Crain's Chicago Business

CRAIN’S LISTS: Here’s who topped our latest charts of highest-paid execs. PAGE 16

Wendy Abrams

MEDLINE: Buyout boosts Mills family’s fortune and philanthropy. PAGE 3

Michael Pykosz, CEO of Oak Street Health

CHICAGOBUSINESS.COM | JUNE 14, 2021 | $3.50

BACK TO THE

Southport Avenue is one of Chicago’s primary boutique retail corridors.

BOUTIQUE

Three Chicago shopping meccas emerge to a new retail reality BY ALLY MAROTTI

JOHN R. BOEHM

WITH SHOPPERS VENTURING OUT AGAIN, neighborhood retail corridors in Chicago are seeking paths to post-COVID prosperity.

A look at shopping strips on Damen, Armitage and Southport avenues reveals the challenges of adapting to a retail landscape altered by the pandemic.

Though the recipe for success will vary by street, the key will be having a good mix of retailers. They’ll need restaurants to drive foot traffic, brands that got their start online and creative leases. Gone are the days of long leases for large spaces and retail models that rely See RETAIL on Page 27

Another cost of ransomware: A rising cyber-insurance tab Companies’ policy premiums jumped 35% in Q1

The most rapidly growing area companies in 2020 had a decidedly tech bent PAGE 19

Who’s next?

In March, CNA Financial became the latest in a string of corporations, including several in Chicago, to have their computer systems crippled by hackers demanding ransom to restore them.

Unlike most other corporate victims, the amount the Chicago-based commercial insurer paid to the information-age version of sea pirates became public: $40 million, according to Bloomberg. That’s the highest known ransom paid in the U.S. so far in what has become an alarming wave striking companies large

and small. CNA isn’t the first business to be struck, and it won’t be the last.

With the Biden administration alarmed enough to label the emerging threat a national security issue rather just a criminal matter, companies face higher costs whether or not they’re victimized.

Federal officials are urging firms to upgrade and harden their systems, which will increase the cost for what already is an expensive line item for most businesses.

And the price of insuring against such attacks is sharply rising as well, with insurers bearing See RANSOMWARE on Page 34

JOHN R. BOEHM

BY STEVE DANIELS

CNA reportedly paid $40 million in ransom.

NEWSPAPER l VOL. 44, NO. 24 l COPYRIGHT 2021 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED

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VENTURE CAPITAL

ONE CHICAGO

“Mega-rounds” turbocharge Chicago’s tech sector. PAGE 8

An architectural critic’s take on the two-tower project. PAGE 26

6/11/21 2:15 PM

2 JUNE 14, 2021 • CRAIN’S CHICAGO BUSINESS

As downtown reawakens, new questions emerge

L

issued by Mayor Lori Lightfoot suggests, recovery is the quintessential work in progress.

There are some promising signs.

Metra, for instance, reports that ridership has reached 17 percent of normal levels, which sounds low but is considerably better than the 10 percent figure it held at most of last year. The pedestrian count and hotel occupancy were up to about 40 percent of normal in mid-May, according to the Chicago Loop Alliance. The Fulton Market area is showing signs of exploding as a biotech center.

Even better, as my colleague Alby Gallun recentIN THIS POST-PANDEMIC WORLD, ly reported, the downtown apartment leasing market PEOPLE WILL HAVE CHOICES. in March completed its best quarter ever with an increase will fully arrive “maybe in Sepof 2,667 in occupied units. Like in tember,” the boss says. the just-completed high-rise I can So it goes in downtown Chisee out my window that was an cago as we enter Phase 5 of the empty hole a year ago. Reviving COVID-19 recovery plan, with the downtown housing market everything open and ready for is absolutely critical to Chicago’s regular business. Or not. As a heart because, even if the occudetailed downtown recovery plan ike a grove of trees sprouting anew after a Chicago winter, something has reappeared in my office. Not leaves but colleagues here at beautiful 150 N. Michigan Ave., a new one or two almost every day now after better than a year existing in Zoom City.

It’s different than it was. Not one of them in a business suit, and one even donning shorts. And, so far at least, it’s pretty irregular. In one day, not the next. Weekly staff meetings and the like still occur remotely rather than around a conference table. The new normal

pants are working remotely, they’ll be eating, shopping and otherwise spending locally.

On the other hand, it’s quite clear now that, as in my office, it’s going to take until at least September for the downtown to seriously start attracting back the 600,000 of us who worked there pre-pandemic.

Farzin Parang, executive director of the Building Owners & Managers Association, says the number of people working in downtown offices still was only 11 percent of occupancy as of midMay. With vaccines, that should increase quickly after summer vacation season, he says. “In their personal lives, people have been out and around now for a while. If you have 40,000 in Wrigley Field, you can have six in an office.” His bottom line: “Chicago will come back. But are we losing competitive position to the Nashvilles of the world?”

The Loop Alliance’s Mike Edwards’ occupancy estimate is a little higher now, around 20 percent,

GREG HINZ ON POLITICS

with most companies having at least a few people in on a given day.

But he expects that, at least for a year or two, only about 80 percent of people will be back. That means downtown will have to somewhat reposition itself as more of a cultural, entertainment and residential center and less of an office complex.

I also heard something else from Parang and Edwards—and even more so from the two aldermen who represent most of downtown, Brian Hopkins, 2nd, and Brendan Reilly, 42nd. That’s the importance of getting the schools open on time this fall (so parents can commute) and, above all, of Lightfoot getting a handle on the city’s soaring violent crime rate.

“There’s some serious money

on the sidelines . . . kicking tires” about retail leases along the now 30 percent-empty Magnificent Mile, Hopkins put it. “But they want reassurance” that influxes of large gangs of rowdy teens and young adults—and shootings in almost every area—are waning. In other words, an end to things such as the 300-person brawl that broke out at Madison and Michigan earlier this month. “The primary focus needs to be on public safety,” says Reilly, who urges Chicago to “do what most other cities are doing” and put police on el trains.

That sounds like good advice to me. In this post-pandemic world, people will have choices. If they’re scared to come or live here, the decision will be easy.

New biz tax hikes will reduce income and opportunity

D

espite positive surprises on the revenue side and imposing four taxes on businesses, Illinois lawmakers couldn’t balance the state budget for the 21st year in a row.

Included in the tax changes, the new budget decouples Illinois from the federal 100 percent bonus depreciation deduction.

By raising the cost of doing business in Illinois, the changes will lower personal income and could reduce opportunity for the state’s idled workers.

The COVID-19 economic shock did not hurt Illinois revenues as much as expected and then federal stimulus came to the rescue.

Illinois collected more revenue in the 12 months since the pandemic began than it collected in the 12 months prior.

Illinois leaders could have used that revenue bump to make significant fiscal reforms for a brighter future. Instead, they imposed $655 million in new business taxes

lawmakers did on Illinois with the most impactful of those four new business taxes: a rollback of the Federal Tax Cut and Jobs Act’s 100 percent bonus depreciation deduction.

Reducing this tax write-off means cash-starved Illinois businesses will be denied the space necessary to invest and create new jobs.

That’s because “100 percent bonus depreciation” is a tax incentive that allows a business to immediately deduct the purchase price of eligible assets, such as machinery, rather than write them off during the life of those assets.

The Tax Cuts and Jobs Act had doubled the bonus depreciation deduction for qualified depreciable property from 50 to 100 percent.

Before undertaking a costly investment, businesses consider whether the value of future cash flows from the investment will exceed the initial cost. Since 2017, the tax law changes have the initial cost of FEWER ASSETS OWNED WILL MEAN reduced new business investments LOWER INCOMES FOR ILLINOISANS. by allowing businesses to deduct the full cost from their tax liability immediately requested by Gov. J.B. Pritzker. rather than over several years.

Illinois is among the slowest Evidence from more than 2 to recover job losses caused by million corporate tax returns COVID-19. Taxing new business shows bonus depreciation investments in a state that is still resulted in substantial increasreeling from the pandemic shock es in eligible new investments was a bad move, but it is harder across the country. There was a to fathom how state leaders could 10.4 percent boost between 2001 see higher revenue, pass four and 2004—during an economic business tax increases and still expansion—and then a much drop a budget containing at least higher 16.9 percent boost during a $482 million deficit. Then to add the Great Recession. The increase insult to that injury, state lawmakin investment also led to higher ers gave themselves each a $1,200 employment growth. The largest raise, doubled their office allowimpact was among small firms ances and added a bump for the because small firms with low cash governor’s office, too. holdings are highly responsive to Raises are supposed to reward a policy that immediately generjob performance. Here’s a closates cash flows. er look at the job Pritzker and

P002_CCB_20210614.indd 2

The policy means longer-lived assets will experience a larger change in the present value cost of investment. So bonus depreciation has larger effects for industries in which businesses invest more, on average, in longer-lived assets such as necessary buildings, machinery and other equipment.

It matters because fewer assets owned by Illinoisans will mean lower incomes for Illinoisans. The economy’s ability to increase its productive capacity by adding to its supply of capital, technology and workers will determine the size of Illinois’ economy.

ORPHE DIVOUNGUY ON THE ECONOMY

For the past two decades, personal income grew less, the labor market underperformed relative to other states and the state’s population shrank. A policy that raises the cost of doing business in Illinois could harm the state’s economic performance.

A state such as Illinois that fails

to keep up with increasing fiscal liabilities because of a shrinking tax base should do everything it can to be more competitive. State leaders just made it less so.

Crain’s contributor Orphe Divounguy is chief economist at the Illinois Policy Institute.

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6/11/21 11:53 AM

CRAIN’S CHICAGO BUSINESS • JUNE 14, 2021 3

A new fortune emerges As Medline’s Mills family cashes in, pols and charities will no doubt come a-calling

BY STEVEN R. STRAHLER

JOHN R. BOEHM

Headlines touting a newly realized family fortune in the Pritzker range no doubt caught the eye of political and philanthropic fundraisers as the family that’s helmed Medline Industries for four generations sold a majority in a $34 billion leveraged buyout.

And while the transaction announced June 5 Wendy Abrams is likely to lure new callers to the Mills family’s offices, there’s at least one descendant of Medline’s founder who is already a familiar check-writer in civic and charitable circles.

A decade ago, Wendy Abrams was lending her voice and her money to environmental causes.

She and her husband, Jim, funded the Abrams Environmental Law Clinic at the University of Chicago Law School. A few years earlier, with the Field Museum and City Hall, she had organized the Cool Globes installation of 120-some model Earths along the lakefront, a “Cows on Parade”-type exhibit with a climate-change edge.

Abrams’ public profile may have receded a bit since those earlier days when she established herself as the most vocal and active patrons in the otherwise quite private Mills family. But her

Angela Ford is the head of the Obsidian Collection, which is converting the old Lu Palmer mansion.

BLACK HISTORY, BRICK BY BRICK An unprecedented push to save historically significant homes is on IN CHICAGO AND THE SUBURBS RIGHT NOW, there are seven homes of historical Black figures that are in some stage of being turned into a museum or cultural center that honors the former residents. It’s an unprecedented number, and an eighth may be in the wings.

While they are mostly in early, even embryonic, stages and some may not advance beyond being an idea, it’s clear this is a singular moment, amid the nationwide reckoning over race.

“It’s time for us to tell our stories to our children in our voices,” says Angela Ford, the executive di-

rector of the Obsidian Collection, a not-for-profit archive of Black cultural materials. In April, the group paid $1 million for the former home of activists Lu and Jorja Palmer on King Drive. Obsidian has a $4 million plan to rehab the 12,000-squarefoot colossus into a Black-centered museum, library and meeting hall.

Ford cites a favorite African proverb: “Until the lion tells the story, the hunter will always be the hero.”

The city’s commissioner of planning and

BY DENNIS RODKIN

“IT’S TIME FOR US TO TELL OUR STORIES TO OUR CHILDREN IN OUR VOICES.” Angela Ford, executive director, Obsidian Collection

See LANDMARKS on Page 33

See MILLS on Page 33

O’Hare waits for business travel recovery Chicago’s air hub trails leisure-focused competitors

BY JOHN PLETZ As air travel begins to recover from the pandemic, O’Hare International Airport is lagging some rivals in the middle of the country as business and international flights take a back seat to domestic leisure trips.

Capacity at O’Hare, as measured by the number of seats that carriers are scheduled to fly in July, is about 20 percent below the same month in 2019, according to data from OAG, an aviation-research firm headquartered outside London.

While that retraces most of the

P003_CCB_20210614.indd 3

60 percent drop last year in the worst of the pandemic, other airports are bouncing back faster.

Denver International Airport is essentially back to pre-pandemic capacity, while Dallas-Fort Worth International Airport is down just 1 percent, and Houston’s George Bush Intercontinental Airport is down 7 percent.

“We’re seeing a frenzied recovery in leisure, which means the worst-case scenario of an extremely slow recovery that could take years no longer seems like a possibility,” says Joe Schwieterman, an aviation expert and professor at DePaul University. “But O’Hare

has more of a focus on business travel than many of the other hubs. It’s still predominantly oriented toward east-west travel, which has recovered less quickly than routes to the Sun Belt.”

O’Hare is Chicago’s economic engine, and its recovery will have a major impact on how the city and the region emerge from the pandemic. The July flight schedules underscore O’Hare’s dependence on corporate and international travel, which account for two-thirds of activity at the airport’s largest carrier, Chicago-based United Airlines.

If business and overseas flying See O’HARE on Page 32

AIR TRAVEL IS TAKING OFF AGAIN Change in scheduled capacity, by total seats in July, compared with schedules during the same month in 2019.

BY CARRIER AT O’HARE

TOP 10 AIRPORTS

United Airlines -25% American Airlines

Denver 0% Dallas-Fort Worth -1% Orlando -4% Las Vegas -6% Seattle-Tacoma -13% Atlanta -17% O’Hare -20% Los Angeles -28% New York-JFK -31% San Francisco -47%

-16%

Delta Air Lines -26% Spirit Airlines -32% Frontier Airlines All carriers

-20%

5%

Source: OAG

6/11/21 4:10 PM

4 JUNE 14, 2021 • CRAIN’S CHICAGO BUSINESS

CHICAGO COMES BACK

How do we choose to spend our time now?

As we transition back to in-person life this summer, let’s take the wisdom we’ve gained living in isolation during the pandemic to guide our choices

The city says Chicago buildings generate 70 percent of local greenhouse gas emissions.

City’s green building initiative confronts post-COVID realities Cutting downtown’s carbon footprint has become an even steeper challenge

BY DANNY ECKER As downtown landlords figure out how to invest in their buildings for a post-pandemic world, Mayor Lori Lightfoot’s administration is mulling how to get them to throw some money at combating climate change while they’re at it.

That’s the idea behind the building decarbonization working group the city announced this month, a collection of local stakeholders from the real estate and other related communities meant to come up with policies and programs for reducing energy consumption among Chicago buildings, which the city says generate 70 percent of local greenhouse gas emissions. It’s a step toward the city’s target of powering all local buildings with renewable energy by 2035, an ambitious mark that’s in line with the goals of the 2015 Paris Agreement.

But the effort is now set against a complicated backdrop for owners of commercial properties, which have more immediate issues to sort through as people and companies rethink how they use buildings in the wake of COVID-19. Tasked with issuing a recommendation by the end of the year, the working group over

the next several months will lay the groundwork that could force commercial landlords and tenants to take on significant new costs over the next decade to green up their properties.

It’s making some real estate investors that are already grappling with the post-COVID recovery nervous about what an environmental push will mean for their bottom line and has others wondering how to ensure the financial burden of reaching the city’s goal will be equitable.

“Right now the biggest concern is the economics of it,” says Ron Tabaczynski, director of government affairs for the Building Owners & Managers Association of Chicago and a member of the city’s new working group. “We want to make sure the approach is going to be realistic.”

JOE CAHILL

WILL RETURN NEXT WEEK

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FOOTING THE BILL

Much like the broader push to slow the effects of climate change, Chicago’s effort has widespread support but little agreement on who foots the bill to attack the problem, or how those who do can recoup their investment.

Getting commercial property owners to replace energy inefficient lightbulbs or install smart heating and cooling systems in their buildings, for example, wasn’t always an easy sell when downtown was booming before COVID. Now convincing an See GREEN on Page 13

Chicago Comes Back is a weekly series on ChicagoBusiness.com providing leadership insights to help your business move forward, written by leadership consultants Emily Drake and Todd Connor.

Drake and Connor facilitate Crain’s Leadership Academy. Drake is a licensed therapist, owner of the Collective Academy and a leadership coach. Connor is the founder of Bunker Labs and the Collective Academy and is also a leadership consultant.

Check out previous installments at ChicagoBusiness.com/comesback.

TODD CONNOR: Memorial Day weekend marked Chicagoans’ annual pivot from the hard-fought winter into the expansive (hopefully) summer ahead. It’s that time of year when we remember a big reason we love our city—“But the summers!” Gathering with family and friends, as we emerge from COVID and the restrictions that we have endured, added another layer of jubilation for many. I could feel the reprieve in the air.

And yet plunging back into the future without stopping and designing what that should look like in our lives feels . . . irresponsible?

EMILY DRAKE: Cautionary, for sure. One of the pieces we’ve found interesting is the American Time Use Survey from the U.S. Bureau of Labor Statistics, which tracks the way Americans spend their time. The data is from 2019, and I’m eagerly awaiting the 2020 results to see how COVID changed all of this. In 2019, 24 percent of employed people did some or all of their work at home on days they were working, and 82 percent did some or all of their work at their workplace. I’m eager to see how the shifts we’ve all experienced personally manifest in shifts we bring professionally, particularly with what wasn’t working for us before the pandemic.

TC: Also interesting: Workers employed in management, business and financial operations, 37 percent, and workers employed in professional and related occupations, 33 percent, were more likely than those in other occupations to do some or all of their work from home on workdays. So, you begin to see a pre-COVID distinction of how managers and those working in professional services had flexibility and time to work from home before COVID, something we now see as a luxury and even a standard for many organizations, as returning to the office gets mixed reviews from employees. I think there was also empathy cultivated for the privilege it is to work from home, particularly as we are now clear on which work roles in our economy are “essential.”

ED: And that those essential roles illuminated inequities we can now grapple with from a place of awareness versus ignorance. Multiple jobholders were nearly twice as

ISTOCK

CURTIS WALTZ/AERIALSCAPES.COM

BY EMILY DRAKE AND TODD CONNOR

likely to work on an average weekend day or holiday as were single jobholders: 58 percent, compared with 31 percent. And gender roles reveal something, too: In families with children under the age of 6, on an average day women spent 1.1 hours providing physical care such as bathing or feeding a child, while men spent 27 minutes. The simple story in 2019 was that higher-wage earners had more time at home, more control of their schedule, weekends and that the division of labor inside the home revealed women doing most of the work.

TC: It does prompt a question: Given everything that happened in 2020, what will the data reveal for how things have changed? In 2019, socializing and communicating, such as visiting with friends or attending or hosting social events, accounted for an average of 38 minutes per day and was the next-most common leisure activity after watching TV. Individuals spent twice as much time socializing on weekend days, 58 minutes, as on weekdays, 29 minutes.

ED: I think the American Time Use Survey may have to change the questions altogether, especially since socializing and leisure happened virtually. It’s interesting to consider what socializing actually means. Getting to know someone on the other side of the country, whom I wouldn’t have met otherwise, makes me wonder: Well, now that I’ve engaged with them virtually, do I fly and see them?

Can you build connection simply

online? On the division of labor in the home, I know anecdotally things have changed for many of us. The Better Life Lab has done some interesting research here in the field of work-family justice and encourages an audit to observe which tasks are being picked up by whom and to have an open conversation about the balance of those tasks.

TC: Doing work at home to raise a family is still unpaid labor and is disproportionately borne by women. Although LGBTQ families tend to find greater role parity, women in two-parent heterosexual partnerships, about 60 percent of families, spend an average of six to eight and a half hours a week on unpaid tasks. I imagine those hours exploded during COVID with work from home and school from home. What we need is to pause and take an audit: How are we spending our time now?

ED: And as you said earlier, more important, how should we spend our time going forward? Our workplace will draw us in, undoubtedly, but let’s not lose the opportunity to make use of what we have been through, to take that hard-fought wisdom and ensure we are creating an equitable and restorative environment at home, making intentional choices about how we work and holding space for intentional choices about how we spend our free time, as well.

What we measure matters—and what we measure moving forward may—or should?—be different.

6/11/21 1:31 PM

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6 JUNE 14, 2021 • CRAIN’S CHICAGO BUSINESS

DON’T WAIT UNTIL IT’S TOO LATE!

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Illinois projects get $300M in federal bill A proposed measure would also provide funding for plans to overhaul CTA stations and extend the 606 Trail

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Republicans tend to back as traditional infrastructure.

With the return of earmarks, many Illinois reps got a chance to add to the bill. Republicans joined in, with projects in downstate areas such as Taylorville, Peoria, Decatur and Granite City making the earmark list.

Metra didn’t get all of the up to $25 million it wanted in preliminary requests for its zero-emissions test, but it pulled away with $19 million.

The CTA el stops at Irving Park on the Blue Line and Belmont and Loyola on the Red Line are each scheduled to get $3.5 million to $4.3 million in work. And Rep. Mike Quigley, D-Chicago, got $1.5 million included in the bill to extend the 606 Trail east from Ashland to Elston, providing

Metra is a big winner, in line to get at least $19 million to test zero-emission locomotives. So are proposals to extend the 606 Trail, extensively rehab three Chicago Transit Authority el stations and create the Patriot Path bikeway in Lake County.

Those are among more than $300 million in “member designated projects”—aka “earmarks”— that Illinois congressmen have been able to include in a new multiyear surface transportation bill being finalized by the House Transportation & Infrastructure Committee.

Nothing has yet passed the House, much less the Senate. But with the Biden Administration nearing an end to compromise talks with Republicans over a much larger infrastructure bill, the earmarks EL STOPS AT IRVING PARK AND are likely to remain in what- BELMONT ARE EACH SCHEDULED ever emerges, be it a compromise or a different mea- TO GET $3.5 MILLION TO sure Democrats could pass with a simple majority vote $4.3 MILLION IN WORK. of both chambers via a technique known as budget reconcil- bikers an easy pathway past the Kennedy Expressway and Union iation.

“For years, Congress has by- Pacific tracks.

Rep. Brad Schneider, D-Deerpassed solving the toughest problems, allowing the transportation field, got $9.8 million for the Lake system to fall farther and farther County bike path; Rep. Sean Casinto disrepair and dysfunction ten, D-Downers Grove, secured while not meeting the mobility $4.8 million to rebuild the inand access needs of the Amer- tersection of Roosevelt and Naican people,” committee chair- perville Roads in Wheaton; and man Peter DeFazio, D-Ore., said Reps. Bill Foster, D-Geneva, and in moving to approve the pending Lauren Underwood, D-Naperlegislation. “I am proud to bring ville, teamed up to designate $15.5 the committee together today to million to extend 143rd Street in consider this transformational Plainfield.

The legislation does not indicate bill.”

Overall, the bill proposes to which House members providspend $547 billion in coming ed which recommendations. But years on the type of road, transit, many members list their selecrail and related projects that even tions on their websites.

6/11/21 12:14 PM

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talking

MANUFACTURING

...

OUR PATH FORWARD: IT’S OUR MOMENT TO LEAD

I

llinois manufacturers have long been on the forefront of spurring societal progress. Our state’s 12,400 manufacturers employ over 572,000 people creating products used in every facet of society—from chemical, food and pharmaceutical to machinery, fabricated metal, plastics, electronic products and much more, Made in Illinois is weaved into our lives. By any measure, Illinois manufacturing is a global powerhouse.

Our manufacturing success is built on a determined entrepreneurial tradition. Smalland mid-sized manufacturers, 99% of the sector, are locally owned and located in every community across our state. These companies have demonstrated their deep commitment to manufacturing excellence and global competitiveness, and the results show. Yet, significant trends are testing all manufacturers.

DAVID BOULAY

Every generation stands at a crossroad due to massive societal challenges. The pandemic and Great Recession are a one-two punch that lay bare three vital challenges for manufacturing.

First, U.S. productivity is flat over the past DAVID BOULAY is president decade. More output with less input means of IMEC, a public-private being competitive, increasing wages and partnership committed to economic opportunity. Flat productivity driving growth through fundamentally challenges our competitive enterprise excellence. He position. If productivity challenges aren’t holds a bachelor’s degree enough, a talent time bomb keeps ticking. in operations management, Known as the skills gap, or body gap, there an MBA and a doctorate in workforce development. are simply not enough people to fill open jobs while the baby boomers are starting to retire— creating a new variable in the future of our workforce. On top of these challenges, the supply chain slack disappeared in the pandemic. Every supply vibration results in delays, cost increases and uncertainties. We must rethink every aspect of manufacturing to change the trajectory of these trends and maintain our competitiveness.

President IMEC dboulay@imec.org

Crossroad moments also spur innovation, collaboration and grit. We can decide to wait for things to return to normal, or we can choose to reset our patterns of thinking. Illinois makers have proven time and again that they’ll persevere. It’s what we’ve always done.

Given this backdrop, “Every generation stands at a we were inspired to compile a book crossroad due to massive societal of best practices, challenges.” practical tips and insights. “Made in Illinois: A Modern Playbook for Manufacturers to Compete and Win” is a working tool to stir new thinking and spark improvement and innovation in manageable, bite-sized topics. It’s meant to encourage us to harness our amazing manufacturing tradition and to take action to ensure our competitive future.

We learned three general themes while pulling this playbook together: • Manufacturers, more than ever, will need to own upskilling the workforce. The skills we develop today will drive the business results of tomorrow, and we must lead.

• Performance improvement remains an unrelenting focus on the right processes while embracing new technologies to create processes that exceed customer needs.

• A leader mindset must harness passion, agility and learning.

Illinois manufacturers are doers. By the nature of who we are, Illinois manufacturing is poised to make the right decisions to guarantee our success. Our path forward will be chosen by the ways we address the productivity, talent and supply chain challenges. As we navigate out of the pandemic, together we’ll work together to show the world that innovation and longevity is Made in Illinois.

P008_CCB_20210614.indd 8

Welcome to the mega-round Nine-figure funding turbocharges local growth companies

Jett McCandless

BY JOHN PLETZ When Jett McCandless set out to raise more money for logistics-software company Project44 in April, he received term sheets from 11 investors in three weeks and closed a $202 million deal with Goldman Sachs in 16 days.

“It was lightning fast,” says the founder and CEO of Project44, which had raised $100 million in December.

The number of “mega-rounds,” or nine-figure deals, has surged as the pool of bankable Chicago companies and the amount of capital available to them has expanded. There have been six financings of $100 million or more so far this year, compared to five in all of 2020, according to data from PitchBook, a Seattle-based research firm.

Nationwide, the volume of $100 million deals is on a record pace.

Chicago is among the leaders in growth rate of nine-figure deals.

But its total count of mega-deals lags other large cities, according to data from Pitchbook. New York and Los Angeles have recorded 58 and 32 deals worth more than $100 million so far this year, respectively, while Boston companies landed 41 mega-rounds. The San Francisco Bay area had 128 such deals, more than twice that of any rival.

“Everyone’s going to be behind Boston, LA, New York and the Bay Area,” says PitchBook analyst Kyle Stanford. “When you talk about investors looking beyond the Bay Area, Chicago is an important place. It has a good stable of VC firms there. There’s a venture-capital culture already built in. Cities like Chicago, Austin and Seattle have those ecosystems.”

MATURING MARKET

Chicago is more in line with these smaller cities that have become tech hot spots. With five $100 million deals, Austin already has matched its total for the previous two years, according to PitchBook. Washington, D.C., has reported seven deals so far, eclipsing its total of five last year.

Seattle had six deals, trailing last year’s total of 10.

“It’s still a handful, but it’s further testament to the maturation of this market, of Chicago being able to build larger companies,” says Richard Ginsberg, a partner at law firm Cooley who specializes in technology and startup deals.

When promising young Chicago companies amass bigger war chests, they buy time to grow and increase their chances of going public and remaining independent longer.

“It’s allowing for smaller companies to attack bigger markets and compete more aggressively on their own against more entrenched competitors, as opposed to having to make the decision to

NATIONWIDE, THE VOLUME OF $100 MILLION DEALS IS ON A RECORD PACE. CHICAGO IS AMONG THE LEADERS IN GROWTH RATE OF NINE-FIGURE DEALS. BUT ITS TOTAL COUNT OF MEGA-DEALS LAGS OTHER LARGE CITIES, ACCORDING TO PITCHBOOK.

BIG DEALS ON THE RISE The number of venture capital ‘mega-deals’ of $100 million or more have increased during the pandemic. $100 MILLION+ VENTURE-CAPITAL DEALS

6

In Chicago

5

3 2

2

1

1

2015 2016 2017 2018 2019 2020 2021

sell to that competitor,” says Steve Maletzky, head of equity capital markets for William Blair.

A larger stable of venture-backed companies is critical to Chicago improving its standing as a tech center, boosting high-paying jobs and feeding other parts of the region’s economy, such as real estate and professional services. The IPO market remains strong, and Ginsberg predicts more public offerings by Chicago companies.

Tempus, a genomic data-analytics company founded by Eric Lefkofsky, and Relativity, a legal-software maker, which employ more than 1,000 workers each and are seen as IPO candidates, recently reaped big rounds of growth capital.

Tempus raised $200 million in December at a valuation of $8.1 billion.

Relativity sold a minority interest in the company, now valued at $3.6 billion, in March to private-equity giant Silver Lake for an undisclosed price. The Chicago-based company has done two acquisitions this year.

ActiveCampaign, a marketing-automation software company, raised $240 million in an April deal led by hedge fund giant Tiger Global. “It is all about increased optionality for building a long-lasting business,” says CEO Jason VandeBoom.

CAPITAL SWELL

The rise in $100 million checks is the result of a massive increase in capital seeking above-market returns in a low interest-rate environment. Venture-capital funds

Deals this year* by metro area 128

San Francisco 58

New York 41

Boston

32

Los Angeles Washington, D.C.

7

Chicago

6

Seattle 6 Austin 5 *Deals as of June 3 Source: PitchBook

raised a record $79.8 billion last year, according to PitchBook.

The median valuation for companies raising money soared past $100 million for the first time as hedge funds, once content to invest in public companies, have moved down market to fast-growing private companies. The result has been a surge in “unicorns,” or venture-backed companies that are valued at $1 billion or more, in Chicago. Among them are Project44, ActiveCampaign, Cameo and Relativity.

“There’s a fair level of inflation in valuations,” Ginsberg says.

“In the past, maybe those deals would be $50 million instead of a $100 million.”

There’s no sign of a slowdown in big venture deals, says Ira Weiss, a partner at Hyde Park Venture Partners, an early investor in FourKites, which raised $100 million in March and competes with Project44.

“There will be more $100 million rounds,” he says. “We’ll probably have two to four per quarter.”

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10 JUNE 14, 2021 • CRAIN’S CHICAGO BUSINESS

EDITORIAL

Telling an underappreciated story

JOHN R. BOEHM

W

e live in a time when Americans are reckoning—haltingly, belatedly, imperfectly— with our past and present dysfunction on matters of race, reflecting on our nation’s original sin of slavery and attempting to mitigate its lasting aftereffects. Part of that conversation has involved a debate around which aspects of our collective past should be commemorated in the form of monuments and museums, and which ones, in a modern light, should be discarded or at least reconsidered.

Against that backdrop, an unprecedented effort is underway in and around Chicago to preserve vestiges of the city’s physical landscape that help tell an underappreciated story: namely, the contributions that Black men and women have made to the creation of this great city— and, likewise, the ways in which this city shaped them.

As Crain’s Dennis Rodkin reports in this week’s issue, there are seven homes of historical Black figures in Chicago and the suburbs that are in some stage of being turned into a museum or cultural center to honor the former residents. It’s an unprecedented number, and an eighth may be in the wings. As Rodkin notes, most of these are in early, even embryonic, stages, and some may not advance beyond being a notion. But the fact that these sites are even being considered for their historical value says something about the shift in perspectives that’s taking place as Chicago takes stock of its past.

Among the homes being considered for some sort of landmarking, preservation or museum treatment are the North Ken-

The former home of activists Lu and Jorja Palmer at 3656 S. King Drive. wood home of blues giant Muddy Waters as well as the West Woodlawn two-flat where Emmett Till, the teenager whose family had moved north to Chicago from Mississippi during the Great Migration, was killed by white racists while visiting relatives down south in 1955.

Both of their stories, perhaps preserved through museums that depict the way they lived, could say a lot, but in very different ways, about how Black people influenced Chicago and vice versa. For a panoply of reasons, however, preserving these historic homes is an enormous challenge—and,

in some ways, the byzantine process of winning landmark status from government overseers is the easy part. The various private and sometimes family-backed organizations that are seeking to memorialize Chicago-area notables like Black Panthers leader Fred Hampton and John W.E. Thomas, Illinois’ first Black lawmaker, are most often dealing with buildings in serious states of disrepair. Physical restoration— not to mention the curation of meaningful displays and programming as well as marketing and community outreach—are all expensive endeavors. And there are also valid questions to be asked about whether, even if successfully rehabbed, these homes could draw enough visitors to become the much-needed catalyst for economic revitalization that the surrounding neighborhoods so desperately need.

Beneath these questions, though, lies a fundamental truth: What we as a city choose to venerate speaks volumes about who we are and what we value. One lone site—say, the Washington Park greystone that served as a Phyllis Wheatley Club where Black women sought shelter during the Great Migration—may not on its own be able to draw the funding or the foot traffic to make a go of it as a museum.

But could it, along with a handful of other area homes now being touted as potential museums, become part of a network of local sites that help tourists better understand the Black experience in Chicago?

It’s a question local philanthropic organizations—and perhaps even the Obama Foundation, committed as it is to enhancing the South Side—could and should help to answer.

YOUR VIEW

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n essential tool in the rebuilding of our American economy is at serious risk as part of the $1.8 trillion American Families Plan being considered in Washington—and the damage will be felt in every state, city and town still reeling from the ravages of COVID-19.

Every community in the nation, including those here in Chicago and its suburbs, has witnessed the closing of countless shopping malls, strip centers and restaurants due to the pandemic.

The fallout continues in hotels and office buildings. A substantial reinvestment to repurpose these properties and redevelop commercial spaces will be required for the economy to regain its strength.

For the last 100 years, like-kind exchanges, which allow investors to defer taxes on property sale gains while reinvesting that money into new properties, have been a cornerstone of the U.S. com-

mercial real estate market, generating economic benefits on every level which far exceed the amount of taxes deferred.

The $1.8 trillion plan presented last month by President Joe Biden proposes to cap the amount of gains that can be deferred at $500,000.This shortsighted and counterproductive cap is a recipe for economic stagnation, not recovery.

Section 1031 brings important capital to revitalize downtown Chicago and surrounding suburbs. It has been used to provide affordable multifamily housing in working-class communities and to bring a food store into a “food desert” on the South Side of Chicago. In the suburbs, Section 1031 was recently used to revitalize a strip shopping center that was 70 percent vacant after losing its anchor store.

The Federation of Accommodators, the national organization of 1031 exchange companies, analyzed and aggregated

the data from eight companies in Illinois from 2015 to 2019.They found: 10,512 properties involved in exchanges.

A total value in these exchanges of $17.8 billion. $29.5 million in state and county transfer taxes and recording fees in Illinois.

42 percent of these properties were in Chicago.

It is clear that Section 1031 is important to the real estate economy in Illinois and Chicago, and that it generates significant tax revenue for state and local governments.

Proponents of the cap may argue that the provision is a loophole used to avoid payment of taxes on gains. In reality, a 1031 exchange is a deferral of tax, not an elimination, and according to a recent study, 80 percent of the taxpayers do only one 1031 exchange and then dispose of the property in a taxable sale. Taxes are paid over a 15-year window.

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

P010-P011_CCB_20210614.indd 10

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Even

David Doig is president and CEO of Chicago Neighborhoods Initiative.

Daniel Wagner is senior vice president of government relations for the Inland Real Estate Group of Companies.

A restrictive cap—whether $500,000 or any other amount—on the ability to reinvest into commercial real estate and the redevelopment of properties at this critical juncture in our nation’s economy would send an already struggling com-

Sound off: Send a column for the Opinion page to editor@ chicagobusiness.com. Please include a phone number for verification purposes, and limit submissions to 425 words or fewer.

6/11/21 2:23 PM

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CRAIN’S CHICAGO BUSINESS • JUNE 14, 2021 11

YOUR VIEW Continued mercial real estate market into a tailspin.

Ernst & Young estimated that the reinvestment through 1031 exchanges for the coming year will create more than 560,000 new jobs paying more than $27.5 billion in labor income, generate $14 billion in federal, state and local taxes and add $55 billion to the GDP. That $14 billion generated in one year far exceeds the estimate in the 2021 Biden budget, which says capping 1031 at $500,000 raises an average of $1.95 billion per year over the next decade. Why would anyone change Section 1031? It doesn’t raise any money.

Like-kind exchanges play a critical role in many facets of the nation’s economy, including:

Crain’s Chicago Business wins Neal Award

Fueling the redevelopment of distressed

commercial properties.

Financing the construction or renovation of multifamily and affordable housing.

Preserving family-owned farms and ranches.

Allowing the middle class to build a real estate portfolio that will one day fund retirement.

A cap of any amount would send an already struggling commercial real estate market into a tailspin.

The private sector must play a significant role in the resurgence of our economy, as it always has. The best way to attract the private capital needed to improve and strengthen our communities and our infrastructure is to keep Section 1031 unchanged.

Crain’s Forum, a monthly feature that explores the public policy challenges facing Chicago and the region, won top honors for Best Series in the 2021 Neal Awards.

Crain’s Forum, published with support from the Joyce Foundation and CIBC, is a free offering that examines topics ranging from the water quality of Lake Michigan to new ideas on curbing crime in Chicago’s neighborhoods to untangling the gridlock that’s choking freight transportation throughout the Midwest. In addition to Crain’s in-depth reporting, each issue also features a wide range of guest commentaries that shed additional light on the issues, offer diverse perspectives and suggest solutions to some of the community’s most vexing problems.

The latest edition of the Forum—“A Mo-

ment or a Movement?”—analyzes the way corporate Chicago responded to the calls for racial equity in the wake of George Floyd’s murder and, one year later, how well those employers lived up to their pledges.

The Jesse H. Neal Awards, established in 1955, are among the most prestigious awards for business journalism.

“This Neal Award reflects the hard work and vision of our current Forum editor, Cassandra West, and her predecessor, Bob Secter, as well as the design ingenuity of Jason McGregor and Karen Freese Zane and the contributions of many staff and freelance writers, photographers and illustrators,” said Crain’s Editor Ann Dwyer. “We’re proud to continue the tradition of the Forum and look forward to more groundbreaking work.”

Chief executive officer KC Crain Group publisher/executive editor Jim Kirk

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6/11/21 2:23 PM

YOUR VIEW

Is air rage caused by class warfare?

Stephen Mihm, a professor of history at the University of Georgia, is a contributor to Bloomberg Opinion.

THE CREATIVE EXCHANGE/UNSPLASH

S

ince the beginning of the year, the Federal Aviation Administration has reported a sharp uptick in the number of passengers behaving badly. In a typical year, the FAA logs between 100 and 200 incidents. In the first three months of 2021, it reported a whopping 1,300, despite the fact that the number of passengers was still well below normal levels.

It’s difficult to account for this recent uptick, but it’s hard to dispute that air rage has become a growing problem over the past few decades. The usual explanations—shrinking legroom, alcohol and flight delays—have merit. But these are arguably overshadowed by a decades-long trend: the transformation of air travel from an elite prerogative to a service that divides passengers into haves and have-nots.

This wasn’t a problem in the early years of aviation. Look carefully at the interior of the Pan Am Clipper. They featured comfortable beds, luxurious fittings and delicious dinners served on china. These flying palaces gave passengers a remarkable amount of room to sit, lounge, walk and mingle.

Most important of all, perhaps, was the fact that they weren’t stratified by class: Everyone enjoyed the same luxuries. There was no distinction between first class, business class and coach.

The idea of different classes of passengers was born in the postwar era, but at first, this didn’t mean putting people into seats of different sizes and comfort levels.

Instead, “coach class” in these years simply meant a ticket on a plane that made more stops. All passengers on these planes sat in precisely the same seats and enjoyed the same amenities as other passengers. It just took longer to get to your destination.

The problem of air rage arguably trac-

The presence of a first-class section made it 3.84 times more likely that someone in economy class would act out. es its origins to a momentous shift in travel unleashed in 1952. That year, the Civil Aeronautics Board in the U.S. and its global counterpart, the International Air Transport Association, began permitting flights that charged passengers different fares on the same flight.

In 1955, planes began flying with different “classes” of seats. While first-class seats continued to enjoy amenities, coach-class seats began their long slide into discomfort, losing legroom with every passing decade.

Not coincidentally, it was precisely in these years that you can find the first expressions of concern over unruly passenger behavior. Conventional wisdom held that alcohol was to blame.

The Civil Aeronautics Board disagreed, though airlines adopted a “voluntary” pledge to make sure that passengers weren’t served more than two drinks each.

In the 1970s, high fuel prices accelerated the inequalities that increasingly defined air travel. As airlines struggled to make money, they crammed ever more coach seats into the same space while cutting amenities for coach-class passengers. Yet individual carriers had little leeway in setting fares. But in 1978, President Carter unleashed the power of the free market on air travel, deregulating the industry.

Airlines responded by creating more extreme distinctions between different classes.

Passengers willing to withstand shrinking levels of legroom and bare-bones service could now fly more cheaply, sitting at the back of planes while their well-heeled counterparts enjoyed free drinks and plenty of room at the front. It was during this era that air rage became increasingly common.

An academic study of air rage incidents

published in 2016 found that the presence of a first-class section made it 3.84 times more likely that someone in economy class would act out. Likewise, making economy-class passengers board from the front of the plane—where they get to see the comfort enjoyed by others—had a similar, effect.

Understood this way, the growing reports of air rage weren’t a function of the fact that economy-class passengers found themselves crammed in ever-smaller seats, but that the inequality in seating arrangements grew.

There’s nothing inherently wrong with this: More cramped seats are cheaper, enabling more people to travel. If they want the legroom, they can pay extra for it. But as this study makes clear, such rational thinking may not prevail when passengers find themselves parked on a runway in uncomfortable seats while they watch well-heeled customers relax, surrounded by comforts. That’s particularly the case when alcohol gets added to the mix, loosening people’s inhibitions.

Airlines have responded in predictable fashion, attacking the symptoms of the problem. They’ve trained flight attendants to disarm belligerent passengers and handcuff them. They’ve cut back on alcohol as well.

But the distance between the most comfortable and least comfortable on planes has only increased. It’s also gotten more stratified, with intermediate seating classes that, perversely, may foster more resentment.

There’s no obvious solution to this. But at the very least, the FAA may want to consider defining a reasonable lower bound to the distance between rows and the width of seats. Legislation passed by Congress in 2018 enjoins the FAA to do precisely that. But so far it hasn’t set these standards and shows no sign of doing so.

For now, air rage is likely to remain an issue for the simple reason that contemporary air travel hammers home the fact that social inequality is, quite literally, a pain in the butt.

This $34 billion LBO is a gift to Blackstone and pals

I

t’s a statement of private-equity power when a giant health care firm chooses a $34 billion leveraged buyout instead of a deal with a rival or an initial public offering. Blackstone Group, Carlyle Group and Hellman & Friedman faced relatively sparse competition in their agreement to buy a majority stake in Medline Industries of Northfield.

But if the winning consortium had an easy ride on the way in, getting out of a jumbo deal could be tougher going.

Medline is a closely held medical-equipment colossus that makes and distributes products ranging from surgical trays to protective masks. The sale’s timing makes sense. The company is clearly worth more since COVID woke governments up to the need for ample supplies to cope with medical emergencies, even if personal protective equipment is only a small part of the business.

The Mills family that owns and runs Medline appears to have been keen to partner with private equity. But there aren’t many financial sponsors who can cobble together a consortium with the required firepower. The transaction—the largest LBO since the financial crisis—therefore plays into the hands of big players that can write sizeable equity checks and are comfortable Chris Hughes is a Bloomberg Opinion columnist covering deals.

P012_CCB_20210614.indd 12

BLOOMBERG

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12 JUNE 14, 2021 • CRAIN’S CHICAGO BUSINESS

doing a so-called club deal.

These dynamics make it less likely that the bidding group has overpaid. And with a lot funds sloshing around, mega-deals put a chunk of idle capital to work all in one swoop. Still, the investment needs to earn good returns too.

Medline’s sales were $17.5 billion last year, coming from distribution and manufacturing. Listed distributors against which it competes, such as Cardinal Health and

McKesson, have Ebitda margins of 2 percent. Makers of health care products like Becton Dickinson and Coloplast A/S are at over 30 percent.

Assume a mid-teens margin for Medline, and Ebitda of around $2.5 billion, and the deal would value the firm in the region of 14 times trailing Ebitda. That places this in the middle of the pack, with Cardinal at seven times, Becton at 12 and Coloplast at 30.

This looks reasonable value for a com-

pany that’s been consistently growing sales at a double-digit rate, largely organically.

It’s plausible there’s more to come, most obviously by targeting non-U.S. markets or harnessing the capabilities of logistics and warehouse firms in the consortium’s existing portfolios.

The relatively undemanding level of debt involved here, accounting for roughly half the purchase price, implies the strategy aims substantially to grow sales and expand margins, rather than use leverage to amplify otherwise modest performance gains.

On that basis, Medline could end up becoming a very large company indeed.

That would in turn limit options for Blackstone, Carlyle and Hellman & Friedman to exit. The natural path would be an IPO, but it would take a while for the consortium members to fully sell their positions in the market, and time is normally the enemy of returns.

The challenge will be persuading investors to value Medline on the punchier multiples afforded to medical-equipment makers than distributors. If it can do that, the consortium could end up selling a business on a higher multiple of higher profits than seen in the transaction.

And who knows, by then maybe another private-equity consortium will have decided the time is right to attempt a $50 billion LBO and that Medline is the right target.

6/11/21 2:23 PM

CRAIN’S CHICAGO BUSINESS • JUNE 14, 2021 13

Chicago’s green building initiative is a tough sell in a post-COVID downtown GREEN from Page 4 office landlord or hotel owner to spend hundreds of thousands or even millions of dollars replacing all of a property’s windows or reducing its reliance on natural gas is even less likely when those owners are scrambling to simply make loan payments.

“There might have been a time where that was less problematic, but right now everybody is still holding their breath about what the recovery is going to look like,” Tabaczynski says.

Environmental advocates point to some Loop landlords that have proven the financial perks of going green as evidence that renovations to make buildings more energy efficient make business sense.

In the roughly nine years since the city launched its Retrofit Chicago program, in which landlords voluntarily pledge to reduce energy use by 20 percent over a five-year period, roughly 100 buildings have participated and collectively saved over $19 million by cutting back on energy use, including a reduction of 250 million kilowatt-hours of electricity, according to Brian Imus, executive director of the Illinois Green Alliance, a nonprofit that promotes green buildings.

The owner of the 65-story office tower at 311 S. Wacker Drive added smart thermostat technology to cut the building’s heating and cooling energy consumption by 30 percent and received a $360,000 rebate from utility provider Commonwealth Edison through its energy-efficiency rebate program, according to Imus.

“That’s free money,” he says.

“It’s not rocket science, and it’s not inventing new technology. It’s (implementing) technology that we know works and is cost-effective over time.”

But many landlords don’t make such investments because they sell their buildings long before the decade or more it takes for some larger eco-friendly changes to pay for themselves in operational savings. Plowing money into building amenities and leasing efforts can immediately drive up a building’s market value, while investors normally don’t pay a premium for properties that are reducing their power bills.

OLDER PROPERTIES

Adding to the lift for downtown Chicago is that 70 percent of office properties were built before 1990, the third-highest share among major U.S. markets, according to Newport Beach, Calif.-based real estate research firm Green Street.

Many older properties are energy guzzlers but command smaller rents, making it harder for their owners to justify putting capital into reducing their carbon footprint.

Lenders and major financial institutions also provide only limited incentives to building owners to take on energy efficiency projects, says Walker & Dunlop Senior Managing Director Dave Hendrickson, who secures financing for commercial property owners and developers. For office buildings and

P013_CCB_20210614.indd 13

hotels, for example, loans aren’t doled out at lower interest rates for energy-efficient projects, and the payoff of big projects is hard to justify today, Hendrickson says.

“Lenders and investors care, and going 100 percent renewable is a noble goal, but the reality is the cost so far outweighs the benefit,” he says.

CONUNDRUM

One more recent conundrum for building owners: Technologies meant to improve air quality for building users—a popular feature tenants are demanding coming out of the pandemic—consume

more energy, pitting building users’ health against the environment.

Chicago Chief Sustainability Officer Angela Tovar, who took the job with the city in June 2020 after more than 15 years in public and private environmental advocacy roles, acknowledges it’s a tough time to call for pandemic-stung commercial property owners to help. She says a key part of the 55-member working group’s mission is to figure out how to make decarbonization investments “feasible” in property sectors with cloudy futures. “This is a moment for the

can get city-sponsored technical assistance to identify incentives, grants and financing options for projects that reduce energy use.

One idea she wants to more owners to “RIGHT NOW THE BIGGEST CONCERN direct is the city’s property clean enerIS THE ECONOMICS OF IT. WE WANT TO assessed gy program, or PACE, MAKE SURE THE APPROACH IS GOING which allows owners to obtain financing for TO BE REALISTIC.” certain green building upgrades and repay the Ron Tabaczynski, Building Owners & Managers money through assessAssociation of Chicago ments on their property tax bill that can building owners such as an “in- be spread over time based on the novation hub” where landlords useful life of the improvements. city to take a step back and hear from folks,” she says.

Tovar stresses the importance of creating tools and resources for

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6/11/21 1:32 PM

14 JUNE 14, 2021 • CRAIN’S CHICAGO BUSINESS

New weed licenses could be issued by end of this summer

BY JOHN PLETZ The state of Illinois could begin issuing long-awaited licenses for new marijuana shops by the end of summer, a legislator says.

The General Assembly passed a law May 28 that would create two additional lotteries, which would be used to award 185 new licenses to operate cannabis dispensaries.

Currently, there are 110 marijuana shops operated by companies that have licenses granted under the initial medical-marijuana law.

“I’m being told the administration would like to see all the licenses issued by end of summer,” Sen. Don DeWitte, R-West Dundee, said

during a Zoom call hosted by the Cannabis Business Association of Illinois, a trade group for the weed industry. “I think that’s a very bold projection. If we could start the process by end of summer, I’d be happy. To have this thing cleaned up by end of the year, I think that would be a realistic target.”

The first licenses were supposed to be issued in May 2020, but the process was delayed and ultimately ran into complaints and litigation over how applications were scored and whether it was falling short of social-equity goals aimed at diversifying the ownership of the industry. The Legislature tried several times to amend the law,

BLOOMBERG

That’s Governor Pritzker’s goal, a state senator says, though getting the long-in-limbo dispensary licenses out by end of the year might be a more realistic scenario

but it didn’t pass until the spring session.

Gov. J.B. Pritzker has indicated he’ll sign the bill. But it has not yet been sent to him, says Rep. LaShawn Ford, D-Chicago, one of bill’s primary sponsors of the bill.

“The Governor’s office is doing everything they can to make sure the

rollout happens right this time.”

Weed shops can be very lucrative, with successful locations doing $10 million a year in business and selling for $20 million or more. The state received more than 900 applications for licenses.

But just 21 applicants received perfect scores, qualifying for a lot-

tery to issue 75 licenses, setting off an outcry that resulted in the new legislation. Under the new law, the state will award 185 recreational dispensary licenses. It also will eventually award another five dispensary licenses that were not issued under the initial medical-marijuana law.

Sterling Bay is putting Talbott Hotel on the market

BY DANNY ECKER

Sterling Bay is looking to unload a Gold Coast property it spruced up as one of its first tries at hotel ownership, potentially closing the book on a project whose payoff was largely thwarted by the pandemic.

A joint venture led by the developer and partners Geolo Capital and Wanxiang America Real Estate Group has hired the Chicago office of Jones Lang LaSalle to sell the Talbott Hotel at 20 E. Delaware Place, according to a marketing flyer for the property.

There is no asking price for the 178-room inn, which the owners bought in October 2015 for $51 million in a deal that included celebrity investors John Cusack and Chris Chelios, among others. But the offering will serve as a valuable test of buyer appetite for downtown hotels as leisure travel picks up and restrictions tied to the public health crisis wane.

The owners in 2017 spent $16.4 million renovating all the guest rooms—adding 29 of them—as well as the lobby, restaurants, fitness center and other spaces, according to the JLL flyer. But what followed was a bumpy road after Hyatt Hotels in 2018 announced the acquisition of Talbott management company Two Roads Hospitality, bringing Two Roads’ Joie de Vivre boutique hotel brand under the Hyatt umbrella. Shortly after that, the Talbott switched management companies again to Atlanta-based Davidson Hospitality’s Pivot Hotels & Resorts brand. Such rapid shifts can impact staffing and room rate strategy, making it difficult for hotels to gain long-term

P014_CCB-20210614.indd 14

traction with guests and clients.

Then came COVID, leaving almost all downtown hotels starving for business and facing what could be a long recovery to pre-pandemic levels of demand.

It’s against that backdrop that the owners will find out what the market thinks the 16-story property is worth. The Sterling Bayled venture refinanced the hotel in 2019 with a $45.9 million loan, according to Cook County property records, meaning the owners would have to sell the property for at least $260,000 per room to cover their debt.

Hotel sources familiar with the property say that would have been an easy feat before the pandemic, but the uncertainty surrounding the rates downtown hotels will command for the next several years make clearing that bar less certain today.

“Despite the upgrades, the hotel has consistently underperformed in recent years relative to both historical pre-renovation levels and with respect to its competitive peers,” JLL says in the flyer, noting that an index of Talbott’s average revenue per available room—a metric that accounts for a hotel’s occupancy and room rate—was 89 percent during the two years after the renovation, compared with 97 percent during the two years before it.

“With the comprehensive improvements, the property should be performing well-above historical averages,” JLL writes.

The Talbott has historically gotten 80 percent of its bookings from leisure travelers, according to the flyer, a tourist segment that’s expected to bounce back more

JONES LANG LASALLE

The Gold Coast property stands to provide more clues about how much investors will pay for downtown hotels as the pandemic wanes

The Talbott Hotel at 20 E. Delaware Place was bought in 2015 for $51 million; the owner later put $16.4 million of renovations into the building. quickly from the pandemic than corporate travel or visitation tied to meetings and events. The brokerage also contends the bottom line will grow with better “expense management” coming out of the pandemic.

PIVOT POINT

The Talbott is also being marketed as an opportunity to rebrand the property and also bring in a new management company to replace Pivot. The hotel’s lease with restaurant operator Prime by Butler can also be terminated without penalty in October if a buyer wanted to bring in a new food and beverage provider, according to the flyer.

A Sterling Bay spokeswoman

declined to comment. Spokesmen for Geolo Capital and Wanxiang couldn’t be reached.

Downtown hotels have been seeing gains in recent weeks as the weather has improved and COVID restrictions have been relaxed. Occupancy at downtown hotels that were open during the last week of May was 42 percent, the highest for any single week since the pandemic began, according to hospitality data and analytics company STR. That’s still well below a typical pre-pandemic May occupancy rate above 80 percent but a big step up from the first year of the pandemic, when occupancy never rose higher than 27 percent for a single week.

That improvement should continue with Chicago and Illinois

expected to remove all COVID-19 mitigation restrictions on June 11 and events returning to the McCormick Place convention center later this month.

Best known for redeveloping and owning prominent office buildings in Chicago, Sterling Bay made one of its first plays in the hotel space with the Talbott. It subsequently developed the Ace Hotel in the Fulton Market District and Hyatt House Chicago in the West Loop and is now developing a 47-story tower on Michigan Avenue that includes a 280-room citizenM hotel.

JLL hotel brokers Adam McGaughy and John Nugent are marketing the Talbott on behalf of the joint venture owners.

6/11/21 2:28 PM

CRAIN’S CHICAGO BUSINESS • JUNE 14, 2021 15

Preservation of Affordable Housing is spending $65 million to buy and renovate a 240-unit Woodlawn apartment building just blocks away from the project site

BY ALBY GALLUN Amid worries that housing around the future Obama Presidential Center will become increasingly unaffordable, a nonprofit plans to buy a big apartment building down the street and hold down rents for low-income residents.

Preservation of Affordable Housing is paying about $65 million to acquire and renovate Island Terrace Apartments, a 240-unit property at 6430 S. Stony Island Ave. in Woodlawn, about four blocks south of the Obama project.

POAH plans to keep rents at some Island Terrace apartments affordable to households earning as little as 30 percent of the area median income, or $27,950 for a family of four.

POAH aims to complete the acquisition on June 23, just a few months before the planned groundbreaking of the $500 million presidential center in Jackson Park. Planning for the Obama project has been underway for several years, attracting scrutiny from community groups and housing advocates worried that the economic boost from the center will produce an unwelcome side ef-

fect: gentrification.

Island Terrace is “an important acquisition for us because it’s a way to extend housing options in a neighborhood where people are concerned about displacement and the potential effects of gentrification,” says Bill Eager, senior vice president of real estate development for the Midwest at Boston-based POAH.

UPWARD PRESSURE

Half the residents within a twomile radius of the Obama site earn less than $35,000 per year, and 69 percent are renters, according to a 2019 report by the Nathalie P. Voorhees Center for Neighborhood & Community Improvement at the University of Illinois at Chicago.

Nearly 9 out of 10 renters cannot afford their rent, spending more than 30 percent of their income on housing, according to the report.

Home prices have jumped in Woodlawn, and investors have been speculating on vacant land, Eager says.

“We’ve seen some upward pressure on rents. We haven’t seen runaway rent increases,” Eager says.

“The concern is that people need to act before those forces take full ef-

fect, to protect and create as many opportunities as you can before the economics make it more difficult.”

To combat displacement due to the Obama Center, the City Council last September passed the Woodlawn Housing Preservation Ordinance, a multipronged measure that provides funding for neighborhood housing and a requirement that vacant city-owned lots in the area be set aside for low-income housing.

To finance the Island Terrace project, POAH is relying on multiple public funding sources, including Low Income Housing Tax Credits. Last month, the Illinois Housing Development Authority approved about $1.2 million in tax credits for the 22-story building.

POAH expects to seek more credits for the project in the future.

Eighty-eight apartments at Island Terrace already are set aside for low-income residents with housing vouchers from the Chicago Housing Authority. The building doesn’t have any income restrictions on the rest of the units, but POAH aims to make all of them available to tenants with limited incomes, Eager says.

Monthly rents at Island Terrace

range from $957 for a one-bedroom apartment to $1,665 for the largest three-bedroom unit, according to real estate data provider CoStar Group.

POAH is buying the building from a unit of Pittsburgh-based PNC Financial Services Group, which paid $19 million for the property in 2015, according to Cook County property records. POAH is paying about $30 million for the building and spending the rest of the money fixing it up, Eager says.

POAH has been expanding rapidly in Chicago in recent years and now owns 26 properties totaling nearly 2,200 units in the city and suburbs, according to its website.

COSTAR GROUP

Nonprofit to preserve housing near Obama Center

Island Terrace Apartments at 6430 S. Stony Island Ave. Its Woodlawn holdings include several buildings along South Cottage Grove Avenue between 60th and 63rd streets.

Royal Bank offers commercial loans with attractive rates and terms.

Contact Andrew Morua, Senior Vice President 2IƓFH Ř 0RELOH (PDLO DPRUXD#UR\DO EDQN XV %LOLQJXDO ŧ (QJOLVK DQG 6SDQLVK

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VISIT OUR SALES GALLERY TO EXPERIENCE TRIBUNE TOWER RESIDENCES. tribunetower.com

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All floor plans shown are for illustrative purposes only. Floor plans may not depict final design of units as constructed and may not be drawn to scale. All sketches, renderings, architectural models, materials, plans, specifications, terms, prices, conditions and statements, including estimated timeframes and dates, contained herein are proposed only and are not intended to constitute representations. Developer reserves the right to make modifications in its sole discretion and without prior notice. All photographs and renderings are merely intended as illustrations of the activities and concepts depicted therein as interpreted by the artists.

Developer makes no representations regarding any view and/or exposure to light at any time including any existing or future construction by either owner or a third party. Square footage and ceiling heights are approximate and may be based on various measurement methodologies, subject to construction variances and tolerances, as well as redesign, and vary from unit to unit (and may vary from floor to floor). This brochure shall not constitute a valid offer in any jurisdiction where prior registration is required and not yet fulfilled. Where used, developer shall mean Tribune Tower West (Chicago) Owner, LLC DL# 2556130 and its affiliated entities and their respective managers, members, directors, shareholders, partners, agents, affiliates and employees.

P015_CCB_20210614.indd 15

6/10/21 2:35 PM

16 JUNE 14, 2021 • CRAIN’S CHICAGO BUSINESS

CRAIN’S LIST CHICAGO’S HIGHEST-PAID CEOS

Want 147 CEOs in Excel format? Become a Data Member: ChicagoBusiness.com/data-lists

Ranked by total compensation in 2020; includes executives from public companies only.

Executive

Total executive compensation 2020; % change from 2019

Salary; bonus

Stock awards; option awards

Non-equity incentive plan; change in pension value

Other compensation

Salary ratio; median employee compensation in 2020

Company net income 2020 (millions); % change from 2019

1

MICHAEL T. PYKOSZ Oak Street Health Inc. CEO

$73,548,6921 2,972.5%

$579,319 NA

$47,225,364 $25,339,908

$392,700 NA

$11,400

NA

-$188.0 NM

2

JESSE G. SINGH The AZEK Co. President, CEO

$35,544,2642 1,128.2%

$764,648 $688,541

$25,028,771 $7,882,489

$1,150,893 NA

$28,922

NA

-$122.2 NM

3

CLINT P. JONES GoHealth Inc. Chairman, CEO

$31,664,7063 530.2%

$325,000 NA

$30,350,749 NA

$231,000 NA

$757,957

NA

-$44.3 NM

4

RICHARD A. GONZALEZ AbbVie Inc. Chairman, CEO

$24,007,591 11.1%

$1,688,462 NA

$11,644,996 $2,781,662

$4,908,750 $2,224,135

$759,586

154 $155,772

$4,616.0 -41.4%

5

GREGORY Q. BROWN Motorola Solutions Inc. Chairman, CEO

$23,046,559 -2.4%

$937,500 $1,421,875

$9,399,711 $4,699,939

$6,250,000 $21,004

$316,530

286 $80,445

$949.0 9.3%

6

JUAN R. LUCIANO Archer-Daniels-Midland Co. Chairman, president, CEO

$21,994,433 21.2%

$1,400,004 NA

$15,940,148 NA

$4,507,300 $112,853

$34,128

338 $65,133

$1,772.0 28.5%

7

THOMAS J. WILSON II Allstate Corp.

Chairman, president, CEO

$21,126,386 7.7%

$1,375,962 NA

$7,312,094 $4,404,993

$4,889,565 $3,116,842

$26,930

206 $102,184

$5,576.0 15%

8

DAVID L. CALHOUN4 Boeing Co. President, CEO

$21,074,052 NA

$269,231 NA

$20,515,106 NA

NA NA

$289,715

158 $133,800

-$11,873.0 NM

9

ROBERT B. FORD5 Abbott Laboratories President, CEO

$20,450,586 71.9%

$1,298,462 NA

$5,623,995 $5,624,993

$3,675,000 $4,150,264

$77,872

266 $77,594

$4,495.0 21.9%

10

MILES D. WHITE6 Abbott Laboratories Executive chairman

$19,828,384 -28.7%

$1,900,000 NA

$5,998,934 $5,999,997

$1,250,000 $3,415,343

$1,264,110

266 $77,594

$4,495.0 21.9%

11

STEFANO PESSINA7 Walgreens Boots Alliance Inc. Executive chairman

$17,483,187 -8.7%

NA NA

$13,180,703 $4,252,100

NA NA

$50,384

524 $33,396

$456.0 -88.5%

12

DIRK VAN DE PUT Mondelez International Inc. Chairman, CEO

$16,842,693 -8.4%

$1,450,000 NA

$9,199,084 $2,021,572

$3,420,550 NA

$751,487

544 $30,937

$3,555.0 -9.5%

13

TERRENCE A. DUFFY CME Group Inc. Chairman, CEO

$16,118,467 35.8%

$1,500,000 NA

$10,933,603 NA

$3,195,001 $45,422

$444,441

109 $148,760

$2,105.2 -0.5%

14

JOSE E. ALMEIDA Baxter International Inc. Chairman, president, CEO

$15,865,396 14.0%

$1,300,000 NA

$8,374,122 $6,120,424

NA NA

$70,850

338 $46,986

$1,102.0 10.1%

15

JOHN C. MAY II Deere & Co. Chairman, CEO

$15,588,384 159.6%

$1,199,245 NA

$6,878,173 $2,624,979

$3,741,252 $834,610

$310,125

220 $70,743

$2,751.0 -15.4%

16

CHRISTOPHER M. CRANE Exelon Corp.

President, CEO

$15,162,803 -1.8%

$1,293,000 NA

$11,000,013 NA

$1,897,536 $757,754

$214,500

96 $157,000

$1,963.0 -33.1%

17

E. SCOTT SANTI Illinois Tool Works Inc. Chairman, CEO

$14,007,356 -9.3%

$1,344,924 NA

$2,937,379 $5,874,987

$3,117,342 $662,892

$69,832

268 $52,250

$2,109.0 -16.3%

18

D. JAMES UMPLEBY III Caterpillar Inc. Chairman, CEO

$13,676,551 -60.4%

$1,600,000 NA

$5,899,969 $5,900,000

NA NA

$276,582

274 $49,847

$2,998.0 -50.8%

19

MARK S. HOPLAMAZIAN Hyatt Hotels Corp.

President, CEO

$13,006,023 -11.5%

$318,050 NA

$10,270,337 $2,374,992

NA NA

$42,644

365 $35,612

-$703.0 NM

20

DEBRA A. CAFARO Ventas Inc. Chairman, CEO

$12,628,714 11.3%

$947,654 NA

$9,509,954 NA

$2,042,500 NA

$128,606

127 $99,569

$439.1 1.4%

21

OSCAR MUNOZ8 United Airlines Holdings Inc. Executive chairman

$12,098,693 -4.3%

$1,239,594 NA

$10,500,146 NA

$0 NA

$358,953

163 $63,496

-$7,069.0 NM

22

RICHARD J. TOBIN Dover Corp.

President, CEO

$11,982,338 31.0%

$1,217,500 $1,722,825

$6,024,137 $2,674,529

$0 $0

$343,347

246 $48,804

$683.5 0.8%

23

SEAN M. CONNOLLY Conagra Brands Inc. President, CEO

$11,882,832 -17.4%

$1,246,154 NA

$7,630,602 NA

$2,649,635 NA

$356,441

287 $41,468

$840.1 23.9%

24

DINO E. ROBUSTO CNA Financial Corp.

Chairman, CEO

$11,469,174 -12.1%

$1,027,778 NA

$4,499,986 NA

$4,250,000 NA

$1,691,410

96 $119,598

$690.0 -31%

25

LANCE MITCHELL Reynolds Consumer Products Inc. President, CEO

$11,410,221 70.3%

$1,550,000 $1,782,500

$3,488,004 NA

$4,421,153 NA

$168,564

NA

$363.0 61.3%

Includes executives and former executives of public companies based in Cook, DuPage, Kane, Lake (Ill.), Lake (Ind.), McHenry and Will counties, as well as select public companies outside the seven-county area that are included due to their size. Salary ratios are based on a CEO’s total compensation and the company’s median employee salary. “Change in pension value” also includes nonqualified deferred compensation. NA: Not available. NM: Not measurable. 1. Michael T. Pykosz’s total compensation largely reflects stock and option awards, as well as previous equity that increased in value after Oak Street Health went public in August 2020, raising $377 million. 2. Jesse G. Singh’s total compensation largely reflects stock and option awards related to The AZEK Co. going public in June 2020, raising $879 million. 3. Clint P. Jones’ total compensation largely reflects stock awards related to GoHealth going public in July 2020, raising $914 million. 4. David L. Calhoun became president and CEO of Boeing in January 2020. 5. Robert B. Ford became CEO of Abbot Laboratories on March 31, 2020. 6. Miles D. White was CEO of Abbott Laboratories until March 31, 2020. 7. Stefano Pessina was CEO of Walgreens Boots Alliance until March 2021. 8. Oscar Munoz was CEO of United Airlines until May 2020.

Data provided by S&P Global Market Intelligence, with additional research by Sophie Rodgers (sophie.rodgers@crain.com)

P016_CCB_20210614.indd 16

6/10/21 7:46 AM

CRAIN’S CHICAGO BUSINESS • JUNE 14, 2021 17

CRAIN’S LIST CHICAGO’S HIGHEST-PAID NON-CEOS

Want 423 Non-CEOs in Excel format? Become a Data Member: ChicagoBusiness.com/data-lists

Ranked by total compensation in 2020; includes executives from public companies only.

Salary ratio; median employee salary in 2020

2020 company net income (millions); % change from 2019

$11,400

NA NA

-$188.0 NM

$266,220 NA

$11,400

NA NA

-$188.0 NM

$30,350,749 NA

$231,000 NA

$1,194,486

NA NA

-$44.3 NM

$500,000 $861,957

NA NA

NA NA

$25,097,954

NA NA

$7.5 0%

$17,126,276 13.1%

$1,211,808 NA

$5,822,401 $1,390,831

$2,550,000 $5,716,702

$434,534

110 $155,772

$4,616.0 -41.4%

CARLOS ALBAN4 AbbVie Inc. Former vice chairman, chief commercial officer

$16,853,926 17.0%

$1,211,808 NA

$5,822,401 $1,390,831

$2,475,000 $5,629,242

$324,644

108 $155,772

$4,616.0 -41.4%

7

CARLOS A. ABRAMS-RIVERA5 Kraft Heinz Co. U.S. zone president

$15,025,111 NA

$723,077 $1,000,000

$10,326,872 $382,151

$2,165,680 NA

$427,331

379 $39,636

$356.0 -81.6%

8

RYAN P. BARRETTO6 Sprout Social Inc. President

$14,660,8217 2,247.3%

$350,000 NA

$13,926,900 NA

$379,421 NA

$4,500

NA NA

-$31.7 NM

9

FREDERICK E. POLLOCK GCM Grosvenor; managing director, chief investment officer, head of strategic investment group

$13,838,023 191.2%

$500,000 $1,687,500

NA NA

NA NA

$11,650,523

NA NA

$7.5 0%

10

ROBERT A. MICHAEL AbbVie Inc. Executive vice president, CFO

$13,494,629 53.8%

$1,065,385 NA

$5,406,515 $1,291,477

$2,110,000 $3,571,858

$49,394

87 $155,772

$4,616.0 -41.4%

11

MICHAEL E. SEVERINO AbbVie Inc. Vice Chairman, president

$13,411,058 41.0%

$1,369,923 NA

$5,822,401 $1,390,831

$2,700,000 $1,910,985

$216,918

86 $155,772

$4,616.0 -41.4%

12

JAMES A. SHARMAN GoHealth Inc. President

$13,002,832 -27.7%

$400,000 NA

$12,140,591 NA

$462,000 NA

$241

NA NA

-$44.3 NM

13

SHANE E. CRUZ GoHealth Inc. Chief operating officer

$12,813,843 16.0%

$336,154 NA

$12,140,591 NA

$330,090 NA

$7,008

NA NA

-$44.3 NM

14

RICHARD T. SCHWARTZ Rush Street Interactive President

$11,640,722 127.3%

$377,000 $188,500

$11,075,222 NA

NA NA

NA

NA NA

-$0.6 NM

15

ALEXANDER W. GOURLAY8 Walgreens Boots Alliance Inc. Former co-chief operating officer

$10,999,510 33.7%

$1,010,809 $559,894

$5,207,062 $1,435,077

$501,454 $1,643,925

$641,289

329 $33,396

$456.0 -88.5%

16 17

JOE OCHOA The AZEK Co.; president of residential segment

$10,286,397 NA

$435,167 NA

$9,244,674 NA

$578,783 NA

$27,773

NA NA

-$122.2 NM

ROBERT E. FUNCK JR.9 Abbott Laboratories Executive vice president of finance, CFO

$9,800,209 NA

$813,462 NA

$2,215,867 $2,216,247

$1,280,800 $3,100,265

$173,568

126 $77,594

$4,495.0 21.9%

RALPH J. NICOLETTI The AZEK Co.; senior vice president, CFO

$9,383,908 254.1%

$502,692 NA

$8,296,611 NA

$567,462 NA

$17,143

NA NA

-$122.2 NM

ORNELLA BARRA Walgreens Boots Alliance Inc. Chief operating officer, international

$9,211,841 29.1%

$1,010,809 $559,894

$5,207,062 $1,435,077

$497,545 NA

$501,221

276 $33,396

$456.0 -88.5%

20

HEIDI B. CAPOZZI10 McDonald’s Corp.; executive vice president, global chief people officer

$8,939,920 NA

$521,907 NA

$7,450,306 $950,021

$0 NA

$17,686

980 $9,124

$4,730.5 -21.5%

21

JEFF A. JACOBSON11 Jones Lang LaSalle Inc.; former global CEO of LaSalle Investment Management

$8,866,983 45.5%

$314,423 NA

$2,336,086 NA

$1,600,000 NA

$4,616,474

165 $53,700

$402.5 -24.8%

22

JAMES A. SKINNER12 Walgreens Boots Alliance Inc. Former executive chairman

$8,797,713 -6.4%

NA NA

$8,787,116 NA

NA NA

$10,597

263 $33,396

$456.0 -88.5%

23

JAMES KEHOE Walgreens Boots Alliance Inc. Executive vice president, global CFO

$8,656,419 29.5%

$941,719 $521,626

$5,207,062 $1,435,077

$467,179 NA

$83,756

259 $33,396

$456.0 -88.5%

24

RAY G. YOUNG Archer-Daniels-Midland Co., Executive vice president, CFO

$8,548,754 25.3%

$850,008 NA

$5,844,739 NA

$1,754,719 $74,554

$24,734

131 $65,133

$1,772.0 28.5%

25

HUBERT L. ALLEN Abbott Laboratories; executive vice president, general counsel and secretary

$8,478,177 13.3%

$751,346 NA

$1,874,607 $1,874,988

$917,700 $2,904,940

$154,596

109 $77,594

$4,495.0 21.9%

Total executive compensation 2020; % Change from 2019

Salary; bonus

Stock awards; option awards

Non-equity incentive plan; change in pension value

1

GEOFFREY M. PRICE Oak Street Health Inc. Chief operations officer

$53,499,9671 2,680.7%

$526,654 $51,145

$37,211,619 $15,393,149

$306,000 NA

2

GRIFFIN R. MYERS Oak Street Health Inc. Chief medical officer

$40,554,0212 2,765.4%

$458,189 NA

$30,663,929 $9,154,283

3

BRANDON M. CRUZ GoHealth Inc. Co-chair of the board, chief strategy officer

$32,101,2353 538.9%

$325,000 NA

4

JONATHAN R. LEVIN GCM Grosvenor President

$26,459,911 185.0%

5

LAURA J. SCHUMACHER AbbVie Inc. Vice chairman of external affairs, chief legal officer

6

Executive

18 19

Other compensation

Includes executives and former executives of public companies based in Cook, DuPage, Kane, Lake (Ill.), Lake (Ind.), McHenry and Will counties, as well as select public companies outside the seven-county area that are included due to their size. Salary ratios are based on the listed executive’s total compensation and the company’s median employee salary. “Change in pension value” also includes nonqualified deferred compensation. NA: Not available. NM: Not measurable.1. Geoffrey M. Price’s total compensation largely reflects stock and option awards related to Oak Street Health going public in August 2020, raising $377 million. 2. Griffin R. Myers’ total compensation largely reflects stock and option awards related to Oak Street Health going public in August 2020, raising $377 million. 3. Brandon M. Cruz’s total compensation largely reflects stock awards related to GoHealth going public in July 2020, raising $914 million. 4. Carlos Alban was vice chairman and chief commercial officer of AbbVie until the end of the first quarter 2021.

5. Carlos A. Abrams-Rivera became U.S. zone president of Kraft Heinz on Feb. 3, 2020. 6. Ryan P. Barretto became president of Sprout Social on Dec. 28, 2020. 7. Barretto’s total compensation largely reflects stock awards, one of which was granted in relation to his promotion as president. 8. Alexander W. Gourlay was co-chief operating officer of Walgreens Boots Alliance until May 17, 2021. 9. Robert E. Funck Jr. became executive vice president of finance and CFO of Abbott Laboratories in March 2020. 10. Heidi B. Capozzi became executive vice president and global chief people officer of McDonald’s on April 13, 2020. 11. Jeff A. Jacobson was global CEO of LaSalle Investment Management until December 2020. 12. James A. Skinner was executive chairman of Walgreens Boots Alliance until March 2021.

Data provided by S&P Global Market Intelligence, with additional research by Sophie Rodgers (sophie.rodgers@crain.com)

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6/10/21 7:45 AM

18 JUNE 14, 2021 • CRAIN’S CHICAGO BUSINESS

PEOPLE ON THE MOVE

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

ARCHITECTURE / ENGINEERING

EDUCATION

LAW

NON-PROFIT

TECHNOLOGY

Klein and Hoffman, Chicago / Philadelphia

Keypath Education, Chicago

Benesch, Chicago

Discovery Partners Institute, Chicago

Judy Ball joined global EdTech company Keypath Education as its Global Vice President, Talent. Judy spearheads Keypath’s global talent acquisition efforts, positioning the company for current and future growth. Judy brings more than 25 years of experience in human resources and talent acquisition in technology, healthcare, insurance, and professional services industries. Before joining the company, Judy was head of Talent Acquisition for Zurich NA.

Laura Seferian has joined Benesch as an Associate in the firm’s Litigation Practice Group. Laura has broad commercial litigation experience, where she focuses on breach of contract, fraud, and intellectual property disputes.

Chicago Citywide Literacy Coalition, Chicago

Klein and Hoffman, Inc. welcomes Caitlin Maggiano, PE, as a Senior Associate II in its Philadelphia office.

Maggiano brings 12 years of experience working in the repair and restoration field routinely developing thoughtful solutions to unique problems for distressed buildings. “Caitlin is an excellent addition to the Klein & Hoffman family and will enhance our tradition of providing top-level service to our clients and mentoring and growing our staff,” says CEO Homa Ghaemi.

Chuhak & Tecson, P.C., Chicago Paulina Garga-Chmiel has been elevated to principal. Paulina represents secured and unsecured lenders in foreclosure litigation, bankruptcy matters, collection actions, breach of contract disputes, SBA loan workouts and loss mitigation. She also manages evidentiary hearings and argues contested motions in both state and federal courts. Utilizing her native language at the Amicus Poloniae legal clinic, Paulina provides pro bono legal services to underserved members of the Polish community.

CONSTRUCTION Northern Builders, Inc., Schiller Park Northern Builders, Inc. is pleased to announce the promotion of Patrick M. Ennes to Senior Project Manager. In his expanded role, Patrick will assume a leadership Ennes role in the overall oversight of the design build process including expanded involvement with municipalities, architects, and engineers to find creative and cost-effective solutions to enhance schedule and ensure quality.

Voltz Northern Builders is also pleased to announce the promotion of Jack E. Voltz to Project Manager.

In his new role, Jack is responsible for managing all phases of construction including design, permitting, and scheduling while ensuring each project meets Northern’s high standards of quality, timing, safety, and performance.

CONSTRUCTION SERVICES

FINANCIAL SERVICES Baird Capital, Chicago Baird Capital announced that Rebecca (Becca) Schlagenhauf has joined its Global Private Equity team as Vice President. She will focus on investments within the Industrial Technology & Solutions sector. Schlagenhauf comes to the firm from Northwestern Mutual Capital and prior to that, spent six years on Baird’s equity research team. She was named an “Up-and-Coming Woman in PE to Know” by McGuireWoods in 2019. Schlagenhauf earned a BS from Notre Dame and an MBA from Kellogg School of Management.

Bulley & Andrews, Chicago David Linden has been elevated to executive vice president of Bulley & Andrews (B&A). In his expanded role, Dave provides executive purview for out-of-town Linden assignments while continuing to lead B&A’s corporate and commercial business unit. During his 20+ year career, Dave has grown the firm’s corporate portfolio threefold.

Joe Koppers has been promoted to Koppers vice president of B&A. During his 23-year career with B&A, Joe has cultivated a best-in-class field operation and earned an enviable reputation for integrity, inclusion and fairmindedness throughout the industry. As vice president and director of field operations, Joe is dedicated to implementing best practices among B&A’s field forces with an emphasis on technology and quality control.

LAW

INVESTMENT

NON-PROFIT The Resurrection Project, Chicago Vicky Arroyo has been named President and Chief Operating Officer at The Resurrection Project. Vicky was a senior bank executive with over 30 years of experience developing strategies to exceed investment objectives and community development goals working with multiple lines businesses. In her role, she oversees community wealth building, real estate development/assets, and community engagement and advocacy. She earned a bachelor’s in Accounting from DePaul University.

LAW MPS Law, Chicago Evan D. Blewett has joined MPS Law as a Partner in the firm’s downtown Chicago office, where he will continue to build his successful practice in the areas of secured lending, real estate transactions, commercial litigation, contract law, and corporate compliance.

He primarily represents local, regional and national lenders and is one of the few attorneys nationwide whose practice focuses primarily on Small Business Administration (SBA) loans.

OCA Ventures, Chicago OCA Ventures, an earlystage technology venture capital firm headquartered in Chicago, today announced that David Kokonas has been promoted to Senior Associate and Dana Sun Kokonas has joined the firm as a Senior Associate. Kokonas joined OCA Ventures as an associate in 2019 and is focused on investments in core technologies and fintech. Kokonas brings considerable experience in early-stage technology Sun investing.

Sun returns to OCA Ventures where she was an associate in 2019 and is focused on investments in digital health, diagnostics, and medical devices. Sun brings a wealth of expertise in venture capital and healthcare technology.

Latisha Bell joined Chicago Citywide Literacy Coalition board to share knowledge gained from professional experiences to organize and empower. Her goal is to ensure CCLC is a great place to work and create and strengthen partnerships within the communities we serve. Bell is an experienced HR Business Partner within Amazon’s People Experience and Technology team. Bell has more than 16 years of broad knowledge of human resources.

Bell will advocate for literacy resources and improved services.

PRIVATE EQUITY FSB Companies, Chicago The FSB Companies welcomes Collin Didier to the team as a software engineer. Prior to discovering his passion for technology, Collin spent 10 exciting years as a real estate entrepreneur and developed a broad skillset in finance, sales, appraisal and investment. Collin now enjoys using his synergistic, cross-industry experience to inform and bolster software development for the FSB Companies’ portfolio.

Discovery Partners Institute (DPI) is pleased to announce that Mauriell H. Amechi and Sarah Cashdollar have joined the DPI team as visiting researchers. Dr. Amechi Mauriell Amechi is a social scientist, professor, consultant, and fierce advocate committed to educational equity, particularly improving postsecondary access and success among historically marginalized student populations.

Cashdollar Dr. Sarah Cashdollar is an interdisciplinary researcher whose work centers on youth preparation for the transition from high school to postsecondary education and work. She is particularly interested in issues of stratification and equity in workforce development, Career and Technical Education, and postsecondary education.

TECHNOLOGY IAA, Inc., Westchester Peg Burr has joined IAA, Inc. as Sr. Vice President of Product Management with a proven track record in strategy and growth of global product portfolios. Burr was Vice President and Global Product Portfolio Leader for the Digital Business of Cognizant.

Prior to Cognizant, she led global end-to-end product strategy and management as a Managing Director with Accenture. Burr will leverage her extensive product strategy and management expertise to further IAA’s product leadership position.

TECHNOLOGY Proven IT, Chicago

REAL ESTATE ML Realty Partners, Itasca

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

Caroline Kruse joined ML Realty Partners as Asset Manager. She will focus on Chicagoland and Dallas-Fort Worth portfolio operations and asset management. Ms. Kruse comes from CBRE as Senior Real Estate Manager and holds a Bachelor of Arts degree from Purdue University.

Proven IT, a national leading technology firm, is proud to announce that Bill Burfeind is joining the leadership team as Chief Revenue Officer. Burfeind leverages 25 years of experience in professional services and commercial office solutions. He offers decades of organizational sales process, revenue generation, and account management expertise to support Proven IT’s growth strategy and customer focused services. Proven IT has been on Inc. 5000’s list of fastest growing companies for six years.

CRAIN’S CHICAGO BUSINESS • JUNE 14, 2021 19

JOHN R. BOEHM

The most rapidly growing area companies in 2020 had a decidedly tech bent

The economic tumult born out of COVID-19 dominated business conditions for most companies in 2020, but for the lucky stars in Crain’s annual Fast 50 list of the area’s most rapidly growing companies, it was hardly a blip in an upward sales trajectory stretching five years and longer. Chicago’s famously diversified economy was reflected in the list, though most of the winners had a technology edge. RedShelf shows college textbook publishers how to transition customers away from print to digital books. OSM delivers parcels, but its growing business has been fattened by e-commerce clients. Neighborhood Loans supplies mortgages, conducting the application process online. Transportation One is a brokerage steering customers to the best pricing and services for trucking and rail arranged online. CoinFlip, a seller of digital currencies through ATMs that topped our Fast 50 list, saw its revenue soar more than fivefold in 2020 to surpass $50 million. Read on for more. STORIES BY H. LEE MURPHY

CoinFlip co-founders Daniel Polotsky, left, and Benjamin Weiss

COINFLIP

What it does: Cryptocurrency ATM banker | 2020 revenue: $50.6 million | 5-year growth: 1.72 million percent | Employees: 182 total, 182 local Profitable: Yes | Location: Chicago

CoinFlip can be excused for its modest growth in the first few years after its founding in 2015—it took some four years for the fledgling company to reach its first $1 million in annual sales. Co-founders Daniel Polotsky and Benjamin Weiss, who graduated from Deerfield High School together only in 2013, were busy putting themselves through college—Polotsky at Northwestern and Weiss at Vanderbilt— while running the business part time from their dorm rooms.

The pair, both 25, recently changed roles, with Polotsky giving up the CEO title to step back as an adviser on big-picture strategy

P019-P025_CCB_20210614.indd 19

while Weiss, formerly the chief operating officer, took over as CEO. “I’ve always been the operations guy, while Daniel was the vision and ideas guy,” Weiss says.

CoinFlip, legally known as GPD Holdings, owns and manages ATMs that deal in a half-dozen digital currencies, though bitcoin consumes 90 percent of all company transactions. From a standing start of 10 ATM m five years ago, the company’s network has grown to more than 2,000 machines in 47 states, with most of them in convenience stores, liquor shops and gas stations, often adjacent to ordinary ATMs. In the early going, business owners were skeptical about the technology and slow to yield floor space to CoinFlip, but now its

business has taken off, with some 330 new machines, all produced in the Czech Republic by a manufacturer known as General Bytes, going into the market each month.

ATM licenses are pending in New York, Rhode Island and Vermont, the only states remaining beyond CoinFlip’s reach. “New York has been a very hard place to get an ATM license,” Weiss observes.

How does CoinFlip work? Customers carry accounts, or digital wallets, in their own names and trade in bitcoins or other currencies—with 90 percent of all transactions comprising deposits taken in cash only. It may seem ironic that a digital currency can be acquired only with cash, but Weiss is unapologetic. “People

for 20 years have been saying that cash is dying, but it’s not true,” he says. “More people use cash than you think.”

The co-founders got the idea for their business five years ago when they noticed that bitcoins, still a hobby for many at the time, were growing in popularity but still inaccessible for many investors wishing to buy in. An ATM format, they figured, would bring digital currencies to the masses.

They were right. There are now 16,250 cryptocurrency ATMs spread around the U.S., with CoinFlip ranked No. 2 in the industry behind Coin Depot, based in Atlanta. Growth for everybody has jumped See COINFLIP on Page 22

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20 JUNE 14, 2021 • CRAIN’S CHICAGO BUSINESS

GREEN THUMB INDUSTRIES Overall cannabis sales in Illinois amounted to roughly $25 million in December 2019. Some 16 months later, Green Thumb Industries CEO Ben Kovler notes, in March of this year state sales reached $115 million. In the same period, the company nearly doubled its store count in Illinois from five to nine. (A 10th location is a joint venture between GTI and Verano, a Verano-branded store in Charleston.) “We think Illinois sales will double again before long,” says Kovler, 42.

The publicly traded company, founded seven years ago by Kovler, a philosophy major as an undergraduate who was later an eighth grade schoolteacher in California, is outracing the cannabis industry in growth as it acquires competitors and broadens its reach by raising capital. In

February it got $100 million by issuing stock to a single investor, and then in late April raised $217 million with a debt offering at 7 percent, significantly cheaper terms than most rivals are getting. In April Green Thumb said it was acquiring Dharma Pharmaceuticals and entering the Virginia market with Dharma’s five medical marijuana licenses and production facility. The company has 13 production facilities in 12 states and has licenses for some 100 retail locations in all.

More than 30 states have made cannabis legal, and it seems clear that Green Thumb is plotting a move into most of them. In rough numbers, the industry nationwide grew overall from $11 billion in sales in 2019 to $18 billion last year, and Kovler is predicting it will keep growing to $80 bil-

TODD WINTERS

What it does: Producer and seller of cannabis | 2020 revenue: $556.6 million | 5-year growth: 95,651% | Employees: 2,219 total, 405 local | Profitable: Yes | Location: Near North

lion or more by 2030. If that happens, cannabis would be bigger than the liquor industry, now pegged at $32 billion in annual revenue, the wine industry at $62 billion and nearly as big as tobacco at $100 billion.

“Illinois by itself will go from $1 billion or so in annual revenue to $4 billion easily, probably within five years,” says Kovler.

“That tells you we don’t have to rush into

every state to achieve growth.”

It helps, he adds, that the company is building brands with national recognition such as Incredibles, an edible cannabis, and Rythm Flower, a big seller that is often vaped. Green Thumb is sponsoring seminars to educate customers on such nuances of weed as potency and vintage differences.

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RHM STAFFING SOLUTIONS

What it does: Staffing contractor | 2020 revenue: $33.4 million 5-year growth: 39,605%1 | Employees: 110 total, 80 local Profitable: Yes | Location: Oak Brook

Manufacturing is booming as the nation comes out of the pandemic, but one employer after another complains that workers are scarce. The search is intense for machinists, engineers and tool-anddie makers.

Industrial companies have used classified ads, social media and referrals from current workers, but increasingly many are being forced to turn to talent search firms like RHM Staffing Solutions, which specializes in the so-called contract-tohire segment for factories, meaning that it stands to collect commissions on both a new hire’s temporary wages as well as any permanent job offer that often comes later.

If employers can’t find industrial workers, how does RHM do it? Managing part-

ner Andy Matheou, 43, admits that “good talent is in short supply.” But the company has become practiced at searching out students at technical schools, junior colleges and even high schools, often just before they graduate. Another good source for leads comes from current clients who have friends with similar skills.

Of course, there is plenty of poaching from rival companies. “Individuals are often ready for a change. Maybe they want to work closer to home. Or maybe they want to work a day shift instead of night.

Or maybe they just want better pay,” says Matthew Houder, 45, Matheou’s co-managing partner. “The marketplace is very fluid. We take advantage of that.”

The company is pushing into new mar-

R E

kets at an aggressive pace. From local hiring offices in Oak Brook and Schaumburg, RHM has opened satellites in Milwaukee, Indianapolis and Nashville. The owners are looking for more office space in the suburbs of Tinley Park and Deerfield and hope to land in the Twin Cities before long. They hope to hire another 70 recruiters themselves by the end of the year and reach the $50 million revenue plateau.

“We will grow in places like Ohio and

Michigan and Missouri,” Houder says.

“We might someday go national, but for now our focus is the Midwest. It’s the No. 1 market in the country for what we do.”

There is one more explanation for RHM’s recent growth. The company’s commissions are pegged to client pay.

Many industrial workers have seen their wages rise 25 percent in just the past three years. “The people who were making $12 an hour in 2018 are making $15 now,” Matheou says.

INSPIRE11

P019-P025_CCB_20210614.indd 20

preaching the whole world of digitization to clients by using the slogan “Goodbye to Normal.” It shows clients how to dig deep into data to understand consumer behavior, reduce the cost of supplies and shorten shelf life, along with a host of other functions. The company keeps offices in Chicago, Atlanta and Minneapolis as well as overseas in Kosovo and Macedonia. A search is on for office space in San Francisco and Seattle.

Competitors include much bigger consultants such as McKinsey and Boston Consulting. Clients run the gamut and include Northern Trust Bank and Great Dane Trailers, a Chicago-based maker of semitrailers. Mehmeti, 35, who was born and raised in Kosovo before fleeing the 1998 civil war there with his family, worked for several other consult-

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What it does: Digital and analytical consulting | 2020 revenue: $39.5 million | 5-year growth: 24,299%2 | Employees: 156 total, 135 local | Profitable: Yes | Location: West Loop

Inspire11 was founded five years ago as Hubbard State Partners, but CEO Alban Mehmeti came to realize in 2017 that “too many tech consulting firms are named for streets.”

The executive came up with the name Inspire, a reference to “changing how the world works,” he says. But then, as a big fan of the 1984 film “This is Spinal Tap,” he appended the 11 as a tribute to the hilarious fictional guitarist Nigel Tufnel, portrayed by Christopher Guest, who showed off his turbocharged amplifiers capable of going past the standard No. 10 on the sound scale. “It shows we go above and beyond here,” Mehmeti says.

Inspire11 isn’t much involved in issues as simple as designing websites or fixing sagging marketing programs. It’s

n E w c p

ing firms before starting his company with $175,000 in savings, working from coffee shops from the outset. Growth took off two years ago when noncompete contracts with former employers lapsed.

Mehmeti predicts Inspire11 will surpass $60 million in revenue this year while employment jumps to 250. He’s hardly complaining about COVID-19

and its impact on the economy. “We got eight new clients in the first two months of COVID, two of them Fortune 10 companies,” Mehmeti says. “Companies that were aware they needed to change began to see the pandemic as a wake-up call.

They decided they needed somebody like us to show them a new way of doing business.”

6/10/21 1:37 PM

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ELEMENTS GLOBAL SERVICES

FAST 50 SPOT LIGHT

1 N. Franklin St., Suite 2600 Chicago, IL 60606 312-392-0145 Elementsgs.com

Innovative Solutions Spur Fast Growth at Elements Global Services Expanding a business globally had to be easier than the standard brick and mortar processes of the past.

Just ask Rick Hammell. The Evanston native founded Elements Global Services in 2015 because he wanted to give all businesses an opportunity to compete within the global market with a partner that understood the complexity of trying to expand their business, onboard employees, manage compliance and pay globally. In another life, Rick managed human resources for a government contracting firm that had contracts across Asia and used a global professional employer organization to manage employees. As the head of HR for that organization, his goal was to focus on the employee experience to make sure they felt they were part of the organization. But problems using that provider ranged from late payrolls and delays in onboarding new employees, to compliance issues and red tape, mainly because they were outsourcing to third party local providers.

“As a client, I knew what didn’t work,” says Hammell. “So, I decided to create a better Rick Hammell, Founder & CEO, business model.”

Elements Global Services

management and payroll platform, allows customers to onboard and pay employees in as little as three days, while Expandopedia, its business intelligence platform, collects HR, tax and regulatory compliance information from over 150 countries to ensure companies are always compliant. “Our technology has disrupted the marketplace,” Hammell says.

With 10 offices overseas and 3 offices in the US, Elements is a truly diverse organization. “Our leadership team is global,” says Hammell. “We speak a combined 98 different languages.”

Hammell’s goal is to have Elements hit a market valuation of $7 billion in the next 3-5 years, partly through acquisitions.

“You have to be ambitious to be successful,” says Hammell. The busy 35-year-old CEO even has a book coming out in September. The apt title: Getting Sh*t Done: The Millennial CEO.

The solution? Hammell designed a new approach by leveraging technology to pioneer a service he coined the direct Employer of Record (EOR). Elements owns legal entities in over 150 countries and works with companies to help them expand quickly overseas without the HR and compliance hassles that come with it. Elements handles everything from global payroll and benefits to local compliance and visas and global mobility.

What sets Elements apart is that it doesn’t use third parties. “We own and operate every entity with which we do business in every country,” Hammell says. “We do all the upfront work. That way we can give our clients a cost-effective speed to market solution.”

The innovative business model is a winner, spurring rapid growth.

Elements Global Services’ brand-new global HQ in the Chicago Loop

Elements has managed over 3,000 worksite employees worldwide on behalf of its customers. The company itself has more than 250 employees globally, 58 of whom are in the Chicagoland area, where it is headquartered. The company added 115 employees in the last 12 months, with plans to add another 200-250 in the next 18 months.

Annual revenues at Elements typically grow by more than 100 percent. Though COVID slowed business last year, revenue still grew over 45 percent. The company is on track this year to double its revenue by the end of July and triple it by the end of the year. “Business has taken off like wildfire,” says Hammell. “Companies have started to catch on to the new way of global expansion.”

The big advantages Elements simplifies global expansion, allowing companies to explore new markets quickly, cost-effectively and easily before launching a costly full entry. For example, one company looking to set up show urgently in China was held back by the country’s entity set-up process, which could take as long as 18 months. However, partnering with Elements, it was able to onboard its first employees in the country within two weeks, giving it a crucial speed to market advantage and enabling it to quickly gain a foothold. After 18 months, the company managed 50 employees in China through Elements. “It was a true testament to the efficacy of our solutions,” Hammell says.

Elements Global Services simplifies global expansion

Another plus: Companies don’t have to worry whether they’re compliant with foreign labor or tax regulations and laws.

Technology has been a major catalyst for Elements’ growth. It developed and launched two proprietary HR technology platforms in 2020 with the aim of further simplifying its customers’ experiences. ApprovPay, its global human capital

P019-P025_CCB_20210614.indd 21

6/10/21 12:55 PM

22 JUNE 14, 2021 • CRAIN’S CHICAGO BUSINESS

SPONSORED CONTENT

FAST 50 SPOT LIGHT

EDGE LOGISTICS 333 N. Michigan Ave., Suite 1200 Chicago, IL 60601 312-319-4766 edgelogistics.com

Edge Logistics Drives Growth with Digital Strategy The challenges of the past year have put logistics in the spotlight. Companies need reliable partners to get their products to their customers on time.

As one of Chicago’s fastest growing companies, Edge Logistics offers their advanced digital platform that matches shippers and truck load carriers. If you love the freight, the Capacity app speeds the bidding and booking process allowing all parties to focus on innovation and working harder. The company has been recognized by a number of publications including Inc. Magazine’s Inc 5000 Regionals: Midwest 2021.

Headquartered in Chicago, Edge has additional offices in LA, Detroit and NY.

Though business was impacted at the height of the pandemic, a big rebound is underway.

Headquartered in Chicago, Edge Logistics today has 65 employees in the U.S. Kerr expects 2021 revenues to top $120 million, noting that all the hard work their team put in while decentralized during the pandemic is paying off now, and they intend to continue to grow.

“Our proprietary technology solution, Capacity, has fueled our tremendous growth,” says Will Kerr, president and founder of Edge Logistics.

Kerr launched the company just six years ago starting with a small team of five that quickly persevered and grew organically. Revenues hit of $71.5 million in 2020, a 43 percent jump from revenues of $50 million the previous year.

The Edge team joined for their annual softball league this summer in Grant Park.

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SHIPBOB What it does: E-commerce packaging and shipping 2020 revenue: $124.8 million | 5-year growth: 9,376% | Employees: 670 total, 360 local Profitable: Yes | Location: West Loop

Throughout the 2020 pandemic year, e-commerce gained momentum as malls and retail stores everywhere went into lockdown. That only drove more business to ShipBob, which is rapidly expanding around the country as a significant shipping alternative to Amazon. Online shopping rose at least 20 percent amid COVID-19; ShipBob’s revenue doubled in 2020.

An infusion of $68 million in new capital raised from Tokyo-based SoftBank and other investors in September will turbocharge the company’s expansion in coming months. A year ago ShipBob ran 10 warehouse fulfillment centers around the U.S. By midyear, CEO Dhruv Saxena expects to have 25 warehouses up and running, with new fulfillment occurring in places like Louisville, Chattanooga and Twin Lakes, Wis. In the past year the company has made the jump to global markets, with warehouses in Ireland and Canada and more coming soon in England and Australia. Another center in Germany will likely be announced by the end of the year.

Sometime in 2022 Saxena hopes to reach 50 fulfillment centers overall. ShipBob represented 5,000 sellers a year ago and has reached 8,000. “We continue to grow by opening more locations in places we’ve never been before,” Saxena says. He has no ambition to follow Amazon’s lead in erecting massive warehouses of 500,000 square feet and more. A typical ShipBob footprint continues to be closer to 100,000 square feet. “At that size we can be more nimble and reach profitability in each center faster,” he says.

The company recently has hit on another avenue for growth. Until now the focus has been in serving individual consumers getting their shipments at home. The company will begin promoting more business-to-business shipping. “Say you’re selling shirts one at a time to customers online,” Saxena explains. “But then Macy’s picks up on your brand and decides it wants to sell them out of all its stores. We can go from shipping a shirt at a time to packing up and delivering hundreds of shirts to Macy’s stores. That could give us a real boost in volume.”

6/7/21 9:23 AM

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A SUPPLEMENT OF CRAIN’S CHICAGO BUSINESS

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I a p fi

The MAKING IT guide will connect Chicago area students, parents and career counselors with employers searching for skilled trade talent and offering rewarding careers.

Learn how to get in front of your future workforce.

Contact Sarah Chow at Schow@crain.com or 312-280-3172

P019-P025_CCB_20210614.indd 22

CoinFlip rides bitcoin wave COINFLIP from Page 19 as the price of digital currencies has zoomed. A decade ago the stillnew bitcoin was priced under $6. In March of this year the price leapfrogged in a 30-day span by 30 percent to exceed $58,000. CoinFlip makes its money by charging nearly 7 percent commission on every buy order and 5 percent on sell orders. If that sounds steep, most competitors charge more. An average transaction, once $200, has risen closer to $300 recently, the company reports.

In the past year CoinFlip has expanded to such states as Hawaii, New Mexico and Maine, typically placing machines in mom-andpop stores in rural areas. Where is all this going? The company hopes to get to a total of 3,500 ATMs by the end of the year and also raise new capital from private-equity investors. An initial offering of public stock will come sometime after that.

“I can foresee an IPO in the next 18 to 24 months, though I can’t make any promises on that,” Weiss says. “We get calls constantly from people who want to invest. But we’re already very profitable.

We want to take on investors who can add value to our company in other ways.”

A public market for the company could be very profitable for shareholders, it seems. Even so, it’s hard to imagine how any mere stock could match the performance of bitcoins themselves, up 30 percent in March alone. There is also the worry that the market has gotten wildly overinflated and has been set up for a crash. Weiss concedes the possibility. “People do get nervous when the price goes down,” he says.

6/10/21 1:37 PM

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THE MATHER GROUP

FAST 50 SPOT LIGHT

353 N. Clark St., Suite 2775 Chicago, IL 60654 888-537-1080 Themathergroup.com

Client-Centric Strategy Fuels Growth at The Mather Group While the wealth advisory industry has taken a more consumer-focused approach lately, the Mather Group has always put the best interest of their clients before any profit. That’s a big reason why the firm is one of the fastest growing companies in Chicago.

The Mather Group is a registered investment advisor (RIA). An RIA is “registered” with the SEC and held to a fiduciary standard. That means it must recommend the best investments for its clients based on their goals and objectives.

“Our financial advisors always do the right thing—no matter what,” says Christopher Behrens, CEO at The Mather Group. “We put the clients’ interests first.”

The Mather Group’s focus is exclusively on our clients and their financial success.

Headquartered in Chicago, with offices in Atlanta, Austin, Dallas, Houston Knoxville and the Philadelphia area, The Mather Group serves affluent and ultra-affluent families and individuals.

The Mather Group’s CEO, Christopher Behrens

The Mather Group was founded in 2011 with $150 million in assets under advisement. Rapid growth has driven the firm’s total assets under management to more than $6.2 billion.

With 44 employees in Chicago, The Mather Group has 104 employees in total nationwide. Another 15-20 employees are expected to be added in the next 12 months.

Revenue jumps 150 percent The client is at the center of the firm’s successful growth strategy.

Investment recommendations are not tied to commissions. Advisors offer unbiased advice. Clients pay for the firm’s expert advice on a fee-only basis, typically as a percentage of assets under management. This approach aligns the interests of the firm and the client.

The Mather Group simplifies clients’ lives by acting as a one-stop investment advisory shop. The firm offers a comprehensive range of in-house services, including tax preparation, tax advice, portfolio management, concentrated stock management, risk assessment, estate planning guidance and comprehensive financial planning.

TMG giving back during a volunteer philanthropy event in support of A Better Chicago.

In-house CPAs and other professionals make it easy. The tailored approach meets clients’ objectives during their working careers and through retirement.

A tech-forward approach has also helped to fuel growth at The Mather Group.

Innovative technology provides a straightforward and transparent client experience.

The pandemic accelerated the firm’s digital capabilities, according to Behrens. He has experience leading major corporate growth initiatives as well as expertise in financial technology and SaaS-based software services. He says that clients have embraced new technologies, such as virtual meetings, adding, “Firms that utilize technology will succeed.”

The client-centric approach has been a success. The Mather Group has grown its client base 90 percent in the last two years, from 1,139 in 2018 to 2,161 in 2020.

Revenues in the same period increased from $10.1 million to $25.5 million, a jump of more than 150 percent. Revenues are projected to top $40 million this year.

Acquisitions are part of the firm’s growth strategy. In January, The Mather Group acquired Trinity Financial Advisors, a Chicago-based fiduciary-only firm with $187 million in assets under management. The acquisition marked the 8th acquisition by The Mather Group in less than two years.

TMG team members collaborating on tech and business process improvement initiatives.

The firm has more acquisitions in the works. Behrens expects to have added four new partner firms by the end of this year’s third quarter. “Our goal is to continue to bring on clients organically and through acquisitions to become a significant-sized, national boutique firm in the RIA wealth management space,” he says.

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6/7/21 12:57 PM

24 JUNE 14, 2021 • CRAIN’S CHICAGO BUSINESS

CRAIN’S LIST FAST 50 Ranked by 5-year growth

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41

Total full-time employees Local full-time employees as of 12/31/2020 as of 12/31/2020

Company/town

5-year growth

2020 revenue

Profitable in 2020?

REDSHELF Chicago

6,483.3%

109

OPPFI Chicago

3,592.6%

WAVICLE DATA SOLUTIONS Chicago

91

$87.1 million

No

Provider of digital textbooks and related distribution software

541

521

$323.0 million

Yes

Financial technology platform

2,371.7%

100

88

$21.1 million

Yes

Data and analytics

REDMOND CONSTRUCTION CORP. Chicago

1,987.2%

26

26

$33.5 million

Yes

Commercial general contractor

RICHARD GROUP Glenview

1,691.4%

27

25

$28.1 million

Yes

Commercial general contractor

CLOUDBAKERS Chicago

1,367.0%

89

71

$42.4 million

Yes

Cloud technology migration

VISTA TRANS Lake in the Hills

1,089.7%

85

43

$86.5 million

Yes

Transportation logistics

ELEMENTS GLOBAL SERVICES Chicago

1,033.3%3

186

26

$75.1 million

No

HR services company specializing in global expansion

ARDMORE RODERICK Chicago

856.0%

217

188

$46.2 million

Yes

Engineering design and construction management firm

NEIGHBORHOOD LOANS INC. Downers Grove

777.7%

392

242

$116.2 million

Yes

Residential mortgage lender

HIREOLOGY Chicago

715.6%

163

125

$29.4 million

Yes

Developer of web-based hiringmanagement software

EDGE LOGISTICS Chicago

693.6%

58

38

$70.1 million

No

Freight broker

M

GOHEALTH Chicago

616.1%

3,000

779

$877.4 million

Yes

Health insurance technology

C&G CONSTRUCTION SUPPLY CO. Calumet City

590.3%

7

7

$15.4 million

Yes

Construction materials supplier

W w Fa

THE MATHER GROUP Chicago

537.8%

97

49

$25.5 million

Yes

Registered investment adviser

SPROUT SOCIAL Chicago

494.8%

703

474

$132.9 million

No

Social media management software for businesses

FULTON GRACE REALTY Chicago

484.3%

49

49

$18.9 million

Yes

Real estate management and brokerage services

ENDURANCE WARRANTY SERVICES Northbrook

466.0%

675

384

$731.7 million

Yes

Automotive extended warranty provider

AGB INNOVATIVE SECURITY SOLUTIONS Chicago

463.8%

1,000

980

$31.6 million

Yes

Security firm protecting people, property and data

CAPGROW PARTNERS Chicago

434.6%

10

10

$15.7 million

Yes

Community housing for individuals with behavioral health needs

TRANSPORTATION ONE Chicago

433.5%

45

45

$75.0 million

Yes

Logistics services

OSM WORLDWIDE Glendale Heights

431.9%

150

75

$319.7 million

Yes

Parcel shipping carrier

BOUNTEOUS Chicago

419.2%

616

156

$101.1 million

Yes

Digital experience consultancy

WYNNDALCO ENTERPRISES LLC Addison

415.1%

23

17

$20.0 million

Yes

IT managed services firm

GRUBHUB Chicago

403.0%

2,714

1,163

$1.8 billion

Yes

Online food ordering

DEVBRIDGE Chicago

387.5%

502

58

$51.8 million

Yes

Custom software design and development

MILLENNIUM TRUST CO. Oak Brook

384.1%

352

340

$230.7 million

Yes

Financial services

PERKSPOT Chicago

384.0%

88

85

$22.2 million

Yes

Employee discount and recognition platform

PARTS TOWN LLC Addison

322.3%

2,192

665

$788.4 million

Yes

Restaurant equipment parts distribution and services

W.S. DARLEY & CO. Itasca

317.9%

310

80

$628.9 million

Yes

Manufacturer and distributor of first responder equipment

LAUNCH TECHNICAL WORKFORCE SOLUTIONS Oak Brook

306.1%

1,112

104

$100.6 million

Yes

Technical workforce solutions provider for aviation, industrial and transportation

HBR CONSULTING Chicago

301.5%

328

117

$110.5 million

Yes

Strategic guidance and operational solutions for the legal industry

RIGHT AT SCHOOL Evanston

287.5%

275

85

$22.5 million

No

In-school child care and extracurricular programs

PAYLOCITY Schaumburg

267.6%

3,600

1,227

$561.3 million

Yes

Cloud-based payroll and HR management software

GP TRANSCO Joliet

244.6%

326

260

$96.8 million

Yes

Truckload services

REDWOOD LOGISTICS Chicago

236.3%

760

400

$764.7 million

Yes

Logistics platform company

P019-P025_CCB_20210614.indd 24

Company description

1. on

w b

6/10/21 1:37 PM

CRAIN’S CHICAGO BUSINESS • JUNE 14, 2021 25

5-year growth

Total full-time employees as of 12/31/2020

Local full-time employees as of 12/31/2020

2020 revenue

Profitable in 2020?

HALO BRANDED SOLUTIONS Oakbrook Terrace

206.4%

1,775

47

$764.7 million

Yes

Distributor of promotional products and employee recognition services

WALKER SANDS Chicago

204.9%

139

114

$21.3 million

Yes

B2B marketing

EGEN Naperville

203.8%

204

130

$51.2 million

Yes

Data engineering and cloud services

OVERTURE PROMOTIONS Waukegan

199.1%

150

144

$126.9 million

Yes

Promotional products

AARETE Chicago

189.8%

287

192

$74.5 million

Yes

Management consulting

BCD INTERNATIONAL Buffalo Grove

183.0%

73

67

$101.1 million

Yes

Video surveillance recording systems

CMC MATERIALS Aurora

169.6%

2,085

397

$1.1 billion

Yes

Supplier of materials to semiconductor manufacturers and pipeline operators

MEDSPEED Elmhurst

166.7%

1,864

414

$159.9 million

Yes

Health care logistics, same-day transportation

ARCO/MURRAY NATIONAL CONSTRUCTION CO. Downers Grove

150.4%

315

315

$478.6 million

Yes

Design and construction, specializing in commercial

Company/town

42 43 44 45 46 47 48 49 50

Company description

1. RHM’s growth rate is based on prorated 2015 revenue of $84,204 because the company was founded in late May 2015; actual 2015 revenue was $49,119. 2. Inspire11’s growth rate is based on 2016 revenue because the company was incorporated on Dec. 31, 2015. 3. Elements Global Services’ growth rate is based on 2016 revenue; the company did not submit 2015 revenue because it became independent in September 2015.

Research by Plante Moran and Crain’s (researcher@chicagobusiness.com)

METHODOLOGY Working with accounting firm Plante Moran, we had these ground rules for choosing the Fast 50: w We considered only firms that have been in business at least since Dec. 31, 2015, and were

located in the seven-county metro area. w We excluded real estate investment trusts, regulated banks, real estate developers, utilities, holding companies, subsidiaries/divisions, franchises and nonprofit organizations.

w Small companies (those reporting less than $15 million in 2020 revenue) were likewise not considered. w Another criterion: no more than one drop in revenue from 2015 to 2020.

r

y

n

n

-

P019-P025_CCB_20210614.indd 25

6/10/21 1:37 PM

26 JUNE 14, 2021 • CRAIN’S CHICAGO BUSINESS

Two towers sprung up while you were working from home

BY EDWARD KEEGAN Chicago’s skyline has always been a work in progress, but with many of us essentially hibernating for the last 14 months, it’s startling to find immensely tall buildings that have seemingly sprung from nowhere during our Year of Living Inside.

The long-vacant block of land between State and Dearborn, Chicago and Superior is now home to two new towers and an immense podium structure designed by two Chicago architectural firms: Goettsch Partners and Hartshorne Plunkard Architecture.

Located directly across the street from Holy Name Cathedral, the plot has long defied redevelopment. As something of an unplanned homage to anti-development sentiments, the single-story concrete block Bella Luna Café continues to defiantly hold down the corner of Dearborn and Superior.

Dubbed One Chicago for the street address of its northeast corner, the mixed-use project will accommodate a health club, supermarket and restaurant, as well as rental and condominium apartments in the towers.

The multistory podium structure brings a liveliness to the four surrounding streets that has been missing in near memory. Once they’re occupied, the corner of Chicago and State promises to bustle as it should.

The architects have toiled to

make the base much more than a simple box, with varying degrees of success. The corner of State and Chicago is a highlight, with sleek stacked boxes sitting above the sidewalk. Much of the base’s façade along Chicago and Dearborn comprises an oddly detailed grid which is considerably fussier than necessary.

Along Superior, an asymmetrical composition of striated glass and vertical fins provides the complex’s most daring single formal element and could have provided a template for other parts of the block. It’s the least-trafficked of the four streets that define the complex, but the architects have made it worth a look.

MISMATCH

The 49-story apartment building

by Hartshorne Plunkard Architecture sits atop the podium structure on Chicago. The 574-feet-tall building is rather unexceptional in its straightforward expression of structure. In an era when so many tall buildings are hopelessly contorted or overwrought, this is a relatively quiet building.

But it’s at the complex’s southeast corner where the design poses its biggest questions. Here, the Goettsch-designed 971-feet-tall main tower is positioned directly opposite Holy Name Cathedral, with a 50-feet deep plaza that is really a widened sidewalk on the west side of State Street.

YOCHICAGO.COM

The long-vacant block across from Holy Name is now home to One Chicago, two buildings connected by an immense podium—here’s an architectural critic’s take

One Chicago will accommodate a health club, supermarket and restaurant, as well as rental and condominium apartments in the towers. Once they’re occupied, the corner of Chicago and State promises to bustle.

While the church’s predecessor was the tallest building in the city between 1854 and 1869, the current spire leaps a mere 210 feet into the air, hardly a height that is noticed in this neighborhood.

Creating a small plaza in front of the cathedral would seem to be a welcome gesture, but the mismatch in scale between One Chicago’s 971 feet and Holy Name’s 210 feet renders it counterproductive. It would have been more compelling had the tower been located elsewhere on the block and if the designers had used a portion of the more human-scaled podium to create a similarly sized public space on State Street.

The designers have cited the art deco stepped forms of New York’s Rockefeller Center as an inspiration for their articulation of the main tower’s considerable girth

and from a block or more away, this seems apt and gives the building a properly memorable presence on the skyline.

Rather than sheath the tower in glass panels, which is Goettsch’s standard answer to clad their designs, they’ve opted for a dull metal and glass skin that seems unfortunately labored and draws attention away from the structure’s otherwise well-conceived massing. The exterior panels have a metallic sheen, but it’s a decidedly dull one when experienced up close.

Goettsch Partners have always been extraordinarily facile with their design of glass towers. Their 150 North Riverside Plaza has always been most memorable for its dramatic east face that is cantilevered over the Riverwalk and below grade railroad tracks, but the simple rectangular volume is

subtly sculpted on each of its faces with the glazing slightly different on each face.

They’ve modeled One Chicago in a similar manner, but here vertical elements are deployed across the façades. These panels express the building’s structural frame, but their bland beige tone can be read as metal, stone or just blah.

If Chicago were a medieval European village—and there’s nothing like a pandemic to make us realize that it’s not that much of a stretch—the cathedral would have a strong presence on the skyline.

But the secular commercial city asserted its dominance here more than a century ago, and there’s no turning back. What we might wish is that commercial projects like One Chicago be a little subtler in their engagement with their neighbors.

A developer known for turning vintage downtown structures into hotels lines up a big project for the inn, which sits atop a building next to the future Salesforce Tower

BY DANNY ECKER

Guests staying at the Holiday Inn overlooking Wolf Point are losing part of their views as a third skyscraper rises next door along the Chicago River. But Chicago developer John Murphy has a vision of bright days ahead for the property.

Murphy is leading a venture to acquire the leasehold interest in the 522-room Holiday Inn Chicago Mart Plaza atop the office building at 350 N. Orleans St., according to sources familiar with the property.

The venture is finalizing a deal to pay close to $23 million, or around $43,000 per room, for the property, with an ambitious plan to renovate and reposition it with a more upscale brand, sources say.

If the deal is finalized, it would mark a bold wager on a downtown hotel amid a COVID-19 crisis that

P026_CCB_20210614.indd 26

has sapped travel and raised questions about how long it will take for demand to recover. Murphy, who is known for redeveloping vintage downtown properties into hotels, is also betting on the future of Wolf Point, where Houston-based developer Hines has completed two residential towers and is now building a 60-story office tower that will be anchored by software giant Salesforce.

BIG PLANS

Sources say Murphy’s venture would buy the leasehold interest in the hotel from a partnership tied to the estate of late Chicago real estate developer Edward Ross, who, along with his late business partner Jerrold Wexler, founded the Jupiter Industries conglomerate that built the hotel in 1976. Murphy is expected to execute a new 99-year

ground lease with New York-based private-equity giant Blackstone Group—which owns the former Apparel Center building on which the hotel sits—and redevelop the property with a different brand within the IHG Hotels & Resorts family. The purchase price is said to be close to the nearly $23 million in debt the hotel’s owners have on the property, according to Cook County property records.

Spokesmen for Murphy Development Group and the hotel’s owners couldn’t be reached. A Blackstone spokesman did not immediately provide a comment.

Murphy is showing confidence in the future of a downtown hotel market that has recently shown small signs of recovery. With COVID restrictions relaxing, occupancy at downtown hotels that were open during the last week of

May was 42 percent, the highest for any single week since the pandemic began, according to hospitality data and analytics company STR. That’s still well below a typical pre-pandemic May occupancy rate above 80 percent, but a big step up from the first year of the pandemic, when many hoteliers shuttered their properties amid paltry demand and occupancy never rose higher than 27 percent for a single week.

The Holiday Inn Chicago Mart Plaza has been closed since early December, according to its website.

Murphy has transformed a series of Chicago properties into hotels, most recently overhauling the former Cook County Hospital into a dual-brand Hyatt Place and Hyatt House hotel. He previously redeveloped a vintage Loop office building into a Hyatt Centric hotel, turned the office portion of the former Oriental Theatre building into the Cambria Hotel & Suites and

GOOGLE

Revamp planned for Wolf Point Holiday Inn

The Holiday Inn Chicago Mart Plaza sits atop the office building at 350 N. Orleans St. converted the Chicago Motor Club Building into a Hampton Inn. His pending Holiday Inn project comes as more downtown hotels have hit the market, testing investor appetite for properties in the COVID-battered hospitality sector.

The Talbott Hotel in River North, Blackstone Hotel on Michigan Avenue and dual-brand Hampton Inn/Homewood Suites Mag Mile in Streeterville have all gone up for sale in the past few months.

6/11/21 2:29 PM

CRAIN’S CHICAGO BUSINESS • JUNE 14, 2021 27

How three Chicago shopping meccas are adapting to post-pandemic retailing too heavily on in-store sales.

As the line between digital and in-person commerce fades, brick-and-mortar stores must serve as brand-building outposts, showrooms and pickup spots for online orders.

“It’s not enough to hang your merchandise on display and expect it to sell off the shelves,” says Niclas Behrndtz, retail expansion manager at Rains, a Danish outerwear retailer that opened on Damen in March. “You need to be interactive; you need to reach the customers in a whole new way.”

A new analysis from Stone Real Estate counts Armitage, Damen and Southport avenues as Chicago’s primary boutique retail corridors. They are often go-to spots for brands looking to set up shop in Chicago, and their fate post-pandemic could influence the city’s ability to attract retailers. Such retail strips also bring business and vibrancy to neighborhoods—a vital task as offices permanently adopt flexible work schedules and residents continue spending time and money near home.

ARMITAGE AVENUE

Armitage became a magnet for online brands in the years leading up to the pandemic. That helped it weather COVID’s retail downturn. The vacancy rate on Armitage between Sheffield Avenue and Halsted Street decreased to 7.2 percent in 2020 from 8.8 percent in 2019, according to Stone’s report. That’s about as good as a retail street could hope for during COVID, says William Winter, senior associate at Stone.

Online brands won new customers during the pandemic as more consumers shopped digitally. A May survey from McKinsey found that 40 percent of Americans changed brands during the pandemic. To strengthen ties with those new customers, they are opening brick-and-mortar outlets, often targeting ZIP codes where e-commerce orders were sent.

Brands that started online occupied 22.1 percent of retail space on Armitage last year.

When traditional retailers such as Vosges Haut-Chocolat and L’Occitane en Provence vacated, online brands Mugsy Jeans and Rothy’s took their places.

DAMEN AVENUE

Online brands occupied only 1.3 percent of space on Damen last year, as the once-hip corridor’s troubles worsened during the pandemic. The stretch between Willow Street and North Avenue saw vacancy rates rise to 29.3 percent in 2020 from 22.9 percent in 2019, according to Stone. That’s double the sub-10 percent rates on Damen between 2013 and 2016. Soft-goods retailers, which were already leaving the strip before the pandemic, continued their outward march last year as five brands left.

“Damen, it has lost its way a lit-

P027_CCB_20210614.indd 27

PHOTOS BY JOHN R. BOEHM

RETAIL from Page 1

Aaron Steingold says his deli on Southport Avenue is doing 2.5 times more orders per month than it did in its previous location. He’s preparing to expand into an adjacent storefront.

NEIGHBORHOOD RETAIL VACANCIES The pandemic hit retail hard, but unevenly. Some of Chicago’s boutique retail corridors fared better than others.

ARMITAGE/DAMEN/SOUTHPORT VACANCY RATES 30.0%

29.3% Damen

25.0 20.0 15.0

7.2%

10.0

Armitage

5.0

4.5%

Southport 0.0

The vacancy rate on a key stretch of Armitage Avenue decreased in 2020. tle bit,” Winter says. “In the early days, when Damen first emerged as the go-to street, it was a lot of gritty local brands that aligned with the ethos of the neighborhood. Over time, those have been filtered out.”

But observers point to signs of recovery on Damen as new businesses take the place of traditional retailers. Primary care practice One Medical Group replaced Nike Running, and facial bar Face Foundrie recently signed a lease.

Warby Parker, an eyeglass brand that started online, is also set to open on Damen this summer. Most of the company’s customers shop both in-store and online, says Sandy Gilsenan, senior vice president of retail.

Chicago’s been a strong market across all channels—Warby has five other locations here, including on Southport and Armitage— and customers have been asking

about a location on Damen, she says.

The story is similar with Chicago-based Foxtrot, which delivers wine, beer and snacks. The brand launched online in 2014 and opened its first brick-andmortar outpost in 2016. Foxtrot looks at retail as a way of connecting with customers, and it uses its locations as shipping hubs, says Carla Dunham, chief merchandising and marketing officer.

Foxtrot is planning to open a location on Damen at North Avenue this month. Experts say any business that was deemed “essential” during pandemic lockdowns is a good get for a retail strip.

Such moves could attract more digital-first retailers to Damen, says Nicole Cardot, vice president at Baum Realty Group: “You do need a couple of these pied pipers to come to the market, and more will follow.”

2012

2013

2014

2015

2016

2017

2018

2019

2020

Source: Stone Real Estate

SOUTHPORT AVENUE

Vacancies on Southport between Addison and Roscoe streets rose to 4.5 percent in 2020 from 0 percent. It’s the highest rate the retail corridor has seen in five years, Stone’s data shows.

Gone are restaurants, soft-goods merchants and national brands, including Canadian retailer DavidsTea, which closed all of its U.S. locations.

Even so, Southport’s vacancy rate beats any that Armitage or Damen have notched in the last eight years.

Southport is populated by national retailers that had more financial cushioning to endure the pandemic than independents and smaller local chains. Beauty giant Sephora recently opened, and several online retailers with Armitage locations have also opened on Southport. Local restaurants, such as Southport

Grocery and Crosby’s Kitchen keep foot traffic flowing.

Southport has been “a beacon of light” during COVID, says Chris Irwin, senior vice president of retail sales and leasing at Colliers. Retailers that were ailing before the pandemic failed, and leasing activity slowed for a while, but Irwin says he’s been busier in the last two months than he’s been in 10 years.

Steingold’s of Chicago relocated this year to an area just north of the stretch analyzed in Stone’s report. Owner Aaron Steingold says he isn’t worried about the empty storefronts, either. The deli is doing 2.5 times more orders per month than it did in its previous location and is preparing to expand into an adjacent storefront.

“We just needed more people walking by,” Steingold says.

“Southport offers that.”

6/11/21 2:11 PM

THE FUTURE OF WORK

SOLUTIONS, STRATEGIES AND RESOURCES

The post-pandemic world of work is changing. While some jobs will be lost—and many others created—almost all will change.

Four Chicago-area executives on the frontlines of the workplace evolution shared their research, insights and ideas that are shaping the future of work—and what business leaders should anticipate for their organizations.

How is your organization involved with “the future of work”?

Antonio Ortiz: The Cristo Rey Corporate Work Study Program prepares the next generation of diverse leaders in our workforce by providing students with hands-

education and employment. We’re training young adults to have both current in-demand technical skills as well as the professional skills they will need throughout their careers regardless of how technology changes the nature of work. Our three schools in the Chicago area serve over 1,300 students, creating a significant

“LEADERS NEED TO DEFINE WITH THEIR TEAMS WHEN AND HOW THEY’LL COMMUNICATE.” —TIFFANY PRINCE, PRINCE PERFORMANCE on work experience with our 150 corporate partners while integrating workplace realities into the classroom.

The model allows our students to experience the connection between

pipeline of diverse talent in the region for years to come. The future of work will still require employees to embody the enduring principles of accountability, resilience, empathy,

self-awareness and good judgement.

We believe there’s no substitute for a meaningful, real work experience at a young age to cultivate and practice these traits.

Robert Dvorak: SilkRoad Technology helps organizations of all sizes and complexities attract, retain and align people to their businesses. The future of work will require organizations to adopt new working models that unify HR and IT initiatives—including IT security— while sustaining engagement and contribution. We’re uniquely positioned to lead our clients through the adoption of digital business models by unifying our data-driven software-as-a-service platform and professional services that bridge HR and IT. We believe that individuals need to be disentangled from their current jobs and we leverage upskill/

reskill/ learning and performance management tools to reshape skill sets and onboarding to transition individuals into their next jobs.

Tiffany Prince: I provide clients with insights into practical leadership and talent strategies to prepare their workforce for changes with technology and leadership across diverse perspectives. Over the last year, much of my work included how to lead transformational change within organizations to address leadership or diversity, equity and inclusion efforts. I partner with senior leaders and human resources executives to build out strategies or roadmaps to address the gaps. Much of my work involves coaching and consulting at the intersection of change, leadership and technology.

I also wrote “Top of the Mountain Leadership—The Future of Performance and Productivity in a Technology Changing World,” which discusses my experiences researching the future of work and interviewing leaders around the world.

Benedict Rocchio: As the workplace evolves, Baird Capital remains laser focused on maintaining a culture that allows us to attract and retain the best talent in the industry.

And as long-time investors in the human capital technology space, we’re keenly interested in identifying new trends and opportunities to fund companies that build technologies that blaze the trail.

What’s the number one workplace concern you’re hearing from customers, clients and other groups you deal with?

Rocchio: The most consistent concern we hear is how to rebuild and preserve culture and team building. Organizations wonder how to harness that value in less time and with a less regular schedule. The issue has a circular impact on employee retention, training and recruitment, and it’s difficult to measure effectively on a straight-line basis.

Prince: Many of my clients are worried about their company cultures and what that looks like in a hybrid setting. They want to know how to

P028_031_CCB_20210614.indd 28

build a more inclusive and engaging workforce without seeing employees in the office every day. I’ve been working with companies on building that balance back, especially since this is our new reality for those who can work remotely. Mostly it’s about rebuilding trust in a variety of areas such as safety, security and productivity along with being empathetic to employees’ individual situations.

Dvorak: In a survey we recently conducted with OnePoll, the top challenge for C-level executives in 2020 was to support customer needs without disruption. This translated into the top priority for 2021, which was finding new ways to serve customers and build resilience without losing agility. COVID-19 has accelerated digital transformation.

This has been compounded by a talent and skills shortage that leaves organizations open to risk in terms of productivity, customer service levels and revenue performance. As a response, most companies have designed, developed and deployed highly digital operating models for greater operational agility, faster innovation and new value chains. The shift is creating an immediate need for digital workforce transformation programs unified with technologycentric digital transformation.

Organizations will need the ability to visualize their skills needs now and, in the future, and have the ability to reskill and redeploy talent as needed to fulfill new working models.

Ortiz: Even pre-pandemic, we were hearing about the difference in employees who come to the table not only with intellectual intelligence, but almost more importantly, a deep sense of emotional intelligence. It’s one thing to start a job and be highly efficient at the skills necessary to complete your day-to-day tasks, and it’s another to have the soft skills engrained in you to be able to work with others who have different backgrounds and life experiences.

For example, it’s a struggle for some people to pick up a phone and talk to someone they don’t know when they’re used to texting or instant messaging. Our partners tell us that employees get hired because they have technical skills but are fired

6/8/21 9:31 AM

SPONSORED CONTENT

challenge for a lot of people to move back into an office environment. But with careful nurturing, people will hopefully come around to see the great benefit of being around each other again for the larger, common good.

ROBERT DVORAK

CEO, President SilkRoad Technology robert.dvorak@silkroad.com 312-574-3902

because they lack professional or soft skills, including teamwork and accepting feedback.

How have business priorities changed over the last year or so?

Rocchio: We’ve placed a sharper focus on longer-term, loyal relationships and have emphasized relationship-based investing to our team and limited partners. Our venture fund added seven new investments last year. In each case, we already had an existing relationship in some form at the company, whether it was an executive, investor or other critical entry point. At the same time, we also came to realize that we can’t rely solely on these legacy relationships, so business development and recruiting has become more critical than ever. We clearly see the need to build the next round of these relationships across the firm.

Prince: Businesses are using technology more effectively, a transition that happened rapidly due to shutdowns. Many are using data analytics to identify shifting customer trends or pinpoint skill gaps in their employee pools. Artificial intelligence and machine learning also are on the rise to help organizations be more effective and resilient. I can’t think of one industry that hasn’t been impacted in some way by the pandemic. Every organization is reimaging how to do business— wondering how many employees to bring back to the office in any given day, how to conduct in-person meetings again, and when or how to build trust with customers so they’ll come back, especially if they’re in retail or hospitality. Businesses need to be agile and respond to employee

ANTONIO ORTIZ

President Cristo Rey Jesuit High School aortiz@cristorey.net 773-890-6822

and customer feedback on what’s working and how they can improve.

Dvorak: Our survey found that C-level executives’ next priorities are identifying critical roles to accomplish organizational strategy or facilitate a new digital business—and how to reskill talent to meet emerging needs.

Industry thought leaders predict digital and AI to eliminate 50 to 70% of all existing jobs over the next seven to 10 years. The convergence of these trends brings a massive opportunity for organizations to rethink what work gets done, what working models best serve their customers and where that work ultimately happens. Failure to address this convergence will directly impact an organization’s ability to compete. To retain and engage employees in new digital business models, organizations need to identify roles and skills that are or will be critical to the business; assess whether they need to build, buy or borrow the skills and talent required to achieve organizational goals; and reskill and transition employees to enhance their strategic value based on desired business outcomes.

As offices begin to re-open, how can organizations build a meaningful work experience for employees, especially if they’re using a hybrid model?

Prince: It’s about defining what’s appropriate for the organization and when it makes sense to get together. Leaders need to define with their teams when and how they’ll communicate. They need to build trust and an inclusive mindset, especially for virtual meetings. We’ve seen those leaders who’ve maintained meaningful connections with their teams—by

“ . . . MANY TASKS AND PROCESSES CAN AND SHOULD BE DIGITIZED AND AUTOMATED.” —ROBERT DVORAK, SILKROAD TECHNOLOGY

P028_031_CCB_20210614.indd 29

TIFFANY PRINCE

CEO Prince Performance tprince@ topofthemountainleadership.com 312-919-5568

discussing work projects, mentoring, coaching, sharing ideas or personal milestones—have higher productivity.

Organizations that have trained their leaders to lead a remote team and to understand the nuances from leading teams prior to the pandemic have noticed higher employee engagement and productivity.

Rocchio: We see a great need for intensely focused team-building days combined with days entirely centered on internal regroups and shared learnings. This allows associates to block out periods of time to accommodate purely value-added

BENEDICT ROCCHIO Partner - Venture Capital Baird Capital brocchio@rwbaird.com 312-609-4706

internal meetings to ensure that teams are in sync. Relationships should then continue to grow naturally.

Ortiz: For us, it’s all about aligning everything with our mission. As author and inspirational speaker Simon Sinek states, most employees know what their organization does, and how they do it, but what’s often overlooked is why they do it in the first place. So much is about relationships that encouraging staff to take the time to personally connect with others in the office or on their team is vital to building camaraderie and collaboration. It’s going to be a

Dvorak: Where possible, organizations should gauge employee interest in returning to the office and their appetite for different types of hybrid models. It’s critical to inform employees about what’s changed or been improved to promote a safe work environment since the beginning of the pandemic so they can make an informed decision. With a hybrid work model, organizations must be as intentional as possible in designing their employee experience.

They should institutionalize regular check-ins between employees and managers to ensure alignment and identify areas for better work/life balance or development opportunities.

Organizations need to ensure that all employees, whether they work in the office or remotely, are treated equitably in terms of performance measurement and opportunities for advancement.

After a year of trauma, what role is wellness playing in the workplace?

Prince: My clients are developing mental health programs or highlighting those programs they already have. Many employees have suffered loss this past year, so the question is, “How will organizations support those employees?” Empathy is a key skill, and leaders who help

The Future of Work is the Cristo Rey Meet Tiffany Luna.

Tiffany is a 2006 graduate of Cristo Rey Jesuit High School in Pilsen. During high school through our transformative Corporate Work Study Program, Tiffany worked five days a month at GTCR, a private equity firm, which funded her Jesuit education and gave her corporate experience that put her ahead of the competition. She graduated from Wellesley College in 2010 and went on to earn her MBA from Northwestern in 2018.

Tiffany is now a Principal at PPM America, Inc. in Chicago and was recently appointed to Cristo Rey’s Board of Directors.

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THE FUTURE OF WORK

SOLUTIONS, STRATEGIES AND RESOURCES employees navigate their own wellbeing can help teams build resilience to handle stress when it comes around. Uncertainty and stress seem to come in waves for people, so I see this as a critical skill to be successful.

Ortiz: It’s going to take practice to come back to an in-person office environment and be able to navigate effectively. We encourage our faculty and staff to take the time they need to rest—and we mean rest their bodies, minds and spirits. We also need to take into account the students we work with and the companies that employ our students. We need to strike a fine balance between working with adults who’ve been through trauma and the students they’ll supervise via the Cristo Rey Corporate Work Study Program.

Excel, and upskilling will be a lifelong process for the young adults we serve. While there’s always a need for job-specific technical skills, and most recently digital literacy, we now need to balance that with transferable soft skills like critical thinking, communication,

finding that many tasks and processes can and should be digitized and automated. For example, retail organizations will likely change their customer service models where customers will interact with technology instead of people and

“I EXPECT CLIENT-FACING ROLES TO RETURN TO NORMAL SOONER THAN MANY PREDICT...”

—BENEDICT ROCCHIO, BAIRD CAPITAL

How are previously relevant skills evolving in today’s workplace?

empathy, collaboration and listening.

These soft skills are best learned in practice, especially when supported by mentorship and exemplified by senior leadership. If the last year has taught us anything, I believe the most relevant skill for employees will be the ability to have a growth mindset, adapt quickly and embrace change to reimagine new business opportunities and impactful outcomes.

Ortiz: At Cristo Rey, many of our students are certified in Microsoft

Dvorak: As organizations adopt new digital business models, they’re

what were traditionally retail or customer service workers will serve as either tech support or a concierge to help customers through their buying journeys. This will require an effort to reskill and re-onboard employees to equip them to perform effectively and serve more customers.

This will enable organizations to drive employee lifetime value, preserve institutional knowledge and improve customer service levels while preserving costs, preventing risks and driving sustained revenue goals.

I www.topothemountainleadership.com I tprince@topothemountainleadership.com

PRINCE PERFORMANCE LLC PERFORMANCE | RESU LTS I GROWTH Prince Performance LLC helps companies and functional leaders with their leadership development strategies to address knowledge and skill gaps, coaching and performance management issues. We specialize in increasing employee productivity and engagement through proven tools and methodologies.

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P028_031_CCB_20210614.indd 30

Prince: We need to be clear and transparent about what each role will be doing and, more importantly, what those roles will no longer be doing. To facilitate reskilling, we need to reframe jobs and expand certain areas, like customer service, but in a more strategic, less tactical way. In upskilling, we’re talking about skills and competencies that an employee may not have yet but will need to develop to be successful for the future. Our challenge with this new future of work is creating a synergistic relationship between technology and people, where employees are excited about changes and advances.

How will a diversity, equity and inclusion strategy likely feed into how companies vision their workforces postpandemic?

Rocchio: We need to maintain a culture where we can attract, retain and develop the best diverse talent.

We need to keep having ongoing conversations and constantly examine what we’re doing—and not doing—to foster an environment that ensures that we have a diverse team in race, gender and thought. It’s not a “nice to do,” it’s a “need to do.” Period.

Ortiz: It’s my hope that after a year that included several very public tragedies and social unrest, the importance of meaningful DEI strategies will be incorporated into the workplace. And while it’s one thing to recruit diverse talent, it’s another to mentor, promote and open doors to higher level leadership opportunities to persons of color and diverse backgrounds. Cristo Rey’s Corporate Work Study Program is itself a meaningful pipeline to talented and diverse workers. We’re hopeful that as offices begin to open back up, that the students of our work program will be welcomed back with a different level of engagement at the office and even deeper levels of sponsorship between supervisors and students. I’m hearing from our corporate partners a genuine desire to diversify their talent pipeline, but a real question as to how best to do this. One corporate partner recently told me, “We can’t just hire our way to success, it’s not sustainable.

We need to grow our own talent from within.”

Prince: I’m noticing a shift from focusing on hiring metrics and goals to career paths and advocacy for underserved populations once they’re in an organization. Employees are holding their leaders accountable for

systemic change, not just a media statement. Employees are expecting action behind leaders’ words and companies are looking to hire a more diverse representation of suppliers and vendors. Research has shown that building inclusive cultures supported by leaders at all levels builds a competitive advantage. Truly visionary companies are looking beyond training and hiring practices for their DEI strategy. You have to look at it as a transformational change to reimagine the workforce.

How can organizations develop the next generation of leaders in a more remote world?

Dvorak: Leadership in a more remote world will require soft skills such as communication, coaching and collaboration. As organizations determine what skills and roles will be crucial to them in new working models, an emphasis on leadership development and soft skills should be at the center. Giving first-time managers guidance on how to give feedback and setting expectations will be critical. Continuing to develop soft skills and inclusivity training for tenured managers will significantly impact employee satisfaction and retention.

Prince: It’s as simple as giving them the training and skills to thrive in the new reality of work. The tactics and management style leaders used when co-located aren’t as effective when working remotely. Communication and collaboration are keys to teams working successfully in a remote world. Leaders need to communicate more frequently now.

Since informal conversations are no longer happening, they need to be done digitally—this is where collaboration comes in. Building a roadmap on which media or tool to use in different situations will provide transparency and clarity to all. It’s hard to “see” what others are contributing or working on remotely, so it’s a leader’s job to make that visible to the team.

Rocchio: Over the last year or so, when we onboarded new employees, we learned that video conferencing, remote team-building activities and knowing that everyone will be together in person one day brought people up-to-speed quickly on our team’s culture, firm values and investment theses. Due to our global platform, there are team members worldwide who most likely will only connect via video regularly. This

6/8/21 9:31 AM

SPONSORED CONTENT

ABOUT THE PANELISTS ROBERT DVORAK is CEO and president of SilkRoad Technology, a global software and services platform that helps organizations attract, retain and align people to their businesses.

He has over 30 years of sales and marketing leadership experience, most recently with Forsythe Technology and its subsidiary KillerIT, where he was president and founder. He holds two bachelor’s degrees from Lake Forest College and an MBA from the Lake Forest Graduate School of Management. He serves on the national board of the Make-A-Wish Foundation.

investment in remote relationshipbuilding will stay the same postpandemic.

Who do you expect to be the “trendsetters” in the return to work and future of work movements?

Dvorak: We’re already seeing some leaders in this space, with Spotify and Salesforce adopting “work from anywhere” approaches in recent months. While improving the customer experience is among the highest priority for C-level executives, it can’t come at the cost of employee wellbeing or work/ life quality. We’ve found that an exemplary employee experience results in better customer service levels, faster innovation and better revenues. In the coming months, we’ll see organizations get this right, and others will over-index on the customer experience as the end-all-be-all. We view the customer experience and employee

ANTONIO ORTIZ is the first lay president of Cristo Rey Jesuit High School, which pioneered the Corporate Work Study Program model for inner city education that has inspired a national network of 37 schools. He joined Cristo Rey in 2000 and became president in 2012. He holds a bachelor’s and a master’s degree from the University of Notre Dame and an MBA from Loyola University Chicago. He’s also a graduate of Leadership Greater Chicago, a member of the Economic Club of Chicago, and serves on several boards including Dominican University and Loyola Medicine.

TIFFANY PRINCE is CEO of Prince Performance, a Chicago-based leadership coaching and development firm she founded in 2014 focused on change, leadership, performance and evolving business strategy. She holds an MBA from Pepperdine University and is author of “Top of the Mountain Leadership—The Future of Performance and Productivity in a Technology Changing World.” She serves on the boards of the Association for Talent Development, Chief Learning Officer Business Intelligence Board, and the Leadership Council of the National Small Business Association.

management rather than time-based or line-of-sight productivity and increase focus on communication, inclusivity and alignment regardless of where employees work.

Rocchio: Startups often set the pace and have created many workplace trends; their environments are just easier to test new ideas and philosophies.

I expect client-facing roles to return to normal sooner than many predict—wait until a salesperson loses an opportunity to a competitor that visited the client in person. On the other hand, more inward-focused departments could easily remain in a hybrid structure forever. This isn’t because of workplace safety or fear of another pandemic, but because technology delivered over the last year confirmed that a flexible office concept works.

P028_031_CCB_20210614.indd 31

Prince: I think it’s too early to name any particular company or point to someone in this area. I do believe those companies that emerge as a “top tier” employer will demonstrate more transparency

than ever. There’s a movement to rehumanize the workforce, and employees are judging employers on how they were treated during the pandemic. The appeal to be able to work from anywhere will make it harder for those organizations that want their employees to come back to the office fulltime. Flexibility is

key to employees. When thinking about jobs that require people to physically go into work, we’re seeing stability and safety as key factors when committing to an organization.

All employees have choices, so it will be the employers with the greatest employee brands that will rise to the top post-pandemic.

Discover the power in partnership

Ortiz: Companies who employ Cristo Rey students are always

“. . . WE NEED THE CHICAGO BUSINESS COMMUNITY TO LEAN IN AND WELCOME OUR STUDENTS BACK TO THE OFFICE.” —ANTONIO ORTIZ, CRISTO REY JESUIT HIGH SCHOOL experience as two sides of the same coin. As a result, we’re looking to help our internal stakeholders and clients adopt a digitized employee experience. As we establish new working norms, successful organizations will prioritize flexibility over rigidity, adopt outcome-oriented performance

leaders of the future will be positively impacted for years to come.

BENEDICT ROCCHIO is a partner in the venture capital group at Baird Capital, the direct private investment arm of Baird that makes venture capital, growth equity and private equity investments in strategically targeted sectors worldwide. He joined Baird in 2000, concentrating on investments in the technology and services sectors. Previously, he worked for KPMG in its information, communications and entertainment group. He holds a bachelor’s degree from the University of Notre Dame and serves on several technology company boards.

cutting-edge when it comes to the future of work. Now more than ever, we need the Chicago business community to lean in and welcome our students back to the office. The return on investment will not only be felt at the bottom line for these companies, but their corporate culture of welcoming diverse

One person alone can have an enormous impact on her community. But when passionate people – with diverse backgrounds, experiences and perspectives – work together, there’s no limit to what we can accomplish.

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O’Hare International Airport, once the third-busiest U.S. airport before the pandemic, has not yet seen a return of passengers like in other cities.

O’Hare slow to recover as business travel lags O’HARE from Page 3 recovers over the next two years, as expected, O’Hare should maintain its hold as the nation’s dominant midcontinent aviation hub.

If not, it risks ceding business and bragging rights to airports in Denver and Dallas-Fort Worth.

O’Hare, which was the third-busiest U.S. airport by passenger count before the pandemic, has plenty of company.

Scheduled seat capacity by carriers serving the busiest, Atlanta’s Hartsfield-Jackson International Airport, is down 17 percent for July. Los Angeles International Airport, the second-busiest, is down 28 percent. San Francisco International Airport, a major gateway to Asia, is recovering the most slowly among the Top 10 airports, with July capacity 47 percent lower than it was in 2019.

“Chicago has remained resilient, and the number of domestic destinations served from Chicago is now at the same level as it was pre-COVID,” an O’Hare spokeswoman says. “Although long-haul international service is recovering more slowly than domestic service due to pandemic-related public health restrictions affecting travel, June 2021 will see the highest number of international departures since before the pandemic and international travel demand should accelerate in 2022.”

AMERICAN VERSUS UNITED

The competitive landscape at O’Hare also is in flux. American Airlines, the second-biggest carrier, is adding seats more quickly than United. Frontier Airlines’ capacity is 5 percent higher than before the pandemic, and Southwest Airlines is serving the airport for the first time.

American’s total number of scheduled seats from O’Hare in July is 16 percent below pre-pandemic levels, according to OAG, while United is down 25 percent.

“We’re still very much committed to O’Hare. It’s our hometown

airport,” a United spokeswoman says. The carrier operates nearly 500 daily flights, about 10 percent more than American.

When measured by flights, American’s Chicago schedule in July is down 17 percent from pre-pandemic levels, compared to 18 percent for O’Hare as a whole.

United has scheduled 20 percent fewer flights, indicating the carrier is keeping a lid on total seats, rather than slashing its route network.

“As we went into this (pandemic), United was more cautious about capacity,” says OAG analyst John Grant. “American has been a bit more aggressive. Neither can change their strategy halfway through.”

Across its entire network, American’s domestic capacity in seats for July is about 5 percent below 2019 levels, while United’s is down 24 percent, according to OAG. United CEO Scott Kirby, whose long-term plan is to increase United’s market share by adding new cities, has been more cautious than his competitors about the severity and duration of the pandemic’s impact on air travel. “We have less capacity in the system than others,” Kirby told investors May 28. He noted that Chicago and Houston have greater international demand than other hub airports in the middle of the country and predicted business travel will increase after Labor Day. Both United and American face new competition at O’Hare in Southwest, which will fly about 102,000 seats in July, or less than 10 percent of what United or American plan to fly.

“We continue being pleased with our initial performance and we’re already adding new destinations and frequencies to respond to customer demand for our O’Hare service,” a Southwest spokesman says.

Grant, the OAG analyst, says that “without the recovery in in-ternational traffic, (Southwest) will inevitably disrupt United and American.”

Southwest also is pushing United in Denver, which for now is Unit-

ed’s second-busiest hub and where it is adding gates because of an airport expansion that was underway before the pandemic.

United is scheduled to fly just 5 percent fewer seats from Denver in July than it did two years ago, compared with 25 percent less seat capacity at O’Hare, according to OAG. Southwest, which is a close second to United in Denver, has increased its capacity 20 percent from pre-pandemic levels.

Denver is the healthiest aviation market in the country. Just 5 percent of Denver’s traffic comes from international travel, and it’s one of the nation’s top destinations for outdoor recreation, which benefited from COVID. Before the pandemic, nearly 20 percent of O’Hare’s capacity came from international flying.

We see a full recovery on the leisure front this summer,” says Brian Znotins, vice president of network planning for American. “Although business travel trails leisure, we reconfigured our network in anticipation of decreased summer demand on the business front.”

The uneven rebound in air travel reflects pent-up vacation demand coming out of a yearlong lockdown. Another factor is the impact of remote work created

by COVID-19, which sent people heading for warmer, affordable markets such as Charlotte, N.C., Denver and Dallas, all of which are hubs for O’Hare’s biggest carriers, American and United.

American is back to pre-pandemic capacity at Charlotte, a hub it began serving after its 2013 merger with US Airways. Capacity at American’s home airport in Dallas-Fort Worth is up 2 percent from pre-pandemic levels, according to OAG. “The business markets are not coming back as strong as leisure points,” says Mike Boyd, an aviation consultant and founder of Boyd Group International in Evergreen, Colo. “Airlines are shifting where they apply capacity based on where the new traffic flows are.”

6/11/21 4:10 PM

CRAIN’S CHICAGO BUSINESS • JUNE 14, 2021 33

LANDMARKS from Page 3 development, Maurice Cox, put that sentiment another way at a recent public meeting about the potential landmarking of the North Kenwood home of blues great Muddy Waters.

“So often the brilliance that African Americans have given to this country is wrapped up in the everyday and ordinary,” Cox said.

“Most people wouldn’t know it if we didn’t preserve that everyday context that helped this man make this extraordinary music that really changed the world.”

Exhibits in the DuSable Museum of African American History or a downtown institution could memorialize any of these homeowners, but “there’s something different and important about moving through the spaces that they moved through when they spent their time thinking and creating and living,” says Regina Bain, the executive director of the Louis Armstrong House Museum in Queens, N.Y. The former home of the musical giant opened for tours in 2003.

On top of walking where great ones walked, the mere fact of homeownership, “is especially important for many Black people who came from impoverished circumstances where a home is not guaranteed,” Bain says. “It’s a point of joy to see that these working-class folks bought and owned their homes. There’s nothing ordinary about that.”

Along with the Palmer and Waters sites, the other homes where efforts have been launched to create a museum or similar space are: The West Woodlawn two-flat where Emmett Till and his mother,

Mamie, lived before he was murdered by white racists in Mississippi in 1955.

The Kenwood house where longtime Nation of Islam leader Elijah Muhammad lived.

A dilapidated Washington Park greystone that served as a Phyllis Wheatley Club, providing a home and support for Black women coming up from the South during the Great Migration.

In south suburban Robbins, the former home of S.B. Fuller, an entrepreneur who in the middle of the 20th century was one of the most successful Black men in America.

In Maywood, the brick two-flat that was the childhood home of Fred Hampton, the Black Panthers leader who was killed by law enforcement agencies in a 1969 predawn raid on his East Garfield Park apartment.

Crain’s hasn’t found as many Black house museum plans in other cities as the seven floating in and around Chicago this year. An eighth attempt may soon surface.

The family members who own the former home of John W. E. Thomas, who in 1876 became the first African American elected to Illinois Legislature, are exploring the process of landmarking, Mary Lu Seidel, the director of community engagement at Preservation Chicago, confirms. A future use of the building has not been announced.

‘UPHILL BATTLES’

Memorializing a Black innovator’s home is important, says Sherry Williams, president and founder of the Bronzeville Historical Society, because “these are the places where they gathered people with them to achieve something in the face of racial hatred.”

Mamie Till Mobley lived among

JOHN R. BOEHM

Historians and activists want to memorialize historic Black homes in Chicago

Sherry Williams, president and founder of the Bronzeville Historical Society. relatives in the West Woodlawn two-flat when she made the momentous decision to keep open the casket at her battered and drowned son’s funeral to, in her words, “let the people see what they did to my boy.”

Williams, who isn’t directly involved with any of the proposals, says “they all face uphill battles of their own,” whether it’s fundraising, getting aldermanic approval or repairing a house that has been decaying for decades. From land acquisition to rehabilitation to navigating the technicalities of the landmarking process, saving and preserving these homes is an expensive proposition. But Williams argued the final product is worth it.

If they surmount the challeng-

es, “these places aren’t going to be just museums. They all want to be meeting spaces, inspirations, spaces where we can gather and meet and new movements can start.”

Several of the proposals include a hoped-for economic impact on their surroundings. Naomi Davis, whose group Blacks in Green is redeveloping the Till two-flat, told Crain’s in the past about her desire to make it a tent pole of economic growth for the neighborhood, its visitor traffic helping lift cafes and other businesses nearby.

Davis declined to comment for this story. In Robbins, Tyrone Haymore of the local historical society envisions the Fuller house as an attraction that would draw Black tourists down from the city to see a town that was one of the first in the

northern states developed primarily for a Black population.

None of the museum organizers has published dollar-figure projections of economic impact.

That doesn’t bother Bain, the head of the Louis Armstrong site in Queens. While she knows New York tourists make special side trips to the Armstrong house on their way to or from JFK Airport and sometimes grab a meal on nearby blocks, “that has to be set aside as a motivation.”

In the case of the Till site, for example, Bain says she hopes “it will serve as a point of thoughtfulness and make us want to think about the American themes that led to what happened to Emmett Till. The importance of that legacy stands alone.”

As an enormous fortune emerges, fundraisers are sure to be calling Mills family MILLS from Page 3 stature could rebound in the wake of the pending buyout of the Northfield-based medical supply giant her extended family owns outright. Her cousin Charlie Mills is Medline’s CEO; her brother Andy is president; and Jim, her husband, is chief operating officer.

With Medline’s proposed sale to a consortium of private-equity firms valuing it at more than $30 billion, excluding debt, the Mills family is poised to emerge as one of the richest—and newly chased-after—clans in the area.

The transaction has been described in Pritzker-esque terms and not solely because of the valuation figure. The Mills family was motivated to sell because of the same intergenerational tensions that forced the breakup of the Pritzker empire two decades ago.

In such situations, the new investment frees up cash for individual family members to control—or donate—as they wish.

“Sometimes that wealth does turn into a new foundation, a new path of charitable giving,” says Jack Darin, director of the Sierra Club’s Illinois chapter, to which

P033_CCB_20210614.indd 33

Abrams donated $10,000 in 2015 and $5,000 in 2017, according to public records.

As recently as 2014, when Medline reported $5.8 billion in revenue, the Mills family ranked No. 170 on the Forbes 400 list, with an estimated net worth of $1.1 billion. That figure has obviously ballooned as Medline’s revenue climbed to $13.9 billion in 2019 and then, spurred by the pandemic’s PPE demands, to $17.5 billion last year.

Abrams and the Millses decline to comment. In a statement, they say they would continue their “philanthropic commitment to important causes.”

GIVING TENDENCIES

The Mills Family Foundation has directed its biggest donations to well-heeled higher education institutions, according to financial filings: $900,000 to Cornell University, Charlie Mills’ alma mater, in 2018, and a combined $900,000 each to Vanderbilt University and the University of Pennsylvania in 2017 and 2018.

Misericordia Home for the developmentally disabled got $400,000 over the two years, and

the Jewish United Fund of Metropolitan Chicago received $100,000 in 2018. Total giving in 2018 was $2.54 million.

Medline last year committed $1 million to Black Lives Matter and three other social justice organizations, it said, and $3.1 million in 2019 to medical relief organizations.

Abrams, 56, has long been a financial backer of Democratic candidates, including Hillary Clinton, Barack Obama and Rahm Emanuel, and the pro-choice Personal PAC. An exception is former Sen. Mark Kirk, a Republican. Her Medline relatives are less visible as political donors. Charlie Mills gave $3,500 to the Lake County Republican Federation in 2008 and 2009, according to campaign disclosure forms.

In 2018, Crain’s reported that Charlie Mills had purchased a Winnetka home for $4.1 million, modest compared with the 17.5acre Highland Park estate that Wendy and Jim Abrams bought for $17.6 million in 2007 after the government seized it from then-imprisoned insurance executive Mickey Segal.

In 2007, Abrams told Chica-

go magazine she became a climate-change Cassandra after being alarmed by an article on its long-term consequences when her children were young. “I remember turning to my husband and crying,” she was quoted as saying. “Yes, I’m writing checks, but the checks that I’m writing are not in the stratosphere,” she said.

The Globes project raised $500,000 for environmental clubs at Chicago Public Schools. Besides the Sierra Club, Abrams has supported the Natural Resources Defense Council, the Union of Concerned Scientists and Waterkeeper Alliance. She wrote an op-ed in 2013 opposing the Keystone XL Pipeline, which last week was canceled. According to the blog Sheridan Road, she teaches a course, “Activism and Advocacy,” at the University of Southern California.

As logical as it is for nonprofits to develop a renewed interest in the Medline heirs, they are understandably reluctant make a public pitch.

“Jim and Wendy Abrams have been strong supporters of the law school and the clinic,” Mark Tem-

pleton, the Abrams clinic director and a former trustee for the Deepwater Horizon Oil Spill Trust, writes in an email. “I don’t really have anything more to add than that.”

A spokeswoman for the Field Museum emails, “Our current team has not worked closely with Ms. Abrams and would not be able to offer any comment on projects at the museum, previous, future or otherwise.”

As private-equity firms Carlyle Group, Blackstone Group and Hellman & Friedman move to carve out an unspecified majority stake in Medline through a leveraged buyout, the plan is to leave the Mills executives in place. Wendy Abrams formerly worked in public relations at the firm.

“There were a number of family members that aren’t in the business, and almost all the family’s net worth is involved in the business,” Andy Mills told the Tribune.

“For years, they had been looking for some liquidity, so we wanted to see if we could thread the needle and get some liquidity for the family but also maintain leadership and position ourselves for a stronger company.”

6/11/21 4:11 PM

34 JUNE 14, 2021 • CRAIN’S CHICAGO BUSINESS

The price of insuring against cyberattacks is rising sharply—with no end in sight RANSOMWARE from Page 1 much of the burden of covering the payments.

Premiums for digital protection jumped 17 percent in the fourth quarter compared with the same period in 2019 and 35 percent in the first quarter compared with the same time frame last year, according to Marsh McLennan, the world’s largest commercial insurance brokerage.

“We’re going to see that continue,” says Ryan Griffin, senior vice president in charge of Marsh’s U.S. cyber practice in the Midwest.

“Organizations, even large ones, are seeking to do more on cyber hygiene,” he says. “The insurance side of the house is be-

money surely raised eyebrows in executive suites throughout the area and the country. In 2020, the average limit for insurance covering such payments was $22.8 million, according to Marsh. For companies with $1 billion or more in annual revenue, the average limit was $72.4 million.

MAKING CHOICES

With insurance costs escalating quickly, many companies will be forced to choose between much higher premiums for the same level of coverage they now have or reducing their claims limits.

CNA still hasn’t officially confirmed the $40 million figure.

In a quarterly Securities & Exchange Commission filing, it labeled the incident “ORGANIZATIONS, EVEN LARGE ONES, not material. “Although we mainARE SEEKING TO DO MORE ON CYBER tain cybersecurity insurance coverage HYGIENE.” insuring against costs resulting from Ryan Griffin, senior vice president, cyberattacks (inMarsh McLennan cluding the attack ginning to enforce that through described above), it is possible losses may exceed the amount premiums.”

Companies perceived to have available under our coverage leaky systems will have to pay and our coverage policy may not more for insurance than those cover all losses. Further, future cybersecurity insurance coverwith stronger security.

CNA’s $40 million in extortion age may be difficult to obtain or

may only be available at significantly higher costs to us. Based on the information currently known, we do not believe that the March 2021 cybersecurity attack will have a material impact on our business, results of operations or financial condition.”

Presumably, CNA’s insurer covered most if not all of the $40 million. That’s good because it amounted to 13 percent of CNA’s first-quarter profit of $312 million.

In an email, the company says it “followed its established processes of determining materiality for significant developments.”

Since the attack, the company has added new detection technology to its systems and thoroughly cleaned them, it says.

But even after taking those steps, CNA couldn’t reassure investors the same thing won’t recur. “No assurances can be given, and we may be subject to future incidents that could have such a material adverse effect or may result in operational impairments and financial losses, as well as significant harm to our reputation,” the company said in the filing.

Other Chicago-area companies recently struck by hackers include Rolling Meadows-based

commercial insurance brokerage Arthur J. Gallagher & Co. Gallagher disclosed that it was victimized in September. “We implemented our incident response plan, took our global systems offline, isolated impacted systems, retained cybersecurity counsel and forensic experts and reported the event to the FBI,” the company said in SEC filings. “The incident has been contained, and all critical systems are back in service.”

It, too, said it carried insurance for the incident but added, “Disputes over the extent of insurance coverage for claims are not uncommon.” Did Gallagher pay to restore its systems? A spokeswoman didn’t respond to requests for comment.

OTHER ATTACK

Likewise, Chicago-based Rand McNally, which provides mapping and travel services, was attacked in November, with outages lasting several days. The privately held company didn’t formally describe the incident as ransomware, but there were striking similarities to other ransomware examples. Rand McNally never denied reports at the time labeling the event as ransomware.

The typical methods of the hackers, often based in Russia

and eastern Europe, include inserting malware in vulnerable corporate systems, which cripple operations, and then demanding payment in return for software to undo the damage.

The FBI has asked companies not to pay ransom, but companies often do anyway because the costs to them of being offline for long are higher than the extortion. Invariably, the hackers ask for payment in cryptocurrency such as bitcoin.

In 2020, victims paid at least $350 million in ransomware, according to a January report by Chainalysis, a blockchain analytical firm. That was up from less than $100 million in 2019.

Cyber insurance premiums similarly are rising quickly. The industry collects about $3 billion each year currently, according to Marsh’s Griffin. That’s triple the amount just a few years ago and is sure to go far higher in the near future.

Rising premiums are one reason, of course, but the other is that demand for coverage is expected to soar. Even with the increased worry and attention to the issue, just 47 percent of Marsh’s business clients even had a stand-alone cyber policy at the end of 2020. That was up from 42 percent in 2019.

CRAIN’S WEBCAST

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Health insurers emerged largely unscathed from the economic fallout of a pandemic that hammered other segments of the health care industry. But COVID-19 has presented a variety of unprecedented challenges and opportunities for payers, including Blue Cross of Illinois’ parent company. Crain’s health care reporter will sit down with Health Care Service Corporation CEO Maurice Smith to discuss navigating the public health crisis and his post-pandemic strategy for one of the nation’s largest health insurers.

FEATURED SPEAKER Maurice Smith President & CEO Health Care Service Corporation

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6/11/21 2:10 PM

CRAIN’S CHICAGO BUSINESS • JUNE 14, 2021 35

Up on this rooftop, they built their oasis WHEN THEY RAISED THE ROOF of their 19th century Gold Coast home, Rena and Manuel Pulido made space for what Rena now calls “our oasis.”

A pair of indoor and outdoor spaces, it’s tucked among neighboring rooftops just west of Washington Square Park, on a quiet block mostly lined with vintage redbrick buildings in classic Chicago 19th and early 20th century styles.

The Pulidos were married but living apart, she in Chicago and he still in their native Australia, in 2004 when he came for one of his regular visits “and she told me she had bought a house.”

They then spent over a year rehabbing the place, with an eye toward “giving it a modern, elegant aesthetic,” Rena Pulido says, “while also respecting its past.”

Working with interior designer and architect Despina Souhlas of studio ESS in Chicago, they opened up the main rooms up from their cramped historical layout, put a wine room and guest suite in the basement and redid the kitchen and baths; they also turned a low-ceiling, topfloor space into the airy, sunlit space it is now.

The Pulidos are relocating back to Australia. They had this house on the market prior to the pandemic, then rented

CHICAGO HOME PHOTOS

The pair of Aussies who rehabbed this 19th century home on Delaware Place in 2004 are returning Down Under and asking a little over $1.62 million for the house BY DENNIS RODKIN

it out for the duration. Now they plan to put the four-bedroom, 3,200-square-foot home back on the market. Represented

by Karen Ranquist of Berkshire Hathaway HomeServices Chicago, it’s priced at a little over $1.62 million.

MORE PHOTOS ONLINE: ChicagoBusiness.com/residential-real-estate

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

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

Vol. 44, No. 24 – 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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