, Chicago

IFF, Chicago

HealthScape Advisors is pleased to welcome Dave Nelson as a Principal. Dave advises companies on the development of alternative payment models in Medicare, Medicaid, TRICARE, and Veterans Affairs, and commercial sectors. Dave spent 25+ years providing operational expertise at risk-bearing health plan and postacute care delivery entities in C-suite positions. He also co-founded xG Health Solutions to deliver Geisinger’s healthcare delivery transformation to organizations nationwide.

IFF is pleased to announce that Michael Goldberg has been hired as Senior Vice President of Real Estate Solutions and will lead a team providing consultative services to nonprofits throughout the Midwest. Mr. Goldberg recently served as Executive Director of Heartland Housing, a nonprofit developer of affordable housing. He has an MA in Urban Planning from the University of Wisconsin-Madison and over 30 years of experience designing and implementing effective community development strategies.

Patterson Law Firm, a business litigation firm, has named Michael Haeberle to Managing Member of the firm. Michael is one of the youngest non-founding attorneys to lead a prominent Chicago law firm. Michael focuses on business lawsuits, contract litigation, shareholder disputes, cryptocurrency disputes, and professional negligence. He advises on governance, employment matters and restrictive covenants. He co-authored TROs and Preliminary Injunctions: Handling the Business Emergency (ABA 2021).

BANKING First Bank of Highland Park, Highland Park As one of the five largest privately held banks in Chicago, First Bank of Highland Park is proud to announce Denise Bryant has been promoted to VP, Marketing & Community Outreach. As we continue to expand, Denise is responsible for implementing a marketing and communications strategy focused on building brand awareness. She is also responsible for managing our community outreach efforts which includes volunteer activities, grants/ donations and financial literacy. Denise joined our team in 2007.

P012_CCB_20211101_v2.indd 1

ENGINEERING / CONSTRUCTION Burns & McDonnell, Chicago Douglas Soutter joins Burns & McDonnell as a senior project manager for environmental services focusing on investigating soil and groundwater remediation. Soutter brings more than 25 years of remediation experience, including applying environmental risk systems, developing site-specific remedial objectives, and evaluating remedial alternatives. He has extensive experience with contaminants such as chlorinated solvents, petroleum, asbestos, coal derivatives, heavy metals and pesticides.

FINANCIAL SERVICES IFF, Chicago IFF is pleased to announce that Marina Titova has been promoted to Managing Director of Structured Finance. Ms. Titova has been with IFF for 5 years, leading the agency’s work with New Market Tax Credits investments and coordinating Social Impact Bond projects, maximizing IFF’s impact in the Midwest. She is a University of Iowa graduate and previously worked in similar roles at NCIF and as a credit and risk management professional at ShoreBank and its affiliates, both headquartered in Chicago.

NON-PROFIT

Luke Tanen, Executive Director of Chicago Innovation, has been promoted to President & CEO. His colleague Paul Kitti has been named VP of Events and Marketing. Tanen When Tanen joined Chicago Innovation (CI) in 2010, its only program was the Chicago Innovation Awards, which lies at the heart of CI’s mission to celebrate, educate, and connect innovators in the Chicago region. Working closely with Kitti, Kitti the organization now hosts 50+ events annually and launched four programs focused on mentoring and innovation. Tom Kuczmarski, co-founder of CI, said: “All who have worked with Luke, Paul, and their colleagues know their dedication to helping grow the innovation community in the Chicago region.” Chicago Innovation is celebrating its 20th year.

PROFESSIONAL STAFFING / RECRUITING Brilliant®, Chicago Patrick Hevrdejs is the new Practice Director for Brilliant’s high-level consulting practice, Brilliant Management Resources. Patrick oversees business development and talent acquisition activities and focuses on providing clients with high-level resources and business solutions for accounting, finance, audit and financial systems initiatives. Patrick is a 25-year industry executive from Chicago with regional, national & global experience in management consulting, sales & professional staffing.

REAL ESTATE MB Real Estate, Chicago MB Real Estate is delighted to announce the promotion of Director of Information Technology Damon Brill to senior vice president. Brill expertly addresses MBRE’s varied needs at the individual, department, and company levels, and he leads the IT group in the continued development of a secure, reliable, and innovative information technology environment for all employees. As MBRE grows, it does so centered on the tech and advice provided by Brill and the IT department.

MARKETING StudioNorth, North Chicago Shannon Lee, Vice President of Creative & Engagement at StudioNorth, has been named President of the American Marketing Association Chicago. Under Lee’s direction, the organization is launching efforts to create more value for its members. Lee has been a board member of AMA Chicago since 2018. With more than ten years at StudioNorth, Lee’s experience with brand strategy, creative direction and customer engagement will benefit the entire membership of AMA Chicago, the country’s largest chapter.

WEALTH MANAGEMENT Highview Capital Management, Buffalo Grove Highview Capital Management, a multifamily office and boutique investment advisor, is excited to welcome Jessica Lebron as Senior Client Consultant. Jessica brings nearly two decades of experience across multiple wealth management disciplines. Her primary responsibilities will be delivering exceptional service to the firm’s clients, and Jessica’s commitment to excellence and boundless energy will make her a key member of the Highview Capital Management team.

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Law firm adds space in East Loop tower BY DANNY ECKER Taft Stettinius & Hollister wants its attorneys and staff to spend more time in the office coming out of the COVID-19 pandemic, and it’s adding space in its longtime East Loop home to help lure them in. The law firm last month said it signed a lease expansion at 111 E. Wacker Drive to grow its footprint in the building by about 40% to more than 105,000 square feet, making it the second-largest tenant in the 32-story building overlooking the Chicago River. Taft also extended its lease in the building by nine years to an expiration in mid-2034. The deal stands out as an example of a downtown office tenant growing its footprint amid a public health crisis that has pushed many to shrink with the rise of remote work. Space shedding in the central business district has driven up the vacancy rate to a recordhigh 20%, according to brokerage CBRE, with major questions ahead about how many more companies will cut back on workspace as their current leases expire. But Taft’s new commitment illustrates that some downtown tenants see the need for just as much workspace, if not more, than pre-COVID. Cid Froelich, chairman of Taft’s Chicago office, said the firm has done well financially during COVID with people working remotely, with revenue up and a lack of business travel keeping expenses way down.

“Economically, it’s been wonderful,” he said, “but it’s better to be together.”

EXPANSION

Growing headcount in Chicago drove Taft’s need for more space, Froelich said, as new attorneys joining from other firms—Taft now has more than 120 locally—left them with a space shortage on the 27th and 28th floors, where the firm and its predecessor have been for 15 years. In addition to planning renovations of those two floors, Taft will now occupy the entire 26th floor, where it plans to build out more offices and new conference and reception areas. Froelich said the firm has encouraged its attorneys and staff to work from the office at least three days a week moving forward and that its leadership decided desk-sharing or “hoteling” weren’t conducive to legal work, creating the need for a larger footprint. Taft looked at other buildings in the area, but Froelich said Illinois Center owner AmTrust Realty was particularly flexible with the terms of its lease expansion and extension, and the firm is happy with the building’s recent $25 million renovation that included new outdoor space. “It was not only the more appropriate place to stay, but the more economical one for our clients and for us,” he said. Taft entered the Chicago market in January 2014 by merging with Shefsky & Froelich, which had 70

attorneys at the time. The new deal is a win for AmTrust on the heels of a roughly 20,000-squarefoot expansion the New York-based landlord recently completed with third-party logistics company Traffic Tech, which now leases around 57,000 square feet in the building. The property is now 75% leased, according to brokerage Madison Rose, which oversees leasing at the building. Robert Sevim in the Chicago office of Savills negotiated the lease for Taft. Law firms overall have been a strong point for downtown office landlords during the pandemic, with a handful signing new leases this year and making new commitments to in-person 111 E. Wacker Drive work. The biggest came from Kirkland & Ellis, which inked 416,000 square feet it leases in the a deal for more than 600,000 square tower today. feet at the future Salesforce Tower Other companies have expandat Wolf Point. Fast-growing law firm ed their downtown office footCooley signed a new lease in Sep- prints. In one of the larger growth tember for about 30,000 square feet stories since the start of the pubat 110 N. Wacker Drive. lic health crisis, Savills recently represented insurance brokerage RT Specialty when it more than MOVES Jenner & Block is said to be in doubled its office space to 83,000 advanced talks to sign a new long- square feet and relocated within term lease for around 225,000 the West Loop to 540 W. Madison square feet at its current 353 N. St. Such lease expansions are good Clark St. home, though that would be a major reduction from the news for landlords in a downtown

Former Three Arts Club Building in Gold Coast sells for $44.7M The 1914 landmark on Dearborn Street houses Restoration Hardware and its 3 Arts Club Cafe, which will remain there under a long-term lease BY ALLY MAROTTI Chicago trader Don Wilson’s real estate company has sold the historic Gold Coast building that houses Restoration Hardware and its 3 Arts Club Cafe, for $44.7 million. The buyer is Phoenix-based Fundamental Income, which specializes in sale leasebacks. Restoration Hardware, now called just RH, will remain in the building under a long-term lease. “In this environment, having certainty of who your tenants are and the cash flow of those tenants is attractive. We believe in Restoration Hardware as a tenant,” said Alexi Panagiotakopoulos, Fundamental Income’s co-founder and chief investment officer. “We thought this was a good market opportunity to acquire a beautiful building.” Built in 1914, the roughly 60,000-square-foot building at 1300 N. Dearborn St. operated for almost 90 years as a residence for female artists called the Three Arts Club. Wilson’s firm, Convexity Properties, took over in 2011 and redeveloped it

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into the swanky RH showroom and restaurant it is today. The building is Fundamental’s first in the Chicago area, Panagiotakopoulos said. The firm, which is managed by Brookfield Asset Management, owns assets in 26 states.

PIVOT

The building’s sale comes as somewhat of a course change. Convexity had previously planned to sell the four-story building, hiring Cushman & Wakefield to handle the deal. Crain’s reported it had attracted interest. Then, Convexity dropped that plan in the summer of 2020, when it decided to refinance with a $24 million loan. At the time, RH occupied the whole building under a 20-year lease that expired in 15 years. When RH opened its opulent showroom, store, wine bar and restaurant in the building in 2015, it was the Corte Madera, Calif-based company’s largest flagship location. The project was a head turner. Before RH came onto the scene,

the building needed major repairs, had been empty since 2003 and was not zoned for retail. The space now is extravagant, with trees growing among the restaurant’s tables, a wine vault, sweeping showrooms and a rooftop patio. Just last month, RH opened another of its lavish showrooms in Oak Brook. RH Oak Brook, the Gallery at Oakbrook Center, is the company’s 12th gallery location. Though many retailers took a beating during the pandemic as shopping shifted even further online, those that can provide an experience—one a customer can’t get online—have done well. “We pulled the deal off the market as a result of COVID,” said David Nelson, head of global investments and real estate at DRW, the parent company of Convexity. “We had not planned to market the asset for another year or two, but we received several unsolicited bids and decided that it was the right time to complete the transaction.” Representatives from RH declined to comment.

COSTAR GROUP

Taft wants attorneys and staff to spend the majority of their weeks working in the office, where its footprint is growing 40%

office market still dealing with big space cutbacks and moveouts. Net absorption, which measures the change in the amount of leased and occupied space compared with the prior period, fell by around 400,000 square feet during the third quarter, according to data from CBRE. The absorption losses from the first nine months of 2021 wiped out all of the positive absorption from 2019 and 2020 combined, a sum that included 2019’s record-high 1.7 million square feet of net move-ins.

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ILLINOIS’

A GUIDE TO WORKPLACE WELLNESS HONOREES The 2021 Illinois’ Healthiest Employers Awards are sponsored by Cigna and conducted by health analytics provider Springbuk Inc. in association with Crain’s Content Studio. Here are this year’s winners and top finalists.

2-99 EMPLOYEES

Winner: Connor & Gallagher OneSource Finalists: Shop Smart LLC, Vesta Preferred Realty

100-499 EMPLOYEES

Winner: V3 Companies, Ltd. Finalists: Associated Agencies, Inc., TBI

500-1,499 EMPLOYEES

Winner: Busey Bank Finalists: AssetMark, Collaborative Solutions, LLC

1,500-4,999 EMPLOYEES Winner: Riverside Healthcare Finalists: CNO Financial Group, Syngenta

5,000+ EMPLOYEES

Winner: U-Haul Finalists: Burns & McDonnell, CGI Technologies and Solutions Inc

SPONSORED CONTENT

Winners Announced of 2021 Illinois’ Healthiest Employers Awards Event How to drive economic vitality through a healthy, productive workforce By Jane Adler EMCEE

JIM KIRK

Publisher Crain’s Chicago Business

MODERATOR

LISA BUCKLEY

Vice President, Account Management Cigna Midwest

PANELISTS

PRESENTERS

BRIAN MARSELLA Market President Cigna Midwest

ighlighting best practices, the state’s top corporate well-being programs were recently honored at the 2021 Illinois’ Healthiest Employers Awards. Global health insurer Cigna sponsored the virtual event which this year focused on driving economic vitality through a healthy productive workforce. This is the sixth year Cigna has sponsored the event which was hosted by Crain’s Content Studio, and emceed by Crain’s Chicago Business Publisher Jim Kirk.

ELLIE POLACK

Managing Director, Enterprise Thought Leadership, Cigna

CHIP ROSS

Wellbeing Program Manager, Syngenta

study results are available at healthyworkforce.economist. com. “We wanted to further the understanding of the intrinsic connectivity between employees’ health and well-being, and its role in business success and the revitalization of the U.S. economy coming out of COVID,” Polack said. The research showed: • The definition of health and wellness has shifted. Employees (54%) define health and wellness as a good work-life balance. • Incentives of all types help boost productivity. • Employees (41%) say the biggest threat to business growth is burnout, though fewer senior executives (33%) consider burnout a threat. “We need to prioritize mental wellbeing, preventing burnout, and work-life balance,” Polack said. • Senior executives (90%) say employers have a responsibility to promote health engagement, but measurement of worker health as a driver of business success lacks consistency.

JENNIFER LOLLINO VP, Human Resources ECOS

LEAH MUHICH

Senior Benefits Manager, Empire Today LLC

The social isolation of the pandemic made behavioral health a priority. Empire Today, for example, addressed the issue with such online tools as Cigna’s iPrevail, a digital therapeutics platform and Happify™ to manage stress. Syngenta, a worldwide agri-business with 4,000 employees, focused on employee burnout and launched a training program for executives to identify stress and depression in workers. The company also reintroduced the staff to its employee assistance program (EAP), so they could more fully understand the benefits. ECOS held a six-month brain health workshop. Operations were stopped at all facilities so employees could attend. The program focused on boosting performance by preventing early aging of the brain. Cigna’s Buckley asked about the connection between wellbeing program and business success. Syngenta, which is self-insured, has been able to lower healthcare costs with a 70% participation by employees in the wellness program, according to Syngenta Well-being Program Manager Chip Ross. During the pandemic, Syngenta has even surpassed

A panel discussion followed with three human resources executives. Lisa Buckley, vice president, account management, Cigna Midwest, moderated the discussion.

V3 Companies “The pandemic put employee health in the spotlight and accelerated the continued need to focus on whole person health, both body and mind,” said Cigna Midwest Market President Brian Marsella. “That’s why it’s so important to recognize today’s winners who are prioritizing workplace wellbeing.” Before the announcement of the 15 award-winning employers, Cigna’s Managing Director, Enterprise Thought Leadership, Ellie Polack, presented new company-sponsored research. The study explores the role of employers in driving links between employee well-being and productivity, business success, and overall economic vitality. Conducted by the Economist Intelligence Unit, the study surveyed 1,800 employees and employers which was supplemented with expert interviews and focus groups to provide strong qualitative and quantitative data (Complete

Panelists agreed that the pandemic required them to make big adjustments to their wellness initiatives, pivoting to a mostly online format. Communication was stepped up to maintain employee engagement. “We kept health and wellness top of mind,” noted Jennifer Lollino, vice president, human resources, ECOS, a maker of safer cleaning products. Since most ECOS employees work on site, the company focused throughout the pandemic on creating a work environment that enhances health and well-being. In fact, the company recently achieved a platinum level WELL Certification from the International WELL Building Institute, which rates buildings on the health of their environment. A big benefit during the pandemic was the addition of telehealth and mental telehealth services. Employees have been able to schedule online visits with doctors and therapists. “We promoted telehealth heavily,” said Leah Muhich, senior benefits manager, Empire Today, a flooring company.

Connor and Gallagher OneSource

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its financial goals. “Healthy employees are more productive.” Ross said. Looking ahead, panelists said they plan to build on this year’s success. Syngenta’s Ross advised wellness managers to reach out to employees. “Don’t make them come to you,” he said. “Put a human face on wellness.” Lollino at ECOS encouraged wellness managers to stay creative, using the new tools they’ve adopted over the past 18 months. Empire’s Muhich said, “Smile, a lot. Have fun.” She added that it’s important to be patient with employees. “Everyone is going through something.” Cigna’s Marsella concluded the online event with the announcement of the winners of the

2021 Illinois’ Healthiest Employers Awards. Contestants are evaluated on six areas of corporate health and wellness. The organizations are arranged by size and compete with like-sized groups. The award is powered and scored by Springbuk, a health analytics company. The 1st place winners for 2021 are: Connor and Gallagher OneSource; V3 Companies; Busey Bank; Riverside Healthcare; and U-Haul. In conclusion, Marsella congratulated the finalists and winners. “The COVID-19 pandemic has impacted the workforce and how we work more than anything we have experienced in our lifetime,” he said. “These local companies are driving economic vitality through a healthy, productive workforce.”

U-Haul

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Busey Bank

Riverside Healthcare

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7 Tips for Wellness Program Success By Jane Adler

orkplace wellness programs that get results start with the needs of employees in mind. Here are seven effective ways to promote worker wellness from the finalists of the 2021 Illinois’ Healthiest Employers Awards.

1. KEEP IT SIMPLE, AND ACCESSIBLE.

Busey Bank (1st place, 500-1,499 employees) offers a holistic wellness program, B Well. Employees are allowed to focus on improving their health, well-being and daily habits through benefits best suited for their unique lifestyle. About 95% of Busey’s associates are actively engaged in the B Well program. It incentivizes wellness through a leveled point system and associates are rewarded with prizes, HSA contributions or cash for achieving four levels. Points are accumulated through fun, engaging and frequently refreshed challenges, such as “Keep it Whole,” which suggests replacing two or more processed foods with whole foods at least once a day, and “The Magic of Tracking Your Mood,” which teaches employees to monitor daily what makes them feel good and what triggers bad feelings.

2. COMMUNICATE, COMMUNICATE, COMMUNICATE.

Connor & Gallagher OneSource (1st place, 2-99 employees) suggests using a variety of communication vehicles depending on what works best for your workplace. Tools might include posters hung up around the office, e-mails, messages from the CEO to all staff, and in-person communications during team meetings. Wellness champions from the employee wellness committee at the company encourage and help engage employees while enhancing overall well-being for team members.

3. LEVERAGE VENDORS.

U-Haul International (1st place, 5,000+ employees) advises maintaining a strong relationship with vendors, such as medical insurance providers, wellness program platforms and pharmacy

Shop Smart LLC

Associated Agencies, Inc.

benefit managers. “Make sure you understand and know what is included within your contracts and administrative fees,” says Monique Harty, wellness program manager at U-Haul. With that knowledge, she adds, the company can take full advantage of its current programs before adding any new vendors or programs.

4. KEEP IT FRESH.

Don’t recycle the same program over and over. V3 Companies (1st place, 100-499 employees) launched its wellness program using the basics which worked well. But the wellness committee changes it up very year. “It keeps our employees engaged and excited to see what is new and around the corner,” says Lori Woody, director of operations and facilities at V3 Companies. Challenges are popular with employees, so the company held an “Oktoberfest Walking Challenge” that put employees on teams from different states. Accumulating steps was part of the challenge, along with two other components. The group had to meet virtually and answer ice-breaker questions. And the team had to go out in nature and spell the name of the team in fall leaves and create a picture. “It was one of our most popular challenges,” Woody says.

5. BUILD YOUR WELLNESS PROGRAM AROUND THE LIVES OF YOUR EMPLOYEES.

Riverside Healthcare (1st place, 1,500-4,999) doesn’t expect employees to live their lives around the wellness program. “Employees have so much going on in their lives between work, home, and other commitments that it leaves little time for much else,” says Lynn Christian, human resources employee outreach & wellness manager at Riverside Healthcare. “Keep your wellness initiatives simple and easily accessible.” Initiatives should be integrated with activities employees already do daily. What are some things your employees like to do in their free time? Ask the question of your employees, then find ways to wrap your wellness initiatives around those things. Include

TBI

Vesta Preferred Realty

AssetMark

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family in wellness programs and challenges—a great way to achieve participation.

6. MEASURE PARTICIPATION.

Collaborative Solutions (3rd place, 500-1,499 employees) measures employee feedback and participation regularly. The company saw a steady increase in participation even as the initiatives were held virtually because of the pandemic. The company attributes its high participation rate to offering initiatives and challenges that are employee centric and interactive. These include “Mindful Mondays” that provide guided meditations for employees, company-wide step races and healthy recipe challenges. “At the core of Collaborative’s values is people and we do an exceptional job at always tying in people to every decision,” says Bonnie Dowler, chief people officer at Collaborative.

7. CREATE A COMMITTEE.

Burns & McDonnell (2nd place, 5,000+ employees), which is employee owned, launched a wellness committee to help create and develop company-wide wellness initiatives with representatives from offices nationwide. The committee’s mission is to foster a culture to make healthy living more convenient and accessible for employees. Committee members, or “Wellness Champs,” are responsible for coordinating local wellness events in their offices. In 2020, a “Fitness and Nutrition” community was launched on the company’s intranet. It is a space where employees can share recipes, workouts and other ideas to help lead a healthy lifestyle. Fitness challenges promote wellness and provide opportunities to earn points through an incentive program. During this year’s “Step It Up Challenge,” participants logged more than 316 million steps. Nearly 1,200 employees participated in the annual “Fall into Fitness” workout challenges. “We want to help our employees take ownership of their health to achieve their goals and feel great,” says Burns & McDonnell Chairman and CEO Ray Kowalik.

Collaborative Solutions, LLC

CNO Financial Group

Burns & McDonnell

Syngenta

CGI Technologies and Solutions Inc

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SPONSORED CONTENT

Workforce Health: A Business Imperative to Achieve Economic Prosperity By BRIAN MARSELLA, Market President – Midwest, Cigna

he Cigna Midwest team is proud to recognize companies who are truly making a difference in workplace wellness. They understand that prioritizing workforce well-being is a key driver of business success. We’re proud to support Crain’s Healthiest Employers given our commitment to improving the health, wellbeing and peace of mind of the people and communities we serve. The COVID-19 pandemic changed the world more than any event in recent history, significantly impacting the health and wellbeing of our workforce and the economy. As a result, the inextricable link between individual health and productivity, business performance, and economic prosperity is clear, and now is the time for employers to more actively engage and support the mental and physical health of employees. In a recent survey by The Economist Intelligence Unit (healthyworkforce. economist.com), commissioned by Cigna, both executives and non-executive employees agree that worker well-being is fundamental to business success. Executives in particular view productivity as the top result of a healthy workforce, with more than 90% seeing investments in employee health and wellness having a direct impact on financial performance. Most executives and employees believe that a healthy workforce is critical to economic vitality; 90% of respondents say companies that prioritize health and wellbeing will recover faster than those that don’t. The survey also emphasized the importance of mental health. The combination of fatigue,

burnout, and stress was recognized as the top barrier to business growth. Workers in the Midwest ranked these concerns higher than in other parts of the country: 41% versus 33% in the West, 38% in the Northeast, and 39% in the South. Many continue to struggle with the impacts of isolation, disconnection, and blurring lines between work and home due to the pandemic, and more people are seeking care for stress, anxiety, and depression. Across the U.S. over half (59%) of employees are looking for broader access to mental health benefits. Research results uncovered other key differences related to mental health and worklife balance: • Industry differences: Employees in health care, financial services, and retail industries were most likely to rate fatigue, burnout, and stress as a significant barrier to business growth. • Differences between executives and employees: While 41% of employees indicated that fatigue, stress and burnout are top barriers to business growth, only 33% of executives did the same, representing an 8% difference. • Importance of work-life balance: The view of what best defines a healthy workforce differs between executives and employees. For executives, having access to quality health care ranked highest (51% vs. 44% for employees). Whereas employees prioritized having a good work-life balance (57% vs. 48% of executives, representing a 9 point difference). Employers can play a leading role in addressing the increased need for health and well-being support. This means more

than providing health benefits and wellness programs; businesses also need to help build a culture of health designed to encourage employees to engage in those programs and their personal well-being. This culture should be created with strong leadership commitment and employee involvement, as well as encompass both physical and mental health, reduce stigma and support greater work-life balance.

for broader, more holistic health and wellbeing strategies.

How do we do that at Cigna? One effective tool we utilize is Mental Health First Aid Training. The goal is to help employees recognize and understand common behavioral issues, explore how stigma is associated with mental health, and offer resources for support. We’re also training and certifying our employer clients so that they can best support their own employees. Further, we help create a culture of wellness through our Midwest Well-Being Committee. This team develops regular employee programming focused on whole-person health including healthy cooking demos, exercise classes, financial wellness seminars, and weekly meditation classes. These are just a few of the ways that our Cigna Midwest team prioritizes physical and emotional health for our employees.

Find out more about The Economist Intelligence Unit’s exploration of how a healthy workforce drives economic vitality at healthyworkforce. economist.com.

As more companies return to work in-person, they’re taking steps to address employee concerns about workplace safety. The Economist study found that workers in the Midwest place a high priority on workplace safety and feel more confident about conditions at work compared to employees in the South and West. Companies in our area are more likely to have a majority of employees working in-person which reinforces the need

As the country continues to manage the complexities of the pandemic, it is vital for employers to invest in the well-being of their most valued asset — their people. Healthy, productive employees represent a true competitive advantage for American businesses, and help drive a robust economy.

Source: The Economist, “The Employer Imperative: Driving US Economic Vitality through a Healthy, Productive Workforce,” survey conducted by the Economist Intelligence Unit (EIU), commissioned by Cigna, in January and February 2021 among 1,200 consumers and 600 executives. https://healthyworkforce.economist.com Product availability may vary by location and plan type and is subject to change. All group health insurance policies and health benefit plans contain exclusions and limitations. For costs and details of coverage, contact a Cigna representative. All Cigna products and services are provided exclusively by or through operating subsidiaries of Cigna Corporation, including Cigna Health and Life Insurance Company (CHLIC) or its affiliates.

ILLINOIS’ HEALTHIEST EMPLOYERS

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It’s more than just health beneﬁts data. It’s direction.

www.springbuk.com

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22 NOVEMBER 1, 2021 • CRAIN’S CHICAGO BUSINESS

DuPage County pays off for apartment investors BY ALBY GALLUN There are a lot of ways to make money in real estate right now, but owning—and selling—apartments in the west suburbs of Chicago has turned out to be one of the best. In downtown Naperville, Chicago-based Origin Investments and a partner recently sold One Nineteen on Main, a 49-unit property, for $23.3 million, a sale that returned more than five times their total investment in the property. About three miles north, a joint venture led by Chicago-based Redwood Capital Group sold Dwell at Naperville, with 400 units, for nearly $123 million. That’s 46% more than the venture paid for it in 2017. Up in Wheaton, the Retreat at Danada sold last month for $98 million, generating a hefty return for Los Angeles-based CBRE Global Investors, which paid $73.1

high, with the strong market expected to continue for the foreseeable future. And the western suburbs look like a safer bet right now than the city, where landlords are bracing for higher property taxes. “Generally, DuPage County is probably one of the most soughtafter submarkets” in the Chicago area, said apartment broker John Jaeger, an executive vice president in the Chicago office of CBRE, who arranged the Dwell and Danada sales. “It’s just a sweet spot right now.”

SUBURBAN FLOCK

Apartments have emerged as one of the strongest property sectors in the coronavirus era, especially in suburban markets. Though occupancies and rents in downtown Chicago plunged last year, the pandemic barely registered a blip in the Chicago suburbs. The suburban Chicago occupancy rate increased to 97% in the quarter, its “GENERALLY, DUPAGE COUNTY highest level in four years, according to the Chicago IS PROBABLY ONE OF THE MOST office of Integra Realty ReSOUGHT-AFTER SUBMARKETS” IN sources, a consulting and appraisal firm. THE CHICAGO AREA. The median suburban apartment rent rose to a reJohn Jaeger, apartment broker and executive cord $1.64 per square in the vice president in CBRE’s Chicago office second quarter, up 7% from a year earlier. The median million for the 295-unit property rent was up 8.7% from second-quarabout four years earlier. ter 2019; it was up nearly 14% in the DuPage County is winning the Naperville/Aurora submarket over popularity contest among apart- that same two-year period. ment investors scouting the ChiNaperville and DuPage Councago area for opportunity these ty more broadly offer two things days. Occupancies and rents are apartment investors like: higher

incomes and a large employment base. Origin liked One Nineteen on Main because of its location in downtown Naperville, near restaurants and stores. It offers “the best of both worlds,” said Marc Turner, Origin’s managing director of investment management. “You’re getting that urban living in a suburban environment,” Turner said. Origin and its partner, Chicago-based Randolph Street Realty Capital, sold the property at 119 S. Main St. for $23.3 million to Friedkin Property Group, a San Francisco-based apartment investor with other holdings in the Chicago suburbs, according to DuPage County property records. Origin and Randolph Street paid $8 million for the property in 2012, when it was operated as student housing by North Central College. The school leased the entire building under a master lease. Origin and Randolph Street, meanwhile, owned just the building, leasing the land underneath it from another investor. After the North Center master lease expired in 2017, the venture converted One Nineteen on Main into a conventional apartment building, spending $2.6 million on a major rehab. It spent another $1 million to buy itself out of the ground lease, taking ownership of entire property—the land as well as the building. Including the sale to Friedkin, the property returned 5.4 times the venture’s equity investment and generated a 25% internal rate

ORIGIN INVESTMENTS

Multifamily landlords are cashing out of big properties in Naperville and nearby towns for hefty sums this year. DuPage ‘is just a sweet spot right now,’ a broker says.

One Nineteen on Main in Naperville of return, according to Origin. “It’s the best deal we’ve ever done,” Turner said. Origin and Randolph Street have also teed up another Naperville property for sale: Iroquois Club apartments, a 272-unit complex at 1101 Iroquois Ave. They paid $38 million in 2015 for 238 units in the Iroquois Club, a rental property that had been partially converted to condominiums. The firms then bought all of the condos back, returning the property to its original state. Turner expects the complex to sell for $72 million or more.

HEDGING BETS

The market is working in their favor. Investors flocking to DuPage County include Oak Brookbased Inland Real Estate Group, which bought Dwell for $123 million, the most paid for a suburban multifamily property since

2018, and New York-based TGM Associates, which paid $98 million for Retreat at Danada, county records show. Though many apartment investors, like TGM, focus just on the suburbs, others historically have shopped in the city as well. But some investors are leery of buying there now, with Cook County Assessor Fritz Kaegi re-assessing properties in Chicago. Kaegi’s office has hiked assessments on downtown apartment buildings by 50% or more, in some cases, leaving landlords wondering how much their property taxes, a major cost for multifamily owners, will jump next year as a result. Many investors are waiting to see what happens to taxes before placing a big bet on the downtown market. “It’s just uncertain right now in Chicago,” said CBRE’s Jaeger. “It’s a tougher place to underwrite.”

That Helmut Jahn bankruptcy case? Never mind. The Chapter 7 filing was an attempt to wipe out about $171,000 in unpaid rent owed by the late architect’s company. The parties have settled.

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But Jahn LLC quickly faced questions about its relationship with Jahn Architecture Inc., which wasn’t included in the bankruptcy filing. If the two companies were closely linked and Jahn Architecture was solvent, the legal strategy wouldn’t work: It would be a stretch to argue that Jahn LLC didn’t have the money to pay the rent.

INTERTWINED

At a September hearing, Bankruptcy Trustee David Leibowitz questioned Jahn Architecture Chief Financial Officer Arthur Herbstman about the two companies, revealing that they were more integrated than court filings suggested. The disclosures— and likelihood of more if the case dragged on—may have been enough for Jahn to stop playing hardball with DUS and settle the rent dispute. “They may be two separate companies, but they really are acting

COSTAR GROUP

er who will step up as the firm’s new design leader who can win Less than three months after big commissions worthy of the filing for bankruptcy protection, a Jahn name. But the bankruptcy case turned company owned by the late architect Helmut Jahn has asked a judge out to be more of a legal maneuto drop the case, saying it has set- ver than a sign of major trouble tled a rent dispute with its landlord at Jahn’s business. The company’s bankruptcy attorney insisted that that prompted the filing. The company, Jahn LLC, filed Jahn LLC was a separate legal enAug. 13 to liquidate under Chap- tity from Jahn’s architecture busiter 7 of the U.S. bankruptcy code. ness, which is owned by a different company, Jahn Architecture Inc. Jahn LLC held the lease “THEY MAY BE TWO SEPARATE for the practice’s space in the office building at 35 E. Wacker COMPANIES, BUT THEY REALLY Drive and filed for Chapter ARE ACTING AS A SINGLE ENTITY 7 protection to resolve the dispute with the property’s IN MANY WAYS.” manager, DUS Management, the attorney, Joseph Cohen, David Leibowitz, bankruptcy trustee said in late August. DUS has a $170,643 claim against The move raised questions about the financial condition of Jahn’s Jahn LLC for unpaid rent, according architecture practice after the ac- to bankruptcy filings. The company claimed designer’s death in May. wanted to use the Chapter 7 case to It remains unclear six months lat- wipe out that obligation.

BY ALBY GALLUN

A company owned by late architect Helmut Jahn has settled a rent dispute over space at 35 E. Wacker Drive, center. as a single entity in many ways,” Leibowitz wrote in a text message. “No need to dwell on it in that Jahn and the landlord have settled.” It’s unclear how much Jahn LLC will pay DUS; terms of the settlement were not disclosed. The two parties have agreed to pay Leibowitz $42,000 for his role in the case, with Jahn LLC paying $12,500 and the landlord paying the rest, according to a

motion to dismiss the case filed in U.S. Bankruptcy Court in Chicago. Judge Donald Cassling will review the proposal at a Nov. 2 hearing, according to the filing. Evan Jahn, Helmut Jahn’s son and president of his architecture practice, declined to comment. An attorney for Jahn LLC, a DUS executive and an attorney representing DUS did not respond to requests for comment.

10/29/21 3:43 PM

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WORKPLACE HEALTH

IMPROVING EMPLOYEE WELL-BEING

As the pandemic continues, workplace health has expanded to include a wider range of well-being offerings, involving behaviors and tactics that can take place in an office, at employees’ homes and elsewhere. Three local executives involved with this ever-expanding topic shared their insights with Crain’s Content Studio. How does your organization improve workplace health? Dr. Alvia Siddiqi: At Advocate Aurora Health, our purpose is to help people live well. Guided by our values of excellence, compassion and respect, as well as by our commitment to diversity, equity and inclusion, we care for others—our patients, our communities and our own team members. We recognize that our team members are our most important asset, and that their ability to provide

consistently excellent, safe care to others depends on their own health, safety and morale. Accordingly, we’ve recently added significant investments in workplace health, with a special focus on our frontline health care workers. Thor Thordarson: We focus on caring for the whole person, body, mind and spirit, and believe that health extends beyond the physical to include mental, spiritual and emotional well-being. Our robust

“A SUCCESSFUL WELL-BEING PROGRAM CAN LEAD TO A HEALTHIER AND MORE ENGAGED WORKFORCE, AS WELL AS INCREASED EMPLOYEE SATISFACTION, PRODUCTIVITY, RETENTION AND LOWER COSTS.” —TOM KUNST, UNITEDHEALTHCARE OF ILLINOIS

associate wellness program integrates and localizes programs formed by our national sponsors, Ascension and AdventHealth; associates can earn healthy rewards to pay for eligible healthcare expenses. We’ve also established an interdisciplinary committee to focus on coordinating resources to support our associates’ full lives. Tom Kunst: UnitedHealthcare has considered workplace health a priority for many years as part of our commitment to helping people live healthier lives. Two examples of workplace health programs we offer are the Peloton digital membership and Sanvello digital therapy. Fitness classes delivered through Peloton app membership can help employees of all fitness levels get motivated to achieve their health goals. Through Sanvello, members can access on-demand support for stress, anxiety and depression. This includes tools from

Working Together. Building Integrity.

guided meditation to guided journeys and on demand therapy. Julie Burke: From preventative education, company-sponsored charitable 5K and 10K walks/runs, a subsidized gym membership, weightloss support, a wellness program that includes guided meditation, healthy cooking demonstrations and workshops on handling stress, Klein & Hoffman’s focus is to create an engaged, educated and proactive approach to improving overall workplace health. How do workplace health programs benefit employers? Burke: In today’s market, job seekers search for companies and jobs that can cater to their personal goals and are concerned about their health. Creating effective and mindful health programs demonstrates to employees how committed a business is to their overall well-being. Successful programs can help reduce company health costs, and participating in nonwork activities strengthens employee relationships, which can have a positive impact on the company culture. Kunst: A successful well-being program can lead to a healthier and more engaged workforce, as well as increased employee satisfaction, productivity, retention and lower costs. We’ve seen employers take an increased interest in incentive-based well-being programs because they recognize they can support their employees’ desire to improve their health and create a happier, healthier workforce while reducing costs for employees and the company.

At Klein & Hoffman, we work collaboratively to deliver value-driven structural engineering and architectural restoration solutions. Whether restoring the façade of a historic building, replacing the windows of a condominium, or removing columns to open up a floor plan, Klein & Hoffman is counted on to deliver every time.

NEW_P024_027_CCB_20211101.indd 24

150 South Wacker Drive Suite 1900 Chicago, IL 60606 +1 (312) 251-1900 kleinandhoffman.com

Thordarson: A well-managed wellness program can deliver care that improves health outcomes, increases access to appropriate care, manages costs and helps associates get back to work more quickly when sidelined with illness. And workplace health extends beyond the physical. We’ve established a clinical mission integration department, which supports the very real compassion fatigue caregivers experience--especially acute due to the current pandemic— giving them the opportunity to integrate faith into their lives and work for support.

Siddiqi: An organization’s continued success depends on motivated, productive, engaged employees. Employers need to help their employees get the right care at the right time, which will only become more important as health care costs continue to rise. How do workplace health programs benefit employees? Thordarson: Workplace health programs remind and encourage associates to take time to care for themselves and their own overall health. We often see our associates working so diligently on caring for their patients and their own families—especially over the past year and a half of the COVID-19 pandemic—that they forget to take the time to focus on their own care. Well-being programs also give employees confidence that their employer cares for them, values what they bring to the organization and supports their health and happiness. Burke: Some positive impacts are that they can boost self-esteem, selfworth and enhance physical activity, which can reduce stress. Wellness programs can provide employees and their families with tools to build a healthier lifestyle. Soliciting employees’ feedback about ways to improve on and add to current offerings is also beneficial, since they have a say in their well-being. Siddiqi: Our workplace health programs include ways to incentivize health screenings and encourage employees to select a primary care physician with a focus on wellness visits to address care gaps. We also have incentives to encourage health screenings for our employees’ partners in an effort to improve the overall health of our employees and their families. Kunst: The vast majority of employees want to improve their health and workplace programs can help them reach that goal. Programs can raise an individual’s awareness of his or her own health status and provide support and resources necessary to make it easier to live a healthy lifestyle. Depending on the program, participants may also benefit from financial incentives, such as reduced premiums, financial

10/28/21 8:48 AM

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bringing this expertise to employers in the communities we serve. Such a partnership enables proven results with limited time and budget for the employer in creating a culture of well-being.

JULIE BURKE

Human Resources Manager Klein & Hoffman jburke@kleinandhoffman.com 312-251-1936

contributions to health savings accounts or merchant gift cards. For example, the UnitedHealthcare Motion program enables members to earn up to $1,460 annually by completing monthly fitness challenges and beginning Nov. 1, eligible members will receive access to Peloton app membership for one year at no additional cost. Please describe an example of a workplace health program that you’ve developed, including the objectives, components and results. Siddiqi: Our employee assistance program, or EAP, offers customized solutions centered around counseling for stress, depression, anxiety, substance use, parenting concerns and more. It also goes far beyond these sessions to offer behavior change and wellness coaching and work-life balance resources such as financial consultations and child- and eldercare referrals. Our client companies save more than $11 million in health care claims and human capital by increasing employee retention while reducing absenteeism and people coming to work but underperforming because of illness or stress. More than 86% of individuals served did not require assistance beyond the EAP, and 76% of individuals referred to the EAP by a supervisor remained with the organization. Burke: In 2020, we created a quarterly wellness program which was well-received and attended. We expanded the program in 2021 into a monthly wellness program online. We’ve been working with a local

TOM KUNST

CEO UnitedHealthcare of Illinois thomas_c_kunst@uhc.com 313-348-7089

nutritionist/wellness coach to develop a rotating monthly program focused on creating a healthy mind and body. Every three months we rotate between a guided meditation, a healthy cooking demonstration—our very own Food Network—and healthy workshops with tips on how to incorporate these ideas into everyday life. Our employees who attend enjoy the collaboration and learning new ideas, and it’s fun to do together. Thordarson: Our associate wellness program increases an associate’s understanding of their current health status and risk factors, providing information on resources available to them, such as diabetes prevention, smoking cessation and the EAP. To take part, associates complete a biometric screening and health risk assessment, then engage in customized activities to earn points tracked online. Our last analysis compared those completing the program to those who didn’t; the participants performed better across all metrics. An analysis of the submitted health risk assessments showed a 2% increase in the number of participants classified as healthy in body fat percent. In addition, participants in our diabetes prevention program showed an average decrease of 14 points in glucose levels over two years and a favorable 9% improvement in claims expenses. Kunst: Across our company, it’s our mission to help people live healthier lives. In an effort to also put this mission—and our expertise—to work on ourselves and each other, we launched Stride, an employee well-being initiative that

“IT’S IMPORTANT TO BE CONSISTENT, FOCUS ON WHAT EMPLOYEES REALLY WANT TO ENHANCE OR CHANGE AND CONTINUE TO BE POSITIVE AND SHOW THE BENEFITS.” —JULIE BURKE, KLEIN & HOFFMAN

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ALVIA SIDDIQI, MD

VP - Enterprise Population Health Advocate Aurora Health alvia.siddiqi@aah.org 630-247-6786

helps make healthy living and weight loss easier and more accessible. Our employees have access to a wide array of resources and tools including professional guidance; videos about nutrition, workouts and healthy cooking; healthier food options available at the office; and financial incentives for taking action and living a healthier lifestyle. What’s the number one challenge employers face in creating and implementing workplace health programs and how can it be addressed?

THOR THORDARSON

EVP, COO AMITA Health thor.thordarson@amitahealth.org 224-273-2302

Thordarson: The most daunting challenge is often the sheer amount of time and effort it takes to create a comprehensive well-being program that’s engaging and impactful yearround. Too often, programs are set up simply as an annual event, which doesn’t allow for true change and growth. We’ve found that it’s most important to engage employees when and where they are. To have the most impact, it needs to be convenient for them. We use technology they may already own—a mobile phone app or website log-in—that can be linked to show progress toward their personal goals. We’re now

Kunst: Strategy. I’d say the number one key in creating a successful wellbeing program is making sure the program is designed for that specific workforce. Instead of using a onesize-fits-all approach, an employer must first understand its workforce by reviewing past insurance claims data, employee surveys and health assessments to select wellbeing programs that address their employees’ most common health challenges. Then, the employer can outline short- and long-term objectives, budgets and expected outcomes. Burke: The toughest challenge can be to find a cost-effective beneficial partner who will work with you to customize your program to meet the needs of your staff and business. Once you have your customized program, rolling this out to get staff buy-in and participation can be a daunting task, as it takes a lot of effort and the willingness to change. Introducing a new health and wellness program is intimidating at first. It’s important to be consistent, focus on what employees really want to enhance or change and continue to be positive and show the benefits. Siddiqi: Caring for the whole person and not just a disease is fundamental

Leading the way to well Health plans designed to support wellness goals from start to finish. There’s no limit to what care can do. Visit UHC.com

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10/28/21 8:48 AM

WORKPLACE HEALTH

IMPROVING EMPLOYEE WELL-BEING to managing population health. We’ve implemented innovative solutions to address these important social needs, such as a partnership with technology company NowPow to connect patients with community-based organizations that can address unmet social needs such as safe housing, nutritious food, transportation and stable employment. What’s been the biggest impact of the COVID-19 pandemic thus far on workplace health? Kunst: Stress levels have been rising due to the COVID-19 pandemic and the numerous disruptions in our daily lives. The American Psychological Association reported back in 2020 that we’re facing a national mental health crisis. And it’s not just adults who are feeling it. The report also revealed that our children are experiencing elevated stress. We provide members access to mental health support where they are including in-person, over the phone and digitally through services such as Sanvello. Thordarson: Amidst the growing need for supporting physical and mental health there’s been a noticeable shift in how mental

health is perceived. “It’s OK to not be OK,” is heard often and widely. This awakening has opened the door to powerful conversations and there’s less stigma in reaching out for help. From the very start of the pandemic, our medical and spiritual professionals went to work supporting our associates and physicians. Our behavioral health experts continue to run confidential virtual support groups several times weekly to care for our caregivers.

patient visits; by the end of 2020, that number exploded to more than one million virtual visits. We launched the LiveWell app, a first-of-its-kind digital ecosystem that combines a patient’s integrated medical record with features such as guided meditation, healthy recipes and health news—and it quickly reached more than one million downloads. Growing employer requirements for employee COVID-19 vaccination and/or testing has led to further transformation

“THE COVID-19 PANDEMIC AIMED A SPOTLIGHT ON THE CONNECTION BETWEEN EMPLOYEE HEALTH AND WELL-BEING AND OVERALL BUSINESS PERFORMANCE.” — DR. ALVIA SIDDIQI, ADVOCATE AURORA HEALTH Siddiqi: The COVID-19 pandemic aimed a spotlight on the connection between employee health and well-being and overall business performance. With organizations changing their business models and work environments to embrace more flexible solutions, traditional care delivery also continues to transform and evolve. In 2019, Advocate Aurora completed about 3,000 virtual

around workplace health. Integrative solutions to help businesses stay productive and keep health care costs contained will continue to be in demand in 2021 and beyond. How can mental health and stress management be addressed? Burke: By offering a variety of health and wellness programs that address

Let’s live well to work well

physical, mental and financial health, companies can create an environment that provides a happier and more productive workforce but also help relieve some stress. Organizations should first identify what the stressors are and develop techniques to manage and minimize them. Some companies include an EAP that provides direct access to mental health professionals and resources. Employees can be encouraged to talk with their managers or simply take a break or a quick walk to give themselves time to recharge and decompress from stressful situations. It’s also important for employees to utilize PTO. Kunst: It’s important to recognize that signs of stress aren’t the same for everyone. Some people get angry or depressed, while others have trouble concentrating or making decisions. The good news is that stress is manageable, but you need to learn to recognize triggers, take time for yourself to have fun, incorporate relaxation techniques and welcome support. Stress is a body’s natural defense mechanism, but being under stress for too long can have a serious negative effect on a person’s health. And if you notice stress is becoming an issue for you, please talk with your doctor. At UnitedHealthcare, we help guide people to quality care and offer behavioral health solutions that are available, affordable and attractive to our members. Physical and mental health are intrinsically linked and it’s never been more important to take a whole-person approach to health. And people struggling with behavioral health conditions— from depression and anxiety to eating disorders to substance abuse disorders—may not always recognize when they need help. That’s why our trained advocates provide members with the right information and care options, at the right time. Siddiqi: A first step for businesses might be to consider a voluntary EAP benefit, offering counseling support around issues such as stress, grief, family problems, psychological disorders and alcohol and substance abuse.

Better health, better safety, better bottom line Living well means getting healthier, working safely and being more productive. Together, we’ll customize a solution that’s just right for you and your employees with programs and services that provide integrated care, world-class providers and easy access to must-have virtual care. And your bottom line will be healthier, too.

Learn more at employersolutions.aah.org

Thordarson: Managers should have regular conversations with their associates and know all the resources available. Not all mental health needs can be solved by one solution. Giving associates access to multiple tools allows them the freedom to find what works best for them individually. At AMITA Health, all of our associates and physicians are invited to join a confidential virtual support program moderated by one of our behavioral medicine specialists—we’ve hosted more than 345 virtual peer support groups with more than 1,180 participants since the beginning of

the pandemic. They can review selfpaced stress-management educational modules. They can speak with an EAP specialist, who can refer them to a qualified professional. They can speak with a chaplain for guidance. How can employers track progress and identify gaps in their workplace health programs? Kunst: Although many companies see value and results from their well-being programs, some other companies struggle. This may be due to a poor program design such as relying on a one-size-fits-all approach, a lack of involvement from executive leadership, poor communications (“launch and leave), choosing incentives that don’t engage employees, or forgetting to align the actual workplace with the program. Employers need to remember to design programs with evaluation in mind, you need to be able to measure and evaluate outcomes. The program should have goal and outcomes that are measurable and achievable. Siddiqi: Employers need to leverage their data using a population health approach, which includes harnessing the power of employee health screening assessments and claims data to stratify employees based on risk and create programs tailored for employees across the risk spectrum. To best engage employees and their families, employers need to implement population health management programs that include health outreach, care management and chronic disease management. Thordarson: A health culture audit will provide employers with insight into how their well-being programs are perceived. The survey can be geared specifically to understanding the work environment and what potential barriers to well-being goals may exist. Results can help identify strengths of current programs and guide the actions of a wellness committee or decision-making team to redesign programming and policy to create a more supportive workplace culture. An added benefit is that feedback can be received from all levels of the organization, not just its leadership. What recommendations do you have for employers seeking a partner for workplace health programs? Burke: Begin by asking employees to provide feedback on current programs, or by conducting a health and wellness survey. I’ve found it helpful to partner with our benefits broker as to what programs are available through their business, and

NEW_P024_027_CCB_20211101.indd 26

10/28/21 8:48 AM

SPONSORED CONTENT

ABOUT THE PANELISTS JULIE BURKE is human resources manager for Klein & Hoffman, a Chicago-based firm that delivers architectural restoration and structural engineering solutions. She joined the firm in 2017 and oversees strategy for HR, culture and the firm’s employment brand. She has nearly 20 years of leadership experience developing HR strategies within the architectural, engineering, manufacturing and health care analytics industries. She holds a bachelor’s degree in communications and a professional in human resources (PHR) certificate. Away from work, she is a hospice volunteer for JourneyCare.

to check with health carriers, research online resources available and use professional networks to identify others who have set up successful programs. If you belong to a fitness studio or gym, you can reach out to learn if these facilities will partner on a three-month pilot program so you can do your own research as to what might be beneficial, cost effective and desired by your workforce. Keep the focus on what your employees are asking for and align it with your business strategy. Siddiqi: The COVID 19 pandemic has shown that a trusted health care partner with strong population health management expertise can help employers navigate the increasingly complex workplace health environment. Health costs continue

TOM KUNST is CEO of UnitedHealthcare of Illinois, which offers the full spectrum of health benefit programs for individuals, employers and Medicare beneficiaries statewide. In his current role, he leads the sales, network and product teams in Illinois and northwest Indiana. He began his career with UnitedHealthcare in 1994 and held a variety of roles in sales and account management with increasing responsibilities, most recently as vice president for the company’s Central region. He was named the CEO in Illinois in 2019.

DR. ALVIA SIDDIQI serves as vice president population health for Advocate Aurora Health, one of the 10 largest not-for-profit health systems in the United States. She also serves as chief safety officer for enterprise population health and is an appointed member of Advocate’s health equity council. A boardcertified family medicine physician, she is past board chair and president of the Illinois Academy of Family Physicians and has served on its commission on quality and practice, and its subcommittee on health equity.

well-being programs that fit their specific workforce and produce results. Thordarson: It’s important to choose a partner that can tailor a program specific to an organization’s goals and provide the employee population with a continuum of care personalized to their needs. As one of the largest behavioral medicine providers in the country, we’re uniquely positioned to provide mental and emotional health support with a comprehensive array of services, including virtual visits and in-person support groups and therapy. By working directly with a health care organization, you can leverage resources to access endto-end services for seamless, costeffective workplace wellness.

Siddiqi: As the definition of “workplace” continues to evolve, employee health expectations are also evolving. These newer workplace health needs include routine testing, preventive services such as vaccinations, metabolic screenings and introducing innovative approaches to manage

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Learn more at AMITAhealth.org/Wholecare

Kunst: It’ crucial to work with an experienced partner who has proven results. At UnitedHealthcare, we partner with employers every day to help create and manage customized

Thordarson: Demand will certainly be greater for mental health support. Providing associates with the tools they need to access wellness and focus on what they need, when they need it, will ensure

that associate programs flourish. In addition, the future holds a greater emphasis on caring for body, mind and spirit. As we gain a better understanding of the repercussions each decision has on employee well-being, we’ll create closer ties between workplace health and human capital.

There are many sides to you. There’s your family, your work, your dreams and your health. At AMITA Health, you’ll find medical expertise and compassion for every part of who you are. We call it Wholecare. Because to us, you are more than a set of symptoms or a procedure. You’re the whole package. And that’s how you’ll be treated here. Always.

How do you see workplace health needs evolving in the future? Kunst: I believe we’ll see more employers encouraging their employees to stay active during the workday. For example, employers could encourage exercise like chair yoga that can be done in any setting, encourage breaks for mindfulness and meditation to recharge and lower stress, and offer well-being seminars throughout the year or even virtual cooking demos of healthy alternatives.

remote employees’ health and wellbeing.

You’re the whole package, so we provide Wholecare

“BY WORKING DIRECTLY WITH A HEALTH CARE ORGANIZATION, YOU CAN LEVERAGE RESOURCES TO ACCESS END-TO-END SERVICES FOR SEAMLESS, COST-EFFECTIVE WORKPLACE WELLNESS.” — THOR THORDARSON, AMITA HEALTH to rise, as do employees’ cost-sharing burden, which leads to greater outof-pocket costs. Managing employee health using a population health framework can lead to reductions in total costs of care while also improving the overall experience and health outcomes for the employer’s workforce.

THOR THORDARSON is executive vice president and chief operating officer for AMITA Health, one of the largest health systems in Illinois, where he provides operational leadership. He has more than 30 years of health care industry experience, beginning as a staff nurse and nursing instructor, then later as president of consulting management companies and CEO of Indiana University Health La Porte Hospital prior to joining AMITA Health in 2016. He holds a bachelor’s degree in nursing and a master’s degree in business administration.

Many of the physicians affiliated with AMITA Health are independent practitioners and members of the medical staff at one or more AMITA Health hospitals and are neither employees nor agents of the hospitals. As a result, AMITA Health is not responsible for the care provided by these physicians.

10/28/21 8:48 AM

28 NOVEMBER 1, 2021 • CRAIN’S CHICAGO BUSINESS

CLASSIFIEDS

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

BUSINESS FOR SALE

CAREER OPPORTUNITIES

FOR SALE TURNKEY WELL ESTABLISHED LIGHTING SHOWROOM 35 yrs in business downtown Westmont location $250 thousand call 630 330-0782 for more details.

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CAREER OPPORTUNITIES

GRUBHUB HOLDINGS, INC. seeks Senior Software Engineer in Chicago, IL to design, implement, & deliver technical platforms & products for all constituencies (diners, corporate accounts, restaurants, internal tools). This is a telecommuting position that can be performed from anywhere in the US. Applicants may apply https://www. jobpostingtoday.com/ Ref # 18841.

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Are Kaegi’s assessments too high or too low? ASSESSMENTS from Page 1 headquarters building in Fulton Market. The property sold for $412.5 million in October 2020 and was appraised around the same time at $409 million. Kaegi’s estimated value: $213.6 million. Yes, the assessed values of the 35 buildings Crain’s analyzed jumped from 2020, more than doubling for 11 of them. The increases could result in crushing property tax bills next year if their owners aren’t able to reduce their assessments on appeal. Landlords and brokers say Kaegi is already hurting the city’s real estate market, scaring off investors wary of buying property here given the risk of getting hit with a big tax increase. “There’s a lot of anxiety within the real estate community,” says John McLinden, managing partner of Hubbard Street Group, a Chicago developer walloped with a 75% assessment increase on a Wicker Park apartment building. “It’s driving people to look beyond Chicago.” But the appraisal data shows a clear pattern. In all but four of the 35 properties Crain’s examined, Kaegi’s estimates of value came in below the building’s appraised values. On average, the assessor boosted the values of the 35 properties by 91% from 2020 to 2021, but his value was 24% lower than their recent appraised values. Since his campaign for assessor in 2018, Kaegi has argued that his predecessor, Joe Berrios, severely undervalued commercial properties, placing too much of the property tax burden on homeowners. It’s logical he would raise commercial assessments so much because they were irrationally low to begin with, Kaegi says. He’s been at it since 2019. That’s when he began valuing properties in north suburban Cook County under the county’s three-year assessment process. He reassessed the western and southern suburbs in 2020 and moved on to the city this year. The stakes are especially high given how much of the county’s property wealth and economic strength is concentrated downtown.

TAX BASE SHIFT

The assessor’s work so far has resulted in a major shift in the tax base. He’s hiked commercial values so much that residential property accounts for 37% of total assessed value in five of the eight Chicago townships that his office has reassessed so far, down from 48% in 2018. Nonresidential real estate—mainly offices, apartments, hotels and other commercial property—accounts for 63% of total assessed value, up from 52% in 2018. Kaegi’s critics in the commercial real estate community contend he’s hiking their assessments to score political points with homeowners: By shifting

more of the tax burden onto commercial landlords, he can say he’s limiting property tax increases on homeowners. Kaegi denies he has an agenda, saying he just wants to get the numbers right. “We think we’re baking in a uniform, very fair, consistent reflection of value,” he says. The appraisal data provides a useful measuring stick to determine whether he’s gone overboard. Provided by Trepp, a New York-based research firm, the data covers Chicago properties with $50 million or more in debt that’s packaged into publicly traded mortgage bonds such as commercial mortgage-backed securities or securities sold by Fannie Mae. A routine part of the lending process, appraisals are used by lenders mainly to determine how much they should lend on a given property. Though not as strong of an indicator as a property’s sale price, appraisals are generally considered reliable estimates of fair market value for commercial buildings.

DOWNTOWN DATA

The Trepp data includes the city’s tallest skyscraper, the Willis Tower. Kaegi hiked the value of the 110-story building by 78% from 2020, to $1.24 billion, but his estimate was still 30% lower than the building’s appraised value of $1.78 billion in March 2018. The assessor’s value is also below the $1.3 billion that Willis Tower’s owner, New Yorkbased Blackstone Group, paid for the property in 2015 before launching a major redevelopment of the building. A few blocks away, Kaegi’s

and retail. Sales of big downtown properties plunged as the pandemic disrupted the market in 2020; they have picked up this year, but brokers say some buildings aren’t selling because uncertainty over property taxes. Parang also disputes the entire premise of the Crain’s analysis, saying it’s not fair to compare the assessor’s estimated values with appraised values, or even with the actual prices that investors pay for properties. The valuation methodologies are different, he says. “They’re not apples to apples,” Parang says. The reality is that appraisers and assessors are both seeking the same answer: what an investor would pay for a property. State law requires that assessors try to get as close as possible to a property’s “fair cash value,” or what it would sell for in an arm’s-length, nondistressed transaction. Assessors also use aggregate sale prices in what are called “ratio studies” to test how well they are hitting the mark. Parang also worries that Kaegi’s increases will hurt not just landlords, but downtown businesses. Most big office landlords pass along their property taxes to their tenants, so any additional cost will be absorbed by them. Parang cited a 2019 study from Jones Lang LaSalle showing that property taxes eat up 21.7% of an average Chicago office tenant’s occupancy cost, more than in eight other peer cities, including New York and San Francisco. The good news for commercial landlords is that Kaegi doesn’t have the final say on what a Cook County property is worth. Land-

“WE THINK WE’RE BAKING IN A UNIFORM, VERY FAIR, CONSISTENT REFLECTION OF VALUE.” Fritz Kaegi, Cook County assessor

office placed a value of $854.2 million on the Old Post Office, the massive office development straddling Ida B. Wells Drive. The building was appraised at $1.17 billion when it was refinanced in 2019. The appraisal data doesn’t tell the whole story. Because it comprises a small sample of big properties mainly downtown, it’s hard to extrapolate it to draw broader conclusions about the accuracy of Kaegi’s assessments for smaller buildings, say, in Chicago neighborhoods. It’s also unfair to conclude that the assessor’s values are too low when compared with appraised values of properties in 2018 and 2019, before the coronavirus pandemic, says Farzin Parang, executive director of the Building Owners & Managers Association of Chicago. But recent data and sales in Chicago suggest that commercial property values in the city have held up, if not increased, over the past two years, with the possible exception of hotels

lords have found more sympathetic ears at the county Board of Review, a separate body that hears appeals from property owners. The board has slashed Kaegi’s assessments the past two years, limiting the overall tax hit on commercial buildings in the suburbs. The Trepp data shows that Kaegi overshot the values on four properties. In the most extreme example, his office estimated that McClurg Court, an apartment complex now known as Arrive Streeterville, is worth $343.8 million, versus an appraised value of $184.6 million in July. But Kaegi points out that his office is valuing properties en masse, relying on general market data to come up with a figure, unlike an appraiser, who has access to property-specific data directly from the building owner. And though his estimates may be low on average, he’s not unhappy with the result. “We’re certainly much closer to the mark than we were before,” he says.

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CRAIN’S CHICAGO BUSINESS • NOVEMBER 1, 2021 29

Some companies are more willing to spread out across multiple, smaller floors footprints—things like having to build out more redundant employee spaces such as kitchens and conference rooms—may not be the dealbreakers they once were, says Robert Sevim, vice chairman in the Chicago office of real estate services firm Savills.

WEIGHING OPTIONS

Many companies are now hunting for space that makes employees feel compelled to be there, he says, a shift from a pre-pandemic era in which more tenants prioritized efficiency and fitting many people into a large office at the lowest cost. That could open the door to companies leasing multiple floors in a building it would have considered too small of a footprint before. “This may be less of a decision driven by finance and more of a decision driven by (human resources),” Sevim says. “Tenants that might not have ordinarily been focused on more than one type of building can look at different ones now and make sense of them.” Companies looking to shrink their office footprints in the wake of the pandemic was part of real estate investor Andy Farbman’s thesis in paying $16.4 million for 100 N. LaSalle St., a 25-story vintage office building with typical floors that are just 6,200 square feet. He’s trying to lure tenants that may be looking to upgrade from other older buildings downtown, but also reduce their square footage to account for fewer people in the office every day.

COSTAR GROUP

540 W. Madison St. But some companies are now their floor-plate sizes. As many open to spreading out across mulcompanies rethink the purpose tiple, smaller floors. One recent exand design of their workspace for a ample: Supply chain management post-COVID world, some develop- company Havi Group is finalizing ers contend bigger may not always a deal to relocate from a pair of 45,000-square-foot floors at its be better. “For certain types of tenants, a current building in Downers Grove larger floor plate just doesn’t work, to a 200,000-square-foot Sterling and the smaller floor plate provides Bay building under construction at advantages,” says Russ Cora, who 345 N. Morgan St. in Fulton Market oversees leasing in Chicago for Ster- with floors that are half the size. At 306 W. Erie St. in River ling Bay. The developer’s proposed building at 360 N. Green St., which North, a seven-story building with would have floors spanning a more 15,000-square-foot floors, Chattamidsized 25,000 square feet instead nooga, Tenn.-based freight logistics of the previously approved 40,000, firm U.S. Xpress earlier this year is meant to entice professional ser- leased 40,000 square feet across 2½ vices and law firms that tend to floors instead of taking a single level avoid the extra-large office footprint, elsewhere. “They liked the idea of being a Cora says. The pandemic doesn’t appear bigger part of the building as opto have taken large swaths of sin- posed to being a small player in a gle-floor office space out of style. big pond,” says North Wells Capital CEO Jim Fox, whose firm owns the building and has “FOR CERTAIN TYPES OF TENANTS leased up 86% of it since the beginning of 2020. . . . THE SMALLER FLOOR PLATE The sheer number of smaller tenants in the PROVIDES ADVANTAGES.” market that may take Russ Cora, who oversees leasing in Chicago smaller individual floors for developer Sterling Bay is also significant: Since 2019, 75% of all new, reThe developers of a new building newed and expanded leases in the completed last year in the Fulton central business district have been Market District at 167 N. Green signed by tenants smaller than St. with floors that are around 10,000 square feet, according to 45,000 square feet apiece have research from Cushman & Wakeinked a series of deals this year. field. The disadvantages that have traInsurance brokerage RT Specialty in October leased two contig- ditionally kept companies away uous 42,000-square-foot floors at from buildings with smaller office OFFICES from Page 3

Southfield, Mich.-based Farbman Group in September bought the 25-story vintage office building at 100 N. LaSalle St. on a bet that there will be more takers for its 6,200-square-foot floors. “I believe wholeheartedly that every single tenant is in play,” Farbman says. One lingering downside for landlords with smaller floors is that leasing space to a slew of smaller tenants as opposed to a handful of larger ones is that it tends to devalue properties. Most investors are averse to the risk of having too many small tenants, as re-leasing space that is vacated can be more difficult. But some landlords are now embracing smaller tenants to fill up their tenant rosters amid a soft market. At a new office building

with 14,652-square-foot floors under construction at 1045 W. Fulton St., the developers recently saw a significant increase in tours after they opened up their search to smaller users in addition to trying to reel in a big anchor for the building, says Madison Rose Founder Matt Pistorio, whose firm oversees the building’s leasing. “There’s something to be said for tenants to be able to control their own floor and control their own identity on the floor,” Pistorio says. “If you’re a 15,000-square-foot tenant, you can do that.”

After slow start, Michigan now surpassing Illinois in recreational weed sales increase,” says Brisbo, who credits lower prices with “attracting consumers to the regulated market.” from 152 a year ago. Headset, a research firm that Michigan’s recreational marijuana sales in September were 109% tracks retail cannabis sales data in higher than a year earlier, while Illi- multiple states, says the average pretax price per item in Illinois, nois’ were up 80%. “Since the very beginning of the which has the highest marijuana cannabis legalization process, Gov. prices in the country, is $41.05, Pritzker has centered equity and so- compared with $18.53 in Michigan. Michigan marijuana buyers also cial justice at every stage of creating this new industry: Maximizing sales pay lower taxes: 16.6%, compared and revenue took a back seat to re- with 16.25% to 41.25% in Illinois, depairing the harms of the failed war pending on the type of product and on drugs and investing in the peo- local taxes. Because of the increase in stores, ple and communities that suffered the most under flawed policies of it’s easier to find weed in Michigan the past,” Toi Hutchinson, the gover- than Illinois. Research firm Anderson Economic Group estimated “OUTSIDE OF THE CHICAGO AREA, IF 95% of the population in Michigan YOU HAVE TO DRIVE SUBSTANTIALLY, IT was within 30 minCAUSES CHALLENGES THAT AFFECT SALES.” utes of a pot shop, compared with Kelly Nielsen, vice president of insights and analytics 90% of Illinoisans, at cannabis research firm BDSA based on 2020 data. The gap likely nor’s top cannabis adviser, says in a widened with the increase in retail statement. “We will continue work- locations in Michigan. “Availability matters,” says Kelly ing closely with the General Assembly, stakeholders and community Nielsen, vice president of insights and analytics at cannabis research leaders to achieve those goals.” Michigan’s licensing process pro- firm BDSA, which is based in Boulduced an explosion in competition der, Colo. “Every time we turn among growers and retailers cut around, there are more doors in retail prices roughly in half, says Michigan. In Chicago and the subAndrew Brisbo, executive director urbs, it’s easy to find cannabis. Outof Michigan’s Marijuana Regulatory side of the Chicago area, if you have Agency. “We saw sales dramatically to drive substantially, it causes chalCANNABIS from Page 3

P029_CCB_20211101.indd 29

lenges that affect sales.” Illinois capped the number of recreational licenses at 500, but it’s nowhere close to that goal. The original 55 medical-marijuana dispensary operators have been allowed to add a new recreational location for each license they held. The state recently held lotteries to grant 185 new licenses, but they’ve not been awarded yet. Illinois awarded 40 “craft-grow” licenses for smaller cultivation operations, none of which have come online. It hasn’t awarded new large cultivation licenses beyond the 21 originally issued for medical marijuana in 2015.

IN LIMBO

Andrew Miller, a Chicago-based consultant at Anderson Economic Group, predicts Illinois’ sales strength will recover with new stores. “As the market continues to mature, and when the latest batch of licenses gets issued, I’d expect we’d see a significant increase in sales in Illinois,” he says. It’s unclear when that will happen. A Cook County judge who is hearing a half-dozen cases challenging the Illinois application process has ordered the state not to formally issue licenses to lottery winners. Once licenses are awarded, it likely will take three months or more for new stores to get up and running, which could mean mid-2022 before demand really takes off.

MICHIGAN PUNCHES ABOVE ITS WEIGHT IN WEED A slower-than-expected rollout of new retail stores in Illinois has allowed Michigan to take the lead in sales of recreational marijuana. The reversal of fortunes reflects different approaches to regulating cannabis. STATEWIDE MONTHLY SALES $124.9 million $140 million 120 100 80 60 40

$121.7 million Illinois

20 0

Michigan Jan. 2020

April

July

Oct.

Jan 2021

April

July

Source: Government filings

Nielsen says Michigan has an advantage that goes beyond the number of stores. “More broadly, the penetration of consumers in Michigan is higher than in Illinois,” she says, based on BDSA consumer surveys. “Penetration in Michigan is about 44% of the adult population. In Illinois, it’s about 39%. In general, Michigan has more a culture of cannabis. It will always have a slightly higher population that’s a consumer.” It’s one reason that BDSA sees Michigan’s cannabis sales remaining ahead of Illinois’ over the next five years. The firm estimates Michigan will have $2.77 billion in recreational marijuana sales in

2026, compared with $2.57 billion Michigan for Illinois. Illinois So far, Illinois’ wobbly start isn’t hurting state tax collections, but it caused Cook County to come up short of forecasts. The state’s budget for the fiscal year that began July 1 calls for $90 million in revenue, up from $71 million in the previous year. In the first quarter, Illinois collected $25 million. This year, Cook County will collect $11.1 million in revenue instead of the $13.9 million it budgeted, which it attributed to “a slower-than-anticipated rollout of retail licenses.” It expects to collect $16.8 million in the coming year.

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30 NOVEMBER 1, 2021 • CRAIN’S CHICAGO BUSINESS

PRIVATE EQUITY from Page 3 to service mountains of debt will play out in a professional services. The private-equity model also calls for portfolio companies to be sold again in a few years or taken public. “I don’t know if the model is going to be able to break sustainably into a people-driven business,” Whitman says. “We’re intrigued, but we have not figured that out.” If it does work, private-equity ownership promises to accelerate consolidation of the hyper-fragmented accounting industry by giving acquirers cash currency to do deals. That means the trend could affect all sizes of firms, many of which are too small to attract private-equity notice. Among 45,000 accounting firms, only nine have at least $1 billion in revenue and the 400th largest has only $6.5 million, according to industry tracker Inside Public Accounting. “It is groundbreaking for the profession,” says Charles Weinstein, who’s made an early bet by leading his New York-based accounting firm, EisnerAmper, into a private-equity transaction that closed in August. “It’s a sea change for what it means for the ownership of accounting firms.” EisnerAmper, with offices on the East and West coasts, wants to expand to Chicago and elsewhere through acquisitions. With the deal, “We think it’s going

to happen in the very near future,” he says. Because CPA firms aren’t allowed to take on outside investors or, depending on state laws, surrender control to them, private equity is investing in their consulting units under newly defined entities. Nevertheless, Weinstein says, the buyer ends up with effective control of the firm. He won’t disclose details of the transaction, but Kent Dauten, a managing director of Chicago-based Keystone Capital, which invests in professional services firms, says private-equity stakes in them tend to account for about 60% of ownership, compared with up to 85% in the manufacturing sector.

BREAKING THE CODE

So far, private-equity shops pursuing accounting industry investments are doing it from New York City and Silicon Valley, but that will change, according to Allan Koltin, a Chicago-based accounting industry dealmaker. “As more private equity comes in, the big-bigs are going to follow, and that goes up to Blackstone. As soon as one breaks the code, it’s like a heat-seeking missile.” Koltin says he’s involved in three pending deals, some of which could be announced soon and lead to rollups that involve Chicago accounting firms. Private equity is clearly eager to

deal. A record 6,000 transactions totaling nearly $800 billion are expected in the industry this year, almost double 2013 figures, according to PitchBook data. “There’s so much money sloshing around in private equity, they’ll take a flyer on almost anything,” says Jim Peterson, an accounting industry commentator. Besides investing in firms, private equity is chasing nonaudit pieces of Big Four accounting firms. The Financial Times reported on Oct. 19 that Clayton Dublier & Rice agreed to buy PwC’s tax and immigration services business for $2.2 billion— the biggest such transaction by PwC in two decades. Sikich’s Geier says he gets at least two calls a week from private-equity suitors. While cautious, he acknowledges his industry is ripe for outside capital. Firms are heading in two directions, he says, aiming to be in the top 50 by revenue or remain momand-pop outfits. In between is a killer, as firms compete for talent and the wherewithal to pay for it. Already, accounting’s traditional audit business, sometimes known as assurance, is feeling the competition for new graduates, says Andrew Imdieke, an assistant professor of accountancy at the University of Notre Dame. “There’s much high demand for data analytic skills. That area is growing more than assurance is.”

JOHN R. BOEHM

Private equity is investing in accounting firms, and accountants are wary

Christopher Geier is CEO of Sikich. TowerBrook Capital Partners, EisnerAmper’s investor, declined to comment on the deal. Based in London and New York, TowerBrook in 2005 was spun out of the (George) Soros Asset Management Group and invests in financial services firms, among others. It once owned Jimmy Choo, the high fashion shoe retailer. “What they’re doing is essentially ending up as employees,” says Michael Minnis, a professor of accounting at the University of Chicago Booth School of Business, of sellers. As for Weinstein, Geier says: “His life is going to be a lot different than it was before.”

Koltin says private equity is focused on accounting firms with annual revenue of between $75 million and $750 million—from about the 15th to the 65th largest, which besides Sikich includes Plante Moran here. Plante Moran says it’s not interested. For firms that are, junior partners will have an easier time of monetizing the value of their ownership, instead of waiting until retirement. But as any accountant should know, there’s a cost to that. “They’re the ones left holding the performance bag,” Peterson says. “They’re going to have to earn that out.”

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CRAIN’S CHICAGO BUSINESS • NOVEMBER 1, 2021 31

Breakup of Amita Health expected to spark a new round of M&A dealmaking founder of health care consultancy Third Horizon Strategies. “This 15 hospitals and AdventHealth, puts two M&A targets back out affiliated with the Seventh-day into the field.” So which chains are expected to Adventist Church, with four. The market looks different than make a play for Ascension and Adit did when the deep-pocketed ventHealth hospitals? Any new acquisition targets national chains first joined forces. (Even Ascension tripled in size here could be off-limits for a large here with the 2018 acquisition of system like 26-hospital Advocate Presence Health.) And it’s unclear Aurora Health due to antitrust conhow they’ll fare against fast-grow- cerns. And six-hospital NorthShore ing local powerhouses like North- likely is focused on its recently anwestern Medicine and NorthShore nounced merger with three-hospital Edward-Elmhurst Health. University HealthSystem. Meanwhile, the Rush UniverSt. Louis-based Ascension and Altamonte Springs, Fla.-based Ad- sity System for Health has been ventHealth say the split will enable expanding into AdventHealth’s them to “more nimbly meet the west suburban territory. And then changing needs and expectations there’s Northwestern, which added of consumers.” But that agility Palos Health this year. A growing Catholic chain like comes at a price. The organizations will lose economies of scale as oth- Peoria-based OSF HealthCare er health systems come together could look to absorb some of to improve bargaining power with the Ascension-owned hospitals, insurers and suppliers, eliminate sources say. In addition to enterredundant expenses, consolidate ing the local market last year when underutilized service lines and exit merged with Little Company of Mary Hospital in south suburban pand physician networks. Industry observers are split on Evergreen Park, OSF already runs whether it makes sense for Amita’s two former Presence Health hosowners to fly solo in the competi- pitals, which it acquired in 2018 tive Chicago-area market. But they just before Ascension scooped up agree on at least one thing: Local the other 10. Northwestern declines to comchains likely are angling to buy ment on such speculaAdvocate Aurora “MOST OF THE BIGGER INSTITUTIONS tion. says “it’s not unusual ARE STILL TRYING TO GROW VOLUME in today’s environment for all providers AND SCALE WITHIN THE CITY, BUT THE to be having conversations, but there PICKINGS HAVE BECOME SLIM.” have not been any formal discussions.” David Smith, founder, Third Horizon Strategies And NorthShore says Amita facilities, particularly those it’s “always looking at potential that have large numbers of patients opportunities in the marketplace with well-paying private insurance. that allow us to provide the highest “Most of the bigger institutions quality care and services to our paare still trying to grow volume tients and communities.” Rush and and scale within the city, but the OSF didn’t respond to requests for pickings have become slim in comment. Amita’s owners haven’t indicatrecent years,” says David Smith, AMITA from Page 1

ed that any of the hospitals are up for grabs. In fact, they’ve said very little about the impending separation—including how long it will take to fully unwind the partnership and whether its 52,000-member accountable care organization will remain intact. However, in an Oct. 21 joint statement, Ascension and AdventHealth said there will be “no disruption to patient care.” Dwindling patient volumes in recent years have led Amita to consolidate certain service lines at some facilities to save money on surgical equipment, space and staff. While the cost-cutting strategy also is intended to improve care by increasing patient volume at select facilities, it’s unclear what effect the split will have on such changes.

REVENUE

Amita reported about $3.6 billion in 2020 operating revenue— roughly one-quarter of which was attributable to AdventHealth. The 46-hospital chain said in a recent filing that its four Amita hospitals accounted for about 7% of the system’s $12.6 billion in operating revenue last year. Meanwhile, 146-hospital Ascension said in a recent memo to bond investors that its 15 Amita hospitals accounted for about 12% of the system’s $27.2 billion in operating revenue for the fiscal year ended June 30. Provided the joint operating company made smart operating changes and divested services that weren’t profitable, “they’ve probably created some runway for themselves,” Smith says. But factor in the time spent integrating 10 Presence hospitals and navigating leadership turnover, followed by the pandemic response, Amita might not have had much time to position itself for the future. Even so, industry observers

WHEN ONE BECOMES TWO Kane

Cook

DuPage

Chicago

AMITA HOSPITAL LOCATIONS Chicago-area hospital chains likely are angling to buy Amita Health facilities, particularly those that have large numbers of patients with well-paying private insurance. Note: There are two medical centers located at 1555 Barrington Road in Hoffman Estates. Source: Amita Health

agree that many Amita hospitals are appealing acquisition targets for the region’s expanding chains. “Do I think they’re strong enough to operate on their own? Yes, those are two pretty good organizations that are well-run nationally,” says Brian Sanderson, managing principal of Crowe’s health care services group. “It will come down to whether they want to continue the investment in this area.” AdventHealth operates “in some pretty good payer mix areas and so they were in a position of relative strength prior” to the formation of Amita, Sanderson says. “If the water of mergers and acquisitions is rising, it’s a question of whether the island they felt safe on before has

Will

Ascension hospitals AdventHealth hospitals Another location, Amita Health St. Mary’s Hospital Kankakee, is located outside the Chicago area.

become too cramped.” In such a case, AdventHealth could look to form a new joint operating company with another faith-based organization here, sources say, pointing to the success of its 25-year-old joint venture with CommonSpirit Health, Centennial, Colo.-based Centura Health. While CommonSpirit’s national office is located in Chicago, the 140-hospital chain doesn’t have any hospitals or clinics in Illinois. Keith Parrott, who joined Amita as CEO in January 2020, will lead Ascension’s local hospitals and clinics while Thor Thordarson, currently Amita’s chief operating officer, will lead AdventHealth’s local hospitals and clinics.

Supply chain woes disrupt homebuilding and remodeling business in Chicago SUPPLY CHAIN from Page 1 for a new house in Highland Park months earlier in the construction process than he normally would even think about it. An Arlington Heights handyman got used to having to drive around to all the big box hardware stores to find enough matching parts to complete his clients’ jobs. “Balancing inventory has never been this difficult,” says Bob Fisher, third-generation owner of Evanston Lumber. “We tell our customers that lead times have gone from reasonable to outrageous.” Fisher, who also owns Marvin Window Gallery in Lake Bluff, says order times for doors and windows have gone from around 3 to 4 weeks to “16 or 20 weeks, maybe more.” Also growing fast: prices. Fisher

said some window lines have had “five price increases at 5% each since 2019. Normally it would be about 3.5%, once a year.” In a recent article in the MIT Sloan Management Review, transportation scholar Yossi Sheffi explains that supply chain shortages resulted from manufacturers cutting back, either because of reduced demand for their products or because of COVID-era work rules, just ahead of a surge in demand for many consumer products, including those that improve the home, pushed by stimulative cheap money. “They made less when they didn’t know people would suddenly demand more, and now nobody can catch up,” says Jonathan Rubenstein, whose Highland Park remodeling and building firm is called Jar Corp. As a result, “everything’s more expen-

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sive and everything’s hard to get,” he said. On a large-scale remodel like the ones Jar specializes in, the homeowner is expecting a package of fine finishes and materials. Rubenstein draws up a proposal and, in ordinary times, the client might take a few weeks to go over it before accepting.

PRICE CHANGES

That used to be OK, Rubenstein says, because “my vendors would hold the pricing they gave me for anywhere from 30 days to 12 months.” In their pinched state now, his vendors “will hold their prices for seven days. That price might go up before (the homeowner client) opens my email.” Kida says that in mid-October, a well-known cabinet brand— which Kida wouldn’t name— announced a 9% price increase

that would take effect Nov. 1. “Normally the cabinet companies would give us 60 to 90 days’ notice, and we’d wrap up our projects,” Kida says. “This time, it’s ‘Boom, done, we’re going up.’” Some repairs require a near-instantaneous turnaround. When a water heater fails, “you need to have a new one the next day, maybe two days,” says Stephen Adamitis, president of American Weathermakers, a Northbrook heating and air conditioning firm. Typically, Weathermakers would have two 50-gallon water heaters in its supply warehouse and reorder each time one leaves the building to be installed in a client’s house. Because of the supply chain slowdown, Adamitis says, he’s been keeping as many as eight 50-gallon heaters in the warehouse, just in case.

Customers have largely been willing to go along with longer wait times and higher prices, these industry sources all say. They attribute that to two factors: The supply chain has been a high-profile problem, so it’s on homeowners’ radar screens and doesn’t surprise them, and most people don’t see the prices coming back down anytime soon. Homeowners “have been understanding,” says Jack Casey, an Arlington Heights handyman who calls his firm Handy Jacks. “They know what’s going on out there. They’ve seen the container ships parked in the ocean (near) Los Angeles.” When he tells them a sheet of plywood that he used to be able to get for $15 is now $48 and he’ll need seven sheets for their bathroom, as he did for one recent client, “They know why,” Casey says.

Vol. 44, No. 44 – 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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