Crain's Chicago Business by crainschicago

REAL ESTATE: Will the downtown apartment market come back? PAGE 3

CRAIN’S LIST: Chicago’s largest money managers. PAGE 7

North State Parkway, $9.95 million

Burton Place, $11.988 million

ALL THAT GLITTERS IS NOT THE GOLD COAST In a city where the real estate market is super tight, Chicago’s ritziest neighborhood has a glut of homes for sale RON CHEZ LISTED HIS ASTOR STREET MANSION in December for the third time. Chez has owned the home, which overlooks the grounds of the historic archbishop’s mansion, since 2000, when he paid a little over $8.1 million for it. Chez is asking nearly $11 million, a million more than he was asking before. That’s despite the fact that the recent high-water mark for home prices on the leafy, mansion-lined blocks of the Gold Coast is $7.5 million, which buyers paid for a home on Bellevue Place in 2017. “I’m not looking at what other people are doing. What the rest of the market is doing doesn’t concern me very much,” Chez says, speaking from his oceanfront mansion near Big Sur, Calif. “It’s a very special home, and fortunately I can wait. I don’t have to sell it, which is always good with illiquid assets.”

Astor Street, $11.888 million

PHOTOS BY SCOTT SHIGLEY

CHICAGOBUSINESS.COM | MARCH 29, 2021 | $3.50

BY DENNIS RODKIN

Astor Street, $10.995 million

Astor Street, $7.785 million

See GOLD COAST on Page 19

Fortune reels in deals as COVID roils waters BY ALLY MAROTTI COVID-19’s devastating impact on restaurants hasn’t dampened seafood supplier Fortune International’s appetite for acquisitions. Backed by private-equity money and intent on building a $1 billion business within five

years, Bensenville-based Fortune bought three companies last year, even as restaurant closures rocked the industry. Fortune is on track to post $425 million in revenue this year, up from $275 million in 2020. Dealmaking has extended Fortune’s reach from its Chicago-area base into 20 states, on its way to

JOHN R. BOEHM

Seafood distributor aims for $1 billion in revenue

Fortune International CEO Sean O’Scannlain launched the company in 2001. building a nationwide presence. Fortune also expanded its operations to include more retail and See FORTUNE on Page 21

How Chicago is doling out the doses

Allocations of vaccines show city’s wide-net strategy BY A.D. QUIG AND STEPHANIE GOLDBERG The Chicago Department of Public Health regularly reports how many COVID-19 vaccines have been administered, as well as the age, race and other demographic data of people vac-

cinated. But one very important aspect of the city’s vaccination campaign has been shrouded in secrecy—until now. Crain’s has the first look at how doses have been allocated among various health care See VACCINES on Page 20

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CHICAGO COMES BACK

MADELEINE DOUBEK

The city’s strength lies in its authenticity. PAGE 4

With help on the way, the state has to help itself. PAGE 2

Lau of t

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2 MARCH 29, 2021 • CRAIN’S CHICAGO BUSINESS

These two retail landlords like Amazon. Here’s why. BY ALBY GALLUN After making life miserable for many retail landlords, Amazon could make some money for the owners of two suburban shopping centers. The owner of Wheatland Marketplace in Naperville is seeking investors to recapitalize the property, home to the first Amazon Fresh grocery store in Illinois. In Schaumburg, the owner of Schaumburg Corners, where the state’s second Amazon Fresh opened just two months ago, is already looking to cash out, hiring a broker to sell the property. The moves underscore the halo effect Amazon can bring to a property, even in a retail sector struggling to adapt to online competition from companies like Amazon. A listing for a retail property that includes Amazon as a tenant gets investors’ attention—and may even command

a higher price than one that doesn’t. Schaumburg Corners could fetch as much as $40 million, a big jump from the $26.3 million it sold for just a little more than a year ago. Amazon already is generating riches for industrial developers, who are cashing out for hefty gains from big warehouses leased to the e-commerce giant. Though Amazon is the bane of most retail landlords, it could be a boon to the fortunate few who lease space to Amazon Fresh, a new grocery chain that opened its first store in August in California. “Amazon is as dynamic a tenant as you’re going to find today given their credit and how relevant they are both for retail and industrial,” says Christian Williams, senior vice president in the Oak Brook office of CBRE, the brokerage hired to sell Schaumburg Corners. So far, Amazon Fresh has opened 12 stores in California and four in

Illinois, including one in Bloomingdale and one in Oak Lawn, according to its website. In December, the chain opened its first Chicago-area store in Wheatland Marketplace, a 170,000-square-foot shopping center at 3116 S. Route 59 in Naperville. Now, Chicago-based Tucker Development, which owns about 84,000 square feet in the center, is trying to raise $8.2 million in equity to recapitalize its portion of the property. Tucker is soliciting investors through Crowdstreet, a Portland, Ore.-based crowdfunding platform. Including a $4.6 million equity investment by Tucker, the deal would value the property at $30.2 million, according to Crowdstreet’s website. It’s unclear whether Tucker or any other investors in Wheatland would pull money out of the property through the deal. Tucker CEO Richard Tucker declines to comment. The Naperville and Schaumburg

CBRE

Just months after Amazon Fresh opened grocery stores in Naperville and Schaumburg, one of its landlords is cashing out and the other is seeking new investors

properties also highlight the divergence within the shopping center market between so-called essential retail and everything else. Investors have favored essential retail, a category that includes grocery, drugstores and home-improvement stores—businesses that have held up well during the coronavirus pandemic. While they aren’t immune to the e-commerce threat, they are less vulnerable to it than are brick-andmortar retailers that sell apparel and other products. Amazon Fresh opened in January at Schaumburg Corners, a fully

leased 160,300-square-foot center at 16 E. Golf Road. The grocer took over a former Babies R Us store. “It’s a huge upgrade for the center, and it will drive significant traffic,” says Williams, the CBRE broker. A sale of Schaumburg Corners could complete a remarkably fast turnaround for the center. A venture led by Oak brook-based developer Kensington Development Partners paid $26.3 million for the property in February 2020 and quickly signed a lease with Amazon Fresh. A Kensington executive did not return calls.

The state is getting help. Now it has to help itself.

e’ve seen the equivalent of elected officials rubbing their hands together in glee now that they know $7.5 billion is on its way to Illinois with the approval of another federal COVID relief bill. Chicago is in for $1.8 billion, public transit will get a chunk, K-12 schools in Illinois get $5 billion, and higher education gets $1.3 billion. “The American Rescue Plan Act will provide emergency funding to cities and states across the country,” says Laurence Msall, president of the Civic Federation, a nonpartisan government research organization. “However, without action to get their respective fiscal houses in order, Illinois and Chicago will quickly find themselves back in the same place they were before receiving assistance—with large structural budget deficits, untenable and growing pension obligations and the worst-rated credits in the United States.” Let’s not forget that Illinoisans are still struggling from this pandemic and another $1,400 is not going to save many of them. Many local governments in Illinois also are facing debts and deficits from shrinking sales tax and other revenue hits. So isn’t this the ideal time for government officials at every level to be looking at ways to streamline, economize and consolidate for struggling taxpayers? Why aren’t we hearing more about that? It’s long been established that Illinois has far more units of government than any other state in the nation. Indeed, while the United States Census of Governments found Illinois topped the list with 6,918, the Civic Federation recently published a new inventory that found Illinois actually has 8,923 lo-

GREG HINZ IS ON VACATION

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cal governments. Only Missouri and Texas have more county governments than Illinois. We have 1,426 townships and road and bridge districts grabbing $750 million in taxes, the federation found. And 17 of those townships share the exact boundaries of municipalities, making them a prime target for merging. So, lawmakers, let’s fast-track HB 1775, which allows townships coterminous with a municipality to dissolve. No other state has more municipalities and one-third of them have fewer than 2,500 residents. How about a look at consolidating some of those with nearby communities? We have 3,204 so-called special districts, more than any other state. That’s not an honor. It’s overkill. Local governments collected $31.8 billion in taxes in 2018, and governments outside of Cook and the collar counties accounted for 23 percent of the property taxes statewide, the federation found. Many Illinoisans soon will be voting for those new township trustees, fire protection district trustees, library and school board members, and mosquito abatement trustees. All those salaries and pensions and administrative costs add up. That $1,400 isn’t going to make a dent in my property tax bill or yours, so let’s make the most of the opportunity in this pandemic to swallow hard and start streamlining. Nothing ever came of all the talk from Gov. J.B. Pritzker and lawmakers two years ago about government consolidation and property taxes. Now is the perfect time to start cutting and consolidating from the taxpayers’ perspective. And hey, it might even make for good campaign fodder, too.

There are plenty of legislative efforts in Springfield. In fact, too many of these bills are ones we see year after year because lawmakers don’t seem to find the courage to approve them. Let’s get HB 0007 approved to look at reorganizing the more than 850 school districts in Illinois and why not enact SB 1637 to allow school districts to share administrators? We definitely need HB 0433, which allows voters to petition to dissolve local governments. Plenty before me have said we never should let a good crisis go to waste. Let’s not pass up this

MADELEINE DOUBEK ON GOVERNMENT

opportunity to trim the government excess that drags down taxpayers. “It would be prudent,” Msall adds, “for the Illinois General Assembly and public officials statewide to take up the causes of pension reform, government consolidation and other best practices to stabilize the finances of

the state of Illinois, city of Chicago and governments across the state.” Amen to that. Madeleine Doubek is the executive director of Change Illinois, a nonpartisan nonprofit that advocates for ethical and efficient government.

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3/26/21 8:17 AM

CRAIN’S CHICAGO BUSINESS • MARCH 29, 2021 3

Will the apartment market come back?

Lauren Nolan has changed her wedding date four times.

Permanent work-from-home arrangements could derail the recovery that’s underway

A WEDDING LOGJAM

Couples who postponed weddings from 2020 are now competing for spaces with the newly engaged BY DANIELLE BRAFF AFTER A YEAR OF SILENCE, wedding venues have become flooded with bookings. And the spots with outdoor space? Snagging these venues is essentially equivalent to winning the Chicago wedding jackpot. “Overwhelmed is an understatement,” says Marta Michulka, managing partner of Chicago Illuminating Co., an event space in the South Loop. The venue is already booking into 2023, and Michulka plans to host two to three weddings per

weekend this summer, with many weekdays also booked. The issue: the unique situation this year. Normally, wedding clients plan a year or two ahead of time. But right now, Michulka says, she’s talking to couples who just got engaged; some who were engaged in 2020 but broke their contracts with indoor spaces because of the pandemic; and some who postponed their pandemic See WEDDINGS on Page 16

ADAM SAUER

BY ALBY GALLUN

“I AM CERTAIN THAT THE WEDDING BOOM IS IMPENDING. DUE TO CURRENT DEMAND, OUR GROUP HAS A THIRD LOCATION IN THE WORKS.” Marta Michulka, Chicago Illuminating Co.

After enduring a brutal 2020, downtown apartment landlords are relieved that the worst is over. They’ll feel even better when downtown businesses tell their employees to come back to the office. The speed and scope of the downtown market’s recovery will depend largely on how quickly the city’s office towers fill back up— and how many workers return. More people working in the office means more people hunting for apartments. Landlords are counting on that happening. “We need to see that, and we will see that,” says Ann Reckelhoff, associate director of development at Marquette, a Naperville developer that owns three downtown apartment buildings. The downtown apartment market already is poised to bounce back from its worst slump in decades, dragged down by the coronavirus pandemic and recession. As people started working remotely and restaurants and bars shut down, living downtown lost its appeal. The riots and looting over the summer didn’t help, either. Many downtown renters moved out, some to Chicago neighborhoods, some to the suburbs and still others out of the state. The bigger problem: Very few people moved in to replace them. Downtown occupancies and rents plunged. Now, landlords are wondering who will come back, and when. Relocations—people moving to See APARTMENTS on Page 19

Local firms face energy shock after frigid February Texas meltdown during cold snap sends natural gas costs soaring BY STEVE DANIELS Many Chicago-area businesses still waiting for their February natural gas bills are in for a painful jolt—at least judging by the bills that have landed with a thud in other local mailboxes. Extremely high gas prices in the middle of last month surprised many suppliers, forcing them to pay up to ensure their customers had heat and fuel during the harsh winter weather that struck the country’s midsection. Now those suppliers seek to pass those higher costs along to customers.

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Consultants to businesses and other natural gas users say February bills they’ve seen so far are ranging from 2.5 to 10 times higher than last year. “Even for people who are doing everything right, it’s going to be twice what it was last year,” says Craig Schuttenberg at Chicago-based Carbonless Community, a long-time energy consultant. “And if you really push the envelope (in terms of taking market risk), it could be 10 times.” For restaurants and other businesses hard hit by the pandemic, the energy bill shock is the last

thing they need. Expect to see customer disputes, lawsuits and hard-fought settlements over the coming months as energy suppliers seek to offload their costs and businesses demand their suppliers justify the increases. “This is real uncharted territory,” says Russ Paluch, principal at Naperville-based Maverick Energy Consulting, which helps clients with energy procurement and price risk. “It’s messy, I’ll say that. . . .The fine print is the big deal.” See GAS on Page 22

 GAS PRICE EXPLOSION February’s natural gas markets began the month normally, but prices soared during the winter-weather crisis in Texas in the middle of the month. SPOT NATURAL GAS PRICES For business days in February $25 20 15 10

2021 (Feb.1-Feb. 26)

2020 (Feb. 3-Feb. 28)

Peak price was $23.86 on Feb. 17. Peak price was $2.04 on Feb. 18.

$1.79 $2.66

0 In dollars per million BTU. Henry Hub distribution market, Louisiana. Source: U.S. Energy Information Administration

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4 MARCH 29, 2021 • CRAIN’S CHICAGO BUSINESS

JOE CAHILL

CHICAGO COMES BACK

ON BUSINESS

figure for the year and maintains its current P/E ratio of 47, its stock price could double. Burger chain McDonald’s took a similar hit early last year, enduring a 10 percent first-quarter earnings decline and a second-quarter plunge of 62 percent. With restaurant restrictions dropping around the country, and McDonald’s drive-thrus running full tilt, earnings are expected to rise 16 percent in the first quarter of 2021, followed by a 161 percent second-quarter leap and a 25 percent rise for the full year. At its current multiple of 37, McDonald’s stock could rise 35 percent if it hits the numbers. Heavy equipment manufacturer Caterpillar suffered when coronavirus hammered global trade. Earnings fell 45 percent in the first quarter and 60 percent in the second. Analysts predict increases of 13 percent and 67 percent for the first and second quarters, powering Cat to a projected 27 percent earnings jump for the full year. Based on its current multiple, Cat stock could rise 29 percent if it meets those CEOS SHOULD RESIST THE URGE expectations, even though the full-year EPS target TO BASK IN THE GLOW. is 28 percent below 2019 earnings. Gobsmacking gains give a third on average at companies CEOs cover, but they could in the S&P 500. be short-lived and deceptive. Painful as it was back then, Strong growth in comparison last year’s plunge sets a very to a period of unprecedented low bar for this year’s earnings economic disruption doesn’t reports. Merely approaching necessarily shed much light on pre-pandemic levels would a company’s post-pandemic likely generate double-digit prospects. percentage EPS growth at a lot The long-term effects of the of companies. Analysts predict coronavirus on many industries 22.6 percent first-quarter earnaren’t clear yet. Red-hot growth ings growth for the S&P 500, could soon cool as companies according to FactSet. encounter new realities. Before Big jumps in EPS tend to triglong, share prices will start ger similar surges in stock pricto reflect the impact of those es, which typically are based on changes. a multiple of per-share earnIn any case, stock values are ings. Even if multiples don’t based on future expectations expand, as they often do during more than current results. Much recoveries, stocks likely would of the anticipated 2021 rebound track earnings increases in the is already priced in, lifting share short term. valuations to dizzying levels. A few local examples illusInvestors will punish companies trate the trampoline effect of that miss their EPS targets, as recovery from a deep downwell as those that hit the mark turn. Medical products maker but betray any hint of worry Abbott Laboratories capitalized about future performance. on surging demand for coroSure, a couple of boffo quarnavirus tests last year, but its ters will spread good cheer in other business lines suffered C-suites. But CEOs should resist as hospitals stopped many the temptation to bask in the non-COVID-related proceglow. Elation could quickly turn dures. Adjusted earnings per to anxiety for leaders who allow share fell 18 percent in the first short-term success to obscure quarter and 60 percent in the future challenges. second, Bloomberg data shows. Last year’s easy comps will Analysts expect a big rebound, soon be distant memories. And with EPS rising 24 percent in this year’s blowout quarters the first quarter of 2021 and 300 will become next year’s tough percent in the second. If Abbott comps. delivers the expected $5.05 EPS There’s plenty to look forward to this year as a brutal winter finally gives way to spring. Accelerating COVID-19 vaccinations are spurring hope that the worst pandemic in a century is on the wane. Economic activity is picking up as states and cities ease restrictions imposed to contain the virus. CEOs of big public companies have another reason for optimism: easy comps. That’s Wall Street talk for quarterly earnings reports that benefit from comparison to lousy numbers a year earlier. Starting next month, companies will report first-quarter profits that are likely to look really good by comparison to the numbers they posted last April. The first quarter of 2020 was the first financial reporting period affected by COVID-19. Sales and profits at many companies started plummeting in mid-March as public officials curtailed commerce in a bid to slow viral transmission. The full impact hit in the April-to-June quarter, when earnings per share fell by about

P004_CCB_20210329.indd 4

GETTY IMAGES

Warning: Earnings are going to look great

Chicago’s strength lies in its authenticity

If we tell the truth and welcome diverse voices, says city CMO Michael Fassnacht, Chicago will keep attracting businesses and people long after COVID BY EMILY DRAKE AND TODD CONNOR Chicago Comes Back is a weekly series on ChicagoBusiness.com providing leadership insights to help your business move forward, written by leadership consultants Emily Drake and Todd Connor. Drake and Connor facilitate Crain’s Leadership Academy. Drake is a licensed therapist, owner of the Collective Academy and a leadership coach. Connor is the founder of Bunker Labs and the Collective Academy and is also a leadership consultant. Check out previous installments at ChicagoBusiness.com/comesback. TODD CONNOR: This week we connect with Michael Fassnacht, who was appointed by Mayor Lori Lightfoot as the city’s first chief marketing officer after a career in advertising and marketing. He’s also been tapped to serve as interim president and CEO of World Business Chicago, the city’s economic development and marketing arm charged with attracting business, people and innovations from across the globe. Michael, thanks for being with us. I want to jump in and ask, as a marketing mind who spends a lot of time thinking about Chicago’s position in the world, what was Chicago’s brand before, what is it today and what do you want it to be as you think about how a city builds a brand for itself? MICHAEL FASSNACHT: Ultimately, I can’t build the brand. I don’t own the brand, you don’t own the brand, the mayor doesn’t own the brand. Every human being on this planet who thinks about Chicago has a mental, emotional image of Chicago, and the sum of all these perceptions is the brand of Chicago. I can do a little to highlight a few things here and there, but I can’t create the brand. If you look at the past, look at the monikers or lines that have been assigned to Chicago: City of Broad Shoulders, the City that Works, the Windy City, the Second City. None of them are necessarily positive, nor do they reflect the Chicago of today. So, I just try to figure out first of all—with not just me alone, with a lot of folks—what is the ultimate truth about the city as a brand?

EMILY DRAKE: And of course, there are so many stories, not all of which we are proud of as a city. How do think about telling a positive and affirming story for the city while also acknowledging its darker truths? MF: You have to honestly elevate all of the stories and the perspectives on those experiences. It seems to be that the ultimate truth, if you talk with people, especially residents, on the positive side we are one of the most diverse cities in the world. The neighborhoods, the people, the industries, the food. But we’re also a very segregated city. And that’s just a truth. So, the question is, what can you highlight if you want to embrace this truth and be authentic about it and not whitewash anything? And I think the ultimate strength of this truth is to focus on all the diverse, different stories that happened in the past, so we’re authentically not walking away from a historic event like the 1919 race riots. We have to teach about it, talk about it. TC: What I hear you saying is that the brand of Chicago is not some ethereal ad campaign, but rather, the honest portrayal of where we have been and where we are going—something we each can inform. How do we help people acknowledge that, get excited about it and stay in the marathon of making a contribution to the city? MF: I think there are two megatrends: One is that more people and more companies lost any sense of location and being rooted in a particular location. But you also have this other trend that people

want. Emily and I just talked before the interview about our favorite local coffee shops. We want the story, we want the “Oh, is it local? Is it female-owned? Is it Black-owned? Is it minority-owned?” There seems to be a powerful tension here. And I think we just have to ultimately show locality matters, physical location matters and where you spend and invest your money matters. And, for that reason, cities matter. And whatever company you build, you have to realize, you didn’t build this company out of nothing just because you’re a genius. Your genius was able to thrive in a physical context that we have to call out, I believe. ED: I want to go back to authenticity. So, authenticity isn’t easy, right? And how do I, as a leader, grapple with it and get closer to it? And the thing I want to run alongside that is, authenticity isn’t safe for some people. So, as a leader reading this and even wanting it: Why is this hard and what do I do? How do I get to it? MF: That’s a very good question. I think the key leadership learning I had is, there’s not one “authenticity.” There are so many different authentic experiences. Like you said, this is not easy. It’s sometimes scary, it’s sometimes threatening, but that’s why I’m so excited about the city of Chicago, because if we realize that, that’s the power that Chicago has. Because I truly believe if we’re at our best, we have more diverse, interesting, fascinating, scary, authentic experiences than so many other cities. That is our power. TC: This theme on authenticity is powerful. And yet, will we reward authenticity? Will we reward the leaders who tell us the truth? What’s your forecast? MF: Ultimately, long term, yes. If we tell the truth, play for the long term and invite the richness of diverse voices, we will be positioned for our extraordinary future.

3/26/21 1:09 PM

Working together to create

jobs for our community At Bank of America, we continue to invest in our local communities to help create jobs and fuel economic opportunity. We’re doing this by collaborating with other companies, identifying needs and working with skill-building partners. This effort also includes our recent $25 million investment in 21 higher education institutions including community colleges, historically Black colleges and universities and Hispanic-serving institutions, such as Harold Washington College, City Colleges of Chicago. Our shared focus is on education, reskilling and up-skilling to build a pipeline of talent — and on increased commitment to hiring by major employers across our local area. Here in Chicago, my teammates and I are excited to be a part of creating more opportunities for members of our community. What would you like the power to do?®

Here’s how we’re helping to accelerate job creation in our community: Partnering with World Business Chicago to advance local goals Supporting organizations that are expanding access to skill building programs and resources, including: • After School Matters • Skills for Chicagoland’s Future • Year Up

Paul Lambert Chicago Market President

To learn more, please visit bankofamerica.com/community

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6 MARCH 29, 2021 • CRAIN’S CHICAGO BUSINESS

Ariel shakes up board, adds West Coast office

The company is establishing a presence closer to co-CEO Mellody Hobson’s realm while making changes to support a venture that will create and invest in minority-owned firms BY STEVEN R. STRAHLER Ariel Investments will open an office in San Francisco, its first on the West Coast, to pursue growth but also to accommodate the schedules of co-CEO Mellody Hobson and her spouse, filmmaker George Lucas. “It makes it easier to build out their team there,” said company founder John Rogers, also co-CEO. “Mellody and her husband are in California a lot; they’re building their museum in L.A.” The investment management company also told clients March 24 that its CFO is leaving and announced board changes it said would support a new division announced last month to invest in minority-owned firms and create others.

The San Francisco office, scheduled to debut this year overlooking the “Golden Gate Bridge from the famed Presidio,” will be Ariel’s third. Rogers said the firm, which has $17 billion under management, already has about half a dozen employees in California. In the note to clients, Ariel said CFO Maureen Longoria, 42, will depart at the end of June after 16 years at the firm “to explore new opportunities.” It added, “Happily working from her Wisconsin home during the pandemic has led her to re-think returning to Chicago full time.” She did not respond to opportunities to comment. Also exiting at midyear is David Maley, whom the note described as a “smart and thoughtful inves-

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tor who has had the courage of his convictions throughout one of the toughest periods.” It said that his micro- and small-cap “deep value” portfolios have recovered “after a brutal time for the very smallest and most undervalued companies.” He did not respond to opportunities to comment.

BOARD SHIFTS

At the board level, Ariel disclosed that veteran Chicago banker David Vitale will depart after more than 30 years to coordinate shared services among the company and startup Ariel Alternatives and its Project Black initiative. Vitale, a former senior executive of First Chicago and vice chair of Bank One, will remain as an adviser to Ariel’s operating committee.

Jen Masengarb spent nearly two decades at the Chicago Architecture Center BY STEVEN R. STRAHLER The American Institute of Architects Chicago chapter has picked a successor to its ousted executive vice president: Jen Masengarb, a Chicago Architec-

GENERAL COUNSELS

NOMINATE NOW! Deadline is Apr. 16

Calling distinguished general counsels Featuring Chicago-area general counsels who practice with distinction at public and private companies; nonprofit, government and health care organizations; and highereducation institutions and are active in civic affairs and generous in contributions of pro bono work.

Nominate at ChicagoBusiness.com/NotableGC To view Crain’s Notable Executives nomination programs, visit chicagobusiness.com/notablenoms.

P006_CCB-20210329.indd 6

Animation and MGM Studios. The Lucas Museum of Narrative Art is scheduled to open next year in downtown Los Angeles after a plan to build in Chicago was abandoned in 2016 because of opposition to a proposed lakefront location. Ariel’s other office outside Chicago, in New York, will house Project Black and see the number of employees rise by 10 to about 30, Rogers said. Replacing the departing Ariel directors are Fazal Merchant, a former CFO of DreamWorks, and Anthony Romero, executive director of the American Civil Liberties Union. Also leaving the board is Vice Chairman Charles Bobrinskoy, a move Ariel said was designed to reduce the number of company insiders on what will be a nine-member board, making Rogers and Hobson as the sole company executives on it.

After messy divorce, Chicago architects group hires new chief

2021

Nomination deadline is Friday, Apr. 16. Section publishes June 7.

Another director, Leslie Brun, will step off the board to become chairman and CEO of Ariel Alternatives. He has private-equity expertise and public company director experience, Ariel said. Rogers said Ariel Alternatives hopes to raise more than $2 billion to invest in Black- and Latino-owned firms and others that are candidates to qualify for such status. It aims to link the companies with larger ones seeking to diversify their vendor base. J.P. Morgan Chase has committed up to $200 million to be co-invested alongside Project Black. Hobson and Lucas have three homes in California, including one in Bel Air purchased from Ross Perot in 2017 for $33.9 million. Ariel’s California-based employees include Jennifer DiGrazia, who heads institutional client and investor relations, having rejoined the firm in 2019 after working at DreamWorks

of a majority of the ture Center veteran who 310 members (virtumost recently worked in ally) present, and the Copenhagen. motion died. She’ll be joining an unDuring the meetsettled organization that ing, board member dumped Zurich Esposito Tim Tracey said Eslast summer and in a narposito had denied row vote declined to rein“all the claims” in Austate him after he hired a gust but was given an lawyer. “overwhelming” vote Masengarb, who has Jen Masengarb of no confidence by a master’s degree in architecture from the University the board after he declined to of Virginia, is familiar to Chica- sign a document outlining “areas goans who listened to WBEZ’s of concern” and a “proposed im“Curious City” program, which provement plan.” Reached March 22, Nancy she hosted. She was not immediately avail- Temple, a lawyer for Esposito, disputed the discrimination alable for an interview. In Copenhagen, Masengarb legations and said, “The matter’s headed the tour program and been resolved to our satisfacguide training for the Danish Ar- tion.” On the day of the meeting, she chitecture Center and helmed an English-language podcast, “Let’s issued a statement: “The board Talk Architecture.” She joined has never asked Mr. Esposito for the center in 2018 after 18 years the facts. Mr. Esposito acknowlat the Chicago Architecture Cen- edged in writing to the executive ter, ultimately as director of in- committee of the board that he had received a summary of seterpretation and research. In a statement released by the lect allegations and that he had chapter, Masengarb says: “One readily agreed to undertake what of my first tasks will be a listen- the board asked him to do in his ing tour to fully understand our position as executive vice presmembership’s diverse needs. ident. He properly declined to That will be particularly import- sign a document that contained ant as we work together to de- false statements and explained velop our new strategic plan and why to the executive committee. identify ways to support mem- The facts, including the investibers’ professional growth and gation results, fully support Mr. Esposito.” development.” According to her alma maEsposito was accused in June of workplace discrimination, ter, Masengarb has written bullying and harassment by AIA two books, one for elementary “employees past and present,” and middle school instruction, according to a September meet- “Schoolyards to Skylines: Teaching of chapter members to con- ing with Chicago’s Amazing Architecture,” and another for high sider his fate. Although the vote was 149 to schoolers, “The Architecture 104 to reinstate Esposito as exec- Handbook: A Student Guide to utive director, the ayes fell short Understanding Buildings.”

3/26/21 1:08 PM

CRAIN’S CHICAGO BUSINESS • MARCH 29, 2021 7

CRAIN’S LIST CHICAGO’S LARGEST MONEY MANAGERS Health care

Mutual funds

Retail

State/local gov’t pensions

Unions

Other

25 24

66 60

3 9

Firm

Top local executive

Foundations

High net worth

Types of investment clients Endowments

Minimum required for separate accounts (millions)1

Educational

Total assets managed as of 12/31/2020 (millions); % change from 2019

Corporate

Ranked by total assets managed

INVESCO 3500 Lacey Road, Suite 700, Downers Grove 60515; Invesco.com

Anna Paglia Managing director, global head of ETFs and indexed strategies

$1,349,924.9 10.1%

NORTHERN TRUST ASSET MANAGEMENT 50 S. LaSalle St., Chicago 60603 NorthernTrust.com

Shundrawn A. Thomas President

$1,165,266.4 14.6%

$25.0

New

JACKSON NATIONAL ASSET MANAGEMENT 225 W. Wacker Drive, Suite 900, Chicago 60606 Jackson.com

Mark Nerud President, CEO

$261,000.0 10.0%

$50.0

LEGAL & GENERAL INVESTMENT MANAGEMENT AMERICA (LGIM AMERICA) 71 S. Wacker Drive, Suite 800, Chicago 60606 LGIMA.com

Aaron Meder CEO

$241,330.3 10.3%

$100.0

WILLIAM BLAIR & CO. 150 N. Riverside Plaza, Chicago 60606 WilliamBlair.com

John R. Ettelson President, CEO

$110,000.02 18.0%

$5.0

PPM AMERICA INC. 225 W. Wacker Drive, Suite 1200, Chicago 60606; PPMAmerica.com

Craig Smith President, CEO, chief investment officer

$105,977.6 -18.3%

$10.0

LSV ASSET MANAGEMENT 155 N. Wacker Drive, Suite 4600, Chicago 60606 LSVAsset.com

Josef Lakonishok CEO, chief investment officer, portfolio manager

$104,316.5 -13.5%

$25.0

HARRIS ASSOCIATES LP 111 S. Wacker Drive, Suite 4600, Chicago 60606 HarrisAssoc.com, Oakmark.com

Kevin G. Grant Anthony P. Coniaris Co-chairmen

$103,605.5 -13.5%

$3.03

8 23

HIGHTOWER ADVISORS LLC 200 W. Madison St., 25th Floor, Chicago 60606 HightowerAdvisors.com

Bob Oros Chairman, CEO

$79,600.0 38.6%

GCM GROSVENOR 900 N. Michigan Ave., Suite 1100, Chicago 60611; GCMGrosvenor.com

Michael J. Sacks Chairman, CEO

$61,942.7 7.3%

HARBOR CAPITAL ADVISORS INC. 111 S. Wacker Drive, 34th Floor, Chicago 60606 HarborFunds.com

Charles McCain Chairman, CEO

$58,987.2 25.3%

6 6

CIBC PRIVATE WEALTH MANAGEMENT 181 W. Madison St., 36th Floor, Chicago 60602 Wealth.US.CIBC.com

Eric Propper, president; Daniel E. Sullivan Jr., head of private banking

$57,356.7 4.6%

$1.0

ADAMS STREET PARTNERS LLC 1 N. Wacker Drive, Suite 2700, Chicago 60606 AdamsStreetPartners.com

Jeff Diehl Managing partner, head of investments

$44,000.0 10.0%

$50.0

22 11

BMO ASSET MANAGEMENT U.S. 115 S. LaSalle St., 11th Floor, Chicago 60603 BMOGAM.com

Kristi Mitchem CEO, BMO GAM

$35,330.6 -7.4%

$5.0

21 18

CITADEL 131 S. Dearborn St., Chicago 60603 Citadel.com

Ken C. Griffin CEO

$33,748.64 13.5%

NA NA

CALAMOS ASSET MANAGEMENT INC. 2020 Calamos Court, Naperville 60563 Calamos.com

John P. Calamos Sr., chairman, global chief investment officer; John Koudounis, president, CEO

$32,348.0 23.8%

18 41

CAPITAL GROUP PRIVATE CLIENT SERVICES 444 W. Lake St., Suite 46, Chicago 60606 CapitalGroup.com/PCS

Zach Lazar Senior vice president, regional director

$31,100.0 15.2%

$5.0

NA NA

AAM INSURANCE INVESTMENT MANAGEMENT 30 W. Monroe St., 3rd Floor, Chicago 60603, AAMCompany.com

John L. Schaefer Chairman, CEO

$28,204.8 0.9%

$25.0

SEGALL BRYANT & HAMILL 540 W. Madison St., Suite 1900, Chicago 60661 SBHIC.com

Philip L. Hildebrandt CEO

$23,100.8 15.3%

$1.0

New

ENVESTNET INC. 35 E. Wacker Drive, Suite 2400, Chicago 60601 Envestnet.com

Brandon Thomas Chief investment officer

$21,435.6 9.7%

$0.1

WINTRUST WEALTH MANAGEMENT 231 S. LaSalle St., 13th Floor, Chicago 60604 WintrustWealth.com

Thomas Zidar Chairman, CEO

$18,160.2 8.2%

$0.1

ARIEL INVESTMENTS LLC 200 E. Randolph St., Suite 2900, Chicago 60601 ArielInvestments.com

Mellody Hobson, co-CEO, president; John W. Rogers Jr., chairman, co-CEO, chief investment officer

$14,582.7 10.3%

$10.0

MAGNETAR CAPITAL 1603 Orrington Ave., 13th Floor, Evanston 60201; Magnetar.com

Alec Litowitz CEO

$12,577.7 2.3%

DRIEHAUS CAPITAL MANAGEMENT LLC 25 E. Erie St., Chicago 60611 Driehaus.com

Steve Weber President and head of distribution

COLUMBIA WANGER ASSET MANAGEMENT LLC 71 S. Wacker Drive, Suite 2500, Chicago 60606; ColumbiaThreadNeedleUS.com

Stephen Kusmierczak, senior portfolio manager, head of international equities; Matt Litfin, senior portfolio manager and director of research

2020 Rank

31 20

44 34

$100.0

$12,320.4 40.0%

$5.0

$11,174.1 9.0%

$10.0

6 7

8 5

Local portfolio managers/ Analysts

17 7 4

13 12

2 6

16 8

12 19

10 13

6 6

9 6

Information is from the companies. The list does not include asset managers primarily working in real estate, private equity or venture capital. NA: Not available. 1. Minimums may vary by strategy and account type. 2. Includes regulatory AUM of William Blair & Co. LLC and William Blair Investment Management LLC. 3. Minimum for private client strategy; minimums vary by strategy from $3 million to $100 million. 4. As of Jan. 1, 2021. Investment capital reported includes equity (or members’ capital) plus any accrued performance allocation (or manager allocation). Researched by Sonya Hill (researcher@chicagobusiness.com)

P007_CCB_20210329.indd 7

3/25/21 10:42 AM

8 MARCH 29, 2021 • CRAIN’S CHICAGO BUSINESS

talking

HEALTH

VIRTUAL CARE: A COVID Trend That’s Here to Stay Why is virtual care growing in popularity? Virtual care is a convenient way to connect with your healthcare provider without needing to travel to an in-person office visit1. It has prompted the industry to think differently about health care delivery. Patients are using this technology via a computer or a mobile device to receive care to prevent or manage health conditions. The pandemic quickly accelerated acceptance of virtual care by patients, healthcare providers and insurers. It was an absolute lifeline for people to access medical care during the pandemic. Patients were able to limit their exposure to COVID and avoid travel, while still receiving the care they needed.

Dr. Catherine Dimou

Midwest Market Medical Executive Catherine.Dimou@cigna.com Cigna Dr. Catherine Dimou is the market medical executive in the Midwest for Cigna, a global health service company.

In fact, with a 154 percent increase from 202020212, I believe virtual care is here to stay. One of the big accelerators of adoption was the ability for a patient to have a virtual visit with their own Primary Care Physician (PCP) with whom they had an established relationship. With the combination of convenience, personalization and effectiveness, virtual care is becoming a routine part of the way we access the medical system. About 83 percent3 of Cigna enrollees anticipate using virtual care in the future. And global professional services company Accenture estimates that one in three visits going forward will be virtual.4

This is why we’re seeing both primary care physicians and specialists offer virtual care. Patients can talk directly to board certified providers 24/7 for help with non-life threatening medical conditions. There’s no waiting. And if appropriate, prescriptions can be sent directly to the patient’s pharmacy. Virtual care can also help improve healthcare affordability. Minor conditions can be addressed virtually rather than with a trip to the emergency room. Individuals may also access a nurse information line for help deciding on whether and how to access virtual care.

“Employers have a role to play. They can help build awareness among employees about when, why and how to use virtual care.”

Preventive care and chronic care management are especially suited for virtual visits. Patients can meet with their healthcare provider to monitor chronic conditions or schedule routine screenings which many people have delayed during the pandemic.

The pandemic also saw more people struggling with emotional, mental health and substance use concerns. A virtual platform can expand access to needed behavioral health resources. Over the last year Cigna has seen behavioral health virtual visits grow from 1.5 percent to 60 percent 5. This makes sense, as virtual care allows individuals to more easily find and connect with mental healthcare providers. Also, visits are private and can be conducted from home at a convenient time which helps drive engagement. Employers have a role to play. They can help build awareness among employees about when, why and how to use virtual care. Further, employers can design their benefit plans to incentivize employees by lowering or eliminating co-pays for virtual care. What’s ahead? Virtual care will continue to evolve. For example, we can expect more specialists to add virtual capabilities. And we’ll likely see a refinement of remote devices that monitor chronic conditions from the home. Ask your carrier about virtual care. It has a broader reach than most realize and can help empower employees to better manage their health.

Footnote and sources: 1. Cigna provides access to virtual care through participating in-network providers. Not all providers have virtual capabilities. Cigna also provides access to virtual care through national telehealth providers as part of your plan. This service is separate from your health plan’s network and may not be available in all areas. 2. CDC, “Trends in the Use of Telehealth During the Emergence of the COVID-19 Pandemic — United States,” January–March 2020. 3. ME online, “Four new statistics that prove telemedicine isn’t a pandemic fad.” 4. Accenture, “Digital Health Technology Vision 2020,” July 2020. 5. Cigna claims data 2019-2020. All Cigna products and services are provided exclusively by or through operating subsidiaries of Cigna Corporation.

P008_CCB_20210329.indd 8

Exelon reports tritium leak at Quad Cities nuclear plant The leak from a storage tank this month was small and has been repaired. The company says no water left the property, and public health wasn’t threatened. BY STEVE DANIELS Exelon’s Quad Cities nuclear station was the source of a tritium leak this month that the company reported to state regulators. Since the March 10 report, the company said March 24 in a response to emailed questions, Exelon found the source of the leak and repaired it. There was no threat to local water supplies, the company said. “Exelon’s environmental team identified elevated levels of tritium in a small amount of water that escaped from a storage tank on plant property,” the company said. “Technicians contained the leak, repaired the tank and notified IEMA (the Illinois Emergency Management Agency) per procedure. No water left the property, drinking water was not impacted and at no time was there a public health or safety risk.” Still, the situation seemed tense two weeks ago when Exelon reported the incident to the Illinois Environmental Protection Agency. Two monitoring wells showed higherthan-normal levels of tritium. “Excavation to identify source leak is underway,” Exelon wrote in the report to IEPA. “Additional sampling is being conducted on the affected wells and the surrounding wells to help define the event. An additional monitoring well has been installed, with plans to install six additional wells to define the ex-

tent of tritium in groundwater.” Exelon set up an “around the clock investigation and remediation team.” Tritium leaks have been an issue for Exelon’s Illinois nukes in the past. Significant leaks 16 years ago at the Braidwood station in Will County led to litigation with the state and the county. Exelon ultimately paid $1.1 million into a fund supporting environmental projects around affected nuclear plants. Tritium, a radioactive isotope, is found naturally in water. But elevated levels in drinking water are linked to cancer, miscarriages and birth defects. In the Braidwood case, tritium leaks at the plant migrated off the site. “The Quad Cities water release is not comparable to the Braidwood release,” Exelon said in its statement to Crain’s. “The volume of water was very small, contained on plant property and quickly identified and addressed. As part of our tritium monitoring program, we notify IEPA and (the Illinois Emergency Management Agency) when unintentional tritiated water releases occur. We take our tritium monitoring and stakeholder notification responsibilities seriously and only a few cases have been reported in recent years, none of which impacted public health and safety.” Additionally, Exelon has said that it’s deferring hundreds of millions’ worth of scheduled capital projects at its power plants across the coun-

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3/25/21 9:12 AM

14 MARCH 29, 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 / DESIGN

BANKING

LAW

NON-PROFIT

Lamar Johnson Collaborative, Chicago

Wintrust Private Client, Chicago

Blank Rome LLP, Chicago

Nixon Peabody LLP, Chicago

Chicago Commons, Chicago

Braden Smith was recently promoted to president of Wintrust Private Client, a newly rebranded division of its parent company Wintrust. Braden brings more than 25 years of experience in working with high-net-worth individuals, business owners, and their families. He serves on the boards of Children’s Brittle Bone Foundation, Friends of Prentice, and John Cabot University.

Seth Lamden has joined Blank Rome’s Chicago office as a partner in the Insurance Recovery group. He has more than 20 years’ experience helping policyholders avoid disputes with their insurers by counseling them through the insurance buying process to ensure that their policies have favorable terms and in presenting claims to their insurers. He also represents policyholders in litigation and negotiation. Seth joins Blank Rome from Neal, Gerber & Eisenberg LLP.

Nixon Peabody is proud to welcome our new commercial real estate partner Michael Kuppersmith to the firm. Mike focuses his practice on commercial real estate law, with an emphasis on the leasing, acquisition, development, financing, and disposition of office, retail, multifamily residential, student housing, hotel, and industrial properties and has extensive experience working on commercial real estate transactions in California. Mike attended the University of Texas School of Law.

Chicago Commons welcomes Dr. Erica M. Collins as the new Chief Human Resources Officer. Dr. Collins brings over 15 years’ experience to serve as a strategist, thought leader, change agent, and cultural leader to help advance the organization’s strategic vision. Prior to joining Chicago Commons in January 2021, Collins was the Human Resources Director for Friend Family Health Center, where she led all aspects of human resources, including alignment of best practices and organizational strategy.

Lamar Johnson Collaborative (LJC) has promoted Lina Chiu, AIA to Principal. With nearly 20 years of experience in architecture and interior design, Lina brings to LJC an impressive portfolio of corporate campus headquarters, hospitality and mixed-use projects. She serves as studio director and team leader for Habitat for Humanity’s Women Build. She holds a BS in Architecture from the University of Michigan and an M.Arch from Rice University.

BANKING

EXECUTIVE SEARCH

LAW

NON-PROFIT

Wintrust Private Client, Chicago

Felix Global, Oak Brook

Nixon Peabody LLP, Chicago

Embarc, Chicago

Scott Fortiano was promoted to senior vice president of Wintrust Private Client, a newly rebranded division of its parent company Wintrust. His main focus is leading efforts to increase the company’s private client presence in Chicagoland. Scott has been with Wintrust for 11 years and has more than 26 years of portfolio management and banking experience. He has a Bachelor of Arts from North Central College and volunteers with the Northern Illinois Food Bank and Feed My Starving Children.

Felix Global, the leadership development, recruiting and outplacement firm, is proud to announce J. James O’Malley and Marc Detampel joined the company to launch its new Executive Search O’Malley Practice. O’Malley will lead the new business line and brings 30 years of talent acquisition expertise. He previously co-founded two retained search firms and is focused on recruitment in private equity, Detampel professional services, and financial services. Detampel brings 25 years of consulting expertise, advising on executive talent, human capital strategy, change management, leadership development and organizational design. He is focused on recruiting and talent management issues for clients in professional services, telecommunications, wireless and cable.

Nixon Peabody is proud to welcome our new commercial real estate partner James Mayer to the firm. Jim focuses his practice on commercial real estate law, including all aspects of real estate acquisition, development, leasing, operation, management, and disposition. His work also involves acquisitions of hotels, development of sports facilities, and real estate finance. Jim earned a J.D. and an MBA from Emory University’s School of Law and Goizueta Business School.

David Allocco, Managing Director with PierceGray, has joined Embarc’s Board of Directors. David’s work with Embarc began through its relationship with Social Venture Partners - Chicago, a non-profit organization where David is a Partner. Through SVP’s grant program, David worked extensively on Embarc’s growth strategy, which positively contributed to Embarc’s expanding impact on Chicago high school students. David will continue to support Embarc’s mission to transform Chicago’s education system.

BANKING Wintrust Private Client, Chicago Molly Gullman was promoted to senior vice president of Wintrust Private Client, a newly rebranded division of its parent company Wintrust. She serves as the group team lead for the west, north, and northwest Chicago private banking markets. Molly has more than 15 years of experience in managing wealth for high-net-worth individuals and privately held businesses in Chicagoland. She has a Bachelor of Arts from Purdue University and serves on the Guild Board for Boys & Girls Clubs of Chicago.

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

LAW Laner Muchin, Ltd., Chicago William G. Wake and Darin M. Williams have been elected as partners at Laner Muchin. Will advises public and private sector employers in compliance matters Wake involving state and federal employment laws. He represents numerous employers at arbitrations and at mediations and hearings before the National Labor Relations Board, the Illinois Department of Human Rights and Williams the Equal Employment Opportunity Commission. Darin represents public and private sector employers before state and federal courts and government agencies in areas including public labor relations, employment discrimination, employee leaves, civil rights, wage and hour, and employment-based contract and torts issues.

NON-PROFIT Urban Alliance, Chicago Elizabeth Lindsey was appointed CEO of Urban Alliance, where she will steward the youth workforce development nonprofit’s mission to build a more equitable next-generation workforce. Urban Alliance provides paid internships, skills training, and mentoring to youth in Detroit, Baltimore, Chicago, and greater DC with traditionally reduced access to these building blocks of economic mobility. Lindsey is the outgoing CEO of inclusive tech training nonprofit Byte Back.

LAW Benesch, Chicago Timothy M. Frey has joined Benesch as Of Counsel in the firm’s Litigation Practice Group. Tim has represented public and private companies, as well as Frey individuals, in a wide array of litigation including products liability, class actions, breach of contract, breach of fiduciary duty, data theft, employment disputes, and contested corporate restructurings. Hannah M. Stowe has Stowe joined Benesch as an Associate in the firm’s Litigation Practice Group. Hannah has experience representing public and private companies in state and federal courts. She has worked on a broad range of complex commercial litigation matters, from construction contract disputes to intellectual property protection.

MARKETING

LAW Levenfeld Pearlstein, LLC, Chicago George Pavlik has joined Levenfeld Pearlstein, LLC as a Partner in the firm’s Intellectual Property Group. George focuses his practice on patent and trademark prosecution, licensing, due diligence, and clearance/opinion matters. He has over 17 years of experience helping clients protect their intellectual property rights across a wide range of technical areas.

MERGE, Chicago

REAL ESTATE

MERGE, a full-service storytelling and technology agency, announces the addition of Candace Graham as Senior Vice President, Group Growth Leader West. In her role, Graham will lead business development and support strategic growth in MERGE’s west region. As a two-time Effie Awards winner for marketing effectiveness, Graham brings more than 20 years of experience on both the client and agency sides, including founding her own agency.

Golub & Company, Chicago Erica Rogers has joined Golub & Company as vice president within its commercial office leasing team. Erica is primarily focused on the leasing and marketing of Golub’s 2.5 million-square-foot downtown Chicago office portfolio. Erica recently spent four years as a leasing representative for JLL’s suburban and downtown office portfolio. Between 1997 and 2017 she held similar roles with CBRE and Avison Young and counts Aon Center among the more noteworthy properties she leased during that time.

CRAIN’S CHICAGO BUSINESS • MARCH 29, 2021 15

Foxtrot Market eyes Fulton Market for new HQ The upscale convenience store company is nearing a deal to lease new workspace in a promising sign for downtown office landlords of renewed demand A growing Chicago convenience store company is nearing a deal to open an outpost in the Fulton Market District, where it would move its headquarters as well. Fresh off raising $42 million in its latest funding round, retailer Foxtrot Market is in advanced talks to lease nearly 30,000 square feet at 167 N. Green St. for a new main office in the former meatpacking district, according to sources familiar with the discussions. No deal has been finalized, but Foxtrot also would open a retail space in the building as part of the move, sources say. The talks are a sign of companies gradually dipping their toes back into the office market more than a year after the start of the COVID-19 pandemic and another data point suggesting that demand for Fulton Market workspace could pick up where it left off before the crisis. That’s promising for office landlords in the gritty-turned-trendy corridor, where leasing activity suddenly went

from a brisk pace to almost nonexistent as the public health crisis pushed companies to rethink their office needs. While many companies facing recent lease expirations have signed short-term renewals or simply let their deals expire while much of their team works remotely, Foxtrot stands to be among the first companies making new office commitments.

‘HUGE FANS’

Foxtrot CEO Mike LaVitola says in a statement that his company “(does) not have a new retail site or office confirmed in Fulton (Market)” and adds that it has not shared future office plans with employees. Foxtrot is based today at 440 N. Wells St., where it leases about 8,000 square feet. “That said, we are huge fans of Fulton Market, and believe it represents the best of Chicago’s growing districts,” the statement says. The company, which was founded in 2014 and operates small, upscale retail shops with

COSTAR GROUP

BY DANNY ECKER

Foxtrot Market is in advanced talks to lease nearly 30,000 square feet at 167 N. Green St. an online delivery service, has done well during the pandemic. Its e-commerce business tripled last year, compared with sales that doubled in 2019. Online orders account for about half of its sales, with the other half from in-person sales. The company has eight Chicago locations and 12 overall, recently opening one in Washington, D.C.

Foxtrot said last month that it planned to open nine new shops this year. A Foxtrot deal in Fulton Market would mark a leasing victory for Chicago developers Shapack Partners and Focus, which completed the 17-story, 750,000-square-foot Green Street building late last year. Foxtrot would join a tenant roster that includes co-working

provider WeWork, auto insurance claim software provider CCC Information Services and Duff & Phelps, the first professional services firm to lease an office in Fulton Market. Brad Serot and Tony Coglianese of real estate services firm CBRE are representing Foxtrot in its office search. Foxtrot isn’t the only company eyeing post-pandemic office space in Fulton Market. Naperville-based money manager Calamos Investments is in late-stage negotiations for a 20,000-squarefoot office lease at 215 N. Peoria St., a 12-story building developed on speculation, or without any tenants signed. Other spec office buildings are finished or underway at 320 N. Sangamon St., 318 N. Carpenter St. and 1043 W. Fulton St. Those are among the many options available to companies looking for offices downtown, where overall office vacancy reached a record high 18 percent at the end of 2020, according to CBRE. That includes many movein-ready spaces on the sublease market, as a rush of tenants have sought to shrink their footprints with the expectation that more employees will work remotely some or all of the time when the pandemic subsides.

High-rise plan stretches hot neighborhood’s boom A 433-unit tower is one of the biggest residential projects proposed in the Fulton Market District and the first in an area recently opened to new housing The Fulton Market District apartment boom is pushing north of Lake Street, the next frontier for housing developers in the neighborhood after a recent city decision to allow residential construction there. A joint venture led by Chicago developer Fulton Street Cos. has filed plans with the city for a 32-story, 433-unit apartment tower at 1201-1215 W. Fulton St. It’s one of the biggest residential projects proposed in Fulton Market and the first one proposed north of Lake Street, an area the city opened up to new housing just last month. The Chicago Plan Commission in February lifted a moratorium on residential development north of Lake Street imposed several years ago to foster more office and commercial development there. Ald. Walter Burnett, 27th, who represents the area, supported the ban originally but changed his mind last year, believing residential construction will help the West Loop neighborhood bounce back from the coronavirus pandemic. “To bring back the economy, we need to keep development flowing,” Burnett said. Now that the ban has been lifted, the Fulton Street project could be the first of many residential projects north of Lake Street. Apart-

P015_CCB_20210329.indd 15

ment developers have been especially busy in Fulton Market south of Lake Street in the past several years and have been pushing west more recently. The Plan Commission this month approved a 27-story apartment tower at 160 N. Elizabeth St., and Naperville developer Marquette has hundreds of apartments in the works west of Ogden Street.

BIG AMBITIONS

Fulton Street, meanwhile, is drawing up plans for another apartment development at 1325 W. Randolph St. that could comprise 430 units, says Alex Najem, who co-founded the firm in 2017. Najem, a former executive at Chicago developer Cedar Street, has big ambitions for the area, with plans to build about 3,000 apartments there over the next three years. “Our company’s called Fulton Street for a reason: We believe in the neighborhood,” he says. Many other developers do, too. Fulton Market has emerged as the city’s strongest office submarket and a destination for companies including Google, McDonald’s, Mondelez and WPP. Its lively restaurant and bar scene is a big draw for many residents, too. “Fulton Market is always going to be a place where people want to be because it’s the only true live-

FULTON STREET COS.

BY ALBY GALLUN

A rendering of 1201-1215 W. Fulton St., which could be the first of many residential projects north of Lake Street. work-play neighborhood,” Najem says. Still, the pandemic hit the downtown apartment market especially hard, curbing the enthusiasm of lenders and investors for big new projects. Developers are counting on a strong comeback in 2021 as the economy rebounds and vaccinations rise. At 32 stories, the tower Fulton Street plans at the southwest corner of Fulton and Racine Avenue would be on the tall end for the neighborhood, but not the tallest. Related Midwest plans a 43-story

tower at 906 W. Randolph St. and a 52-story building at 725 W. Randolph St. New York-based Morris Adjmi Architects designed the high-rise for Fulton Street, which the developer would build in a joint venture with Chris Merrill, co-founder and CEO of Chicago-based real estate investment firm Harrison Street Real Estate Capital. The venture paid about $20 million for the development site last October. In addition to securing construction financing, the venture also needs a zoning change for

the project from the Chicago Plan Commission and City Council. Burnett also must approve the proposal; he says he’s reserving judgment until he gets feedback from Fulton Market residents. To comply with the city’s affordable housing regulations, Fulton Street plans to set aside 20 percent, or 87, of the units in the development as affordable to low- or moderate-income residents, according to the zoning application it filed with the city. It will include 44 units within the building and 43 at an off-site location.

3/26/21 1:12 PM

16 MARCH 29, 2021 • CRAIN’S CHICAGO BUSINESS

Advocate Aurora launches investment arm The move builds on ambitious growth plans unveiled by the 26-hospital network last year Advocate Aurora Health has launched an investment arm with the goal of backing businesses that aim to promote health and wellness. The move builds on the Downers Grove- and Milwaukee-based health system’s ambitious growth plan to more than double revenue by 2025 and employ a “whole person” care model that extends beyond medical treatment. Following Advocate Aurora’s failed merger with Michigan-based Beaumont Health and in the midst of the COVID-19 pandemic, CEO Jim Skogsbergh recently said the revenue plan has been slowed down but the strategy remains the same. Through Advocate Aurora Enterprises, the 26-hospital network aims to invest in health-related businesses, with a focus on enabling people to age independently; supporting parents in raising children, and helping people achieve goals around mind, body and nutrition. “There’s a financial diversification component to this, but probably more important strategically, for us, is the ability to impact a person’s broader health,” says Scott Powder, president of the en-

terprise arm. A number of large health systems, including Northwell Health and the University of Pittsburgh Medical Center, have also pursued similar diversification strategies. For example, the investment arm at Peoria-based OSF HealthCare backs medical technology companies and a telepsychiatry provider.

NO QUICK EXIT

Unlike some health system investors that operate like venturecapital or private-equity firms, Advocate Aurora Enterprises isn’t looking for a quick exit, says Powder, who previously was the health system’s chief strategy officer. “We’re investing in companies that over the long term, we believe are going to help us” meet peoples’ health needs, Powder says. “We obviously have to contribute to the financial health of the organization over time, but we don’t have that exit mentality.” The subsidiary’s first investment is in San Francisco-based Foodsmart, which offers nutrition counseling and other digital services to make it easier for people to eat well on a budget. Foodsmart raised $25 million in a Series C funding round led by Ad-

ADVOCATE AURORA HEALTH

BY STEPHANIE GOLDBERG

Advocate Illinois Masonic Medical Center in Chicago is part of Advocate Aurora Health’s 26-hospital network. vocate Aurora Enterprises. Powder, who will join Foodsmart’s board, declines to say exactly how much Advocate Aurora invested. “We serve 3 million people in any given year and there’s not one person who wouldn’t benefit

from this kind of service,” Powder says. “As a national leader in value-based care, at least half of those people we have some financial risk for their overall health, and so this becomes a really powerful tool there.”

Meanwhile, according to a recently released financial filing, Advocate Aurora Health’s revenue increased 2.5 percent to $13.1 billion in 2020, compared with the previous year. Net income fell 62 percent to $558 million.

WEDDINGS from Page 3 weddings and now need a new venue. “It’s really so all over the board,” Michulka says. “It changes every week.” The Chicago History Museum is also seeing couples moving events from other states to Illinois (and vice versa) due to travel restrictions. As of the end of March, indoor and outdoor spaces are limited to 50 percent capacity or 100 people, whichever is fewer. The capacity of any event must be in line with capacity rules on the date of the event, not the date that it’s booked. For example, if you book today but the event is in July, capaci-

more in demand than ever, Weller says, with venues equipped with permanent tents such as Chicago Illuminating, Harris Theater’s Rooftop Terrace and the Shore Club Chicago at North Avenue Beach all coveted spots. The pent-up demand for venues—especially those outdoors— is wreaking havoc in every area of the wedding industry at a time when COVID restrictions change frequently and nothing is certain.

FILLING UP

At the Greenhouse Loft, a wedding venue in Logan Square, the 2021 calendar was already starting to fill up pre-pandemic, says Spencer Lokken, the owner of the Greenhouse Loft, Ovation Chicago and Style Matters DJs. Then they had to push the majority of their 2020 “IT’S REALLY SO ALL OVER THE BOARD. clients to 2021. Now, all Fridays, Saturdays IT CHANGES EVERY WEEK.” and Sundays in 2021 are booked with the Marta Michulka, managing partner, exception of two SunChicago Illuminating Co. days around the holidays. ty limits will be determined by They’re pushing couples whatever the state’s mitigation to 2022 but are fielding a fair phase is then. amount of 2023 inquiries as well. Most people prefer an out“I am certain that the wedding door space so they can have the boom is impending,” Michulka flexibility of a larger guest count says. “Due to current demand, and so their guests will be more our group has a third location in comfortable, says Claire Weller, the works.” senior planner at Big City Bride, The Newberry in the Gold a wedding planning company in Coast hopes to start hosting Chicago. Tented weddings are events in August or September.

P016_CCB_20210329.indd 16

It’s slated to have its busiest October and November in the past decade and has just two remaining Saturdays available in 2021, along with a handful of Fridays and Sundays. Some 90 percent of people are looking to 2022 and beyond, says Chayla Ellison, director of events at the library. Redfield Estate at the Grove in Glenview has been open for business since late January and has been flooded with inquiries and bookings, as most of its 2020 clients moved weddings to 2021 and 2022. Newly engaged couples are also seeking to book dates. It’s recommending that couples be flexible and to consider weekday or brunch weddings. Lauren Nolan, a Chicago-based blogger, is one of the hordes of brides who spent the pandemic on the phone with wedding venues. She got a sweatshirt that says “Bride-to-be eventually” after changing dates four times, from May 2020 to August 2020 to June 2021 to August 2021. She lost her venue (Cafe Brauer) due to the postponements. “We were lucky that we found another venue because we had a connection to it, but that was very lucky,” Nolan says, explaining that they will now be married at the Biltmore Country Club in North Barrington. Also lost? Her photographer, as she, too, was booked for Nolan’s fourth wedding date.

KATRINA JAYNE

Getting hitched? With event spaces overwhelmed, good luck finding a venue.

Chicago-based blogger Lauren Nolan has changed her wedding plans four times, from May 2020 to August 2020 to June 2021 to August 2021.

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18 MARCH 29, 2021 • CRAIN’S CHICAGO BUSINESS

Health watchdog starts a food fight with Kraft Heinz The Center for Science in the Public Interest wants a review board to weigh in on Kraft Mac & Cheese ads BY JESSICA WOHL

ble use of the product with a view toward healthy development of The Center for Science in the the child. For example, advertisPublic Interest is publicly calling ing of food products should not out Kraft Heinz for ads that use discourage or disparage healthy humor to suggest parents should lifestyle choices or the consumpsmother broccoli in cheese, bribe tion of fruits or vegetables, or kids with fries, or replace some other foods recommended for veggies with some macaroni and increased consumption by curcheese to lessen the stress during rent USDA Dietary Guidelines for Americans and My Pyramid, as meals. Certain Kraft Heinz ads that applicable to children under 12.” One of the ads highlighted by ran in recent years appear to violate guidelines regarding product CSPI is a Kraft macaroni & cheese presentations and disparagement spot that shows a woman chasing established by the Children’s Ad- after a child with a forkful of vegvertising Review Unit of the Bet- gies in an unsuccessful attempt to ter Business Bureau, according get the kid to eat “one more bite.” to CSPI. And now, the group is Then, when the adult makes Kraft asking CARU to weigh in on the macaroni and cheese, the child smiles during mealtime. matter. That commercial “disparaged In a March 24 letter addressed to CARU Director Dona Fraser, healthy foods, a longstanding CSPI highlights some of the ads it feature of advertisements from Kraft Heinz,” CSPI wrote. And, accordONE OF THE ADS HIGHLIGHTED ing to data shared by the watchdog, it BY THE WATCHDOG GROUP SHOWS A was shown during WOMAN CHASING AFTER A CHILD WITH kids programming on networks such as A FORKFUL OF VEGGIES. “Teen Titans Go!” on Cartoon Network, finds fault with. The watchdog ac- “DuckTales” on Disney XD and knowledges that Kraft is already “SpongeBob SquarePants” on planning to discontinue the cam- Nickelodeon. The Kraft mac and cheese spot paigns in question yet writes that it still wants the ad review unit used the tagline “for the win win,” to review the food marketer’s ad a sentiment echoed in a spot for Kraft cheese that showed a standpractices. Guidelines issued by CARU in- off at the dining table that ends clude: “Advertising of food prod- when broccoli is covered with ucts should encourage responsi- cheese. Both ads use the Enya

CSPI acknowledges that Kraft is already planning to discontinue the campaigns in question, yet it still wants the marketer’s ad practices reviewed. song “Only Time” to suggest the relaxation that ensues. Kraft is in the process of selling much of its cheese business to Groupe Lactalis.

GUIDELINES

A 2018 campaign for the OreIda brand suggested parents use french fries as a bargaining chip to get kids to eat other foods they may not enjoy as much as fries. A “mealtime bribery chart” that was part of the Ore-Ida Potato Pay campaign when it debuted jokingly suggested how many fries a kid should get for eating certain foods. A bite of a carrot or chicken was worth one fry, while eating tofu or quinoa netted five fries, according to the “frynancial guide,” which was labeled “for illustrative purposes only.” The Ore-Ida campaign came

from Droga5. “While Kraft Heinz has told CSPI that the Ore-Ida Potato Pay and the ‘for the win win’ campaigns will be discontinued later this year, we are writing to ask that CARU review Kraft Heinz’s advertising practices and work with the company to align their advertisements with CARU guidelines,” Sara Ribakove, senior policy associate at CSPI, wrote in the letter to Fraser. Kraft Heinz could not be immediately reached for comment. The BBB site lists Kraft Heinz as a CARU supporter. CSPI also takes issue with a 2020 Capri-Sun campaign about donating water for schools to use when drinking fountains were closed during the pandemic. A video showed kids disappointed when offered water in a pouch rather than a Capri-Sun drink.

The “We’re Sorry It’s Not Juice” campaign came from Mischief @ No Fixed Address. Ribakove says CSPI wrote to Kraft Heinz expressing its concerns in November. Kraft Heinz didn’t find fault in any of the ads mentioned when it responded in January, but did inform CSPI that the Ore-Ida Potato Pay and the Kraft “for the win win” campaigns would be ending during the second half of this year, according to Ribakove. CSPI continues to have concerns “about the ongoing and future disparagement of healthy products in Kraft Heinz advertisements given that the company does not find fault with this tactic and has used it frequently,” Ribakove tells Ad Age. Jessica Wohl writes for Crain’s sister publication Ad Age.

Lender faces loss on Scott Foresman campus in north suburban Glenview With a foreclosure suit pending, the property owner is trying to sell it to raise cash BY ALBY GALLUN The story of the Scott Foresman office campus in Glenview is heading toward a conclusion, and it’s not looking like a happy ending for the property’s lenders. Facing a foreclosure suit filed in December, the owner of the 19.4acre property is trying to raise the cash to pay off its $15.1 mortgage by selling the site to a developer. But the owner, an affiliate of Oak Brook-based Inland Group, is trying to work out a so-called short sale, according to a recent disclosure, a sign that the sale price is expected to fall short of what’s owed on the property. The property at 1900 E. Lake

P018_CCB_20210329.indd 18

Ave. has plunged in value because it no longer generates any income. Its only tenant, publisher Savvas Learning, moved out last summer, and Inland decided to put the campus, which includes a 187,500-square-foot office building, up for sale. CBRE, the broker hired to sell the site, pitched it to developers interested in building housing or something else there. But a buyer hasn’t emerged quickly enough. Inland defaulted on its mortgage when it stopped making mortgage payments in August. The firm leads a group of investors that have owned the Scott Foresman campus since 2006. The investors bought the property for $51.8 million through a so-called

1031 exchange, a transaction that allows them to defer capital gains taxes on the sale of one property if they reinvest the proceeds in another one. An Inland spokesman declined to comment, and a CBRE executive did not return a call. Wells Fargo Bank turned up the heat by filing a foreclosure suit against the Glenview property in mid-December. Wells Fargo serves as a loan trustee for investors who own bonds, or commercial mortgage-backed securities, secured by the property’s debt. The question now is how much the bondholders will lose. In a short sale, a borrower sells a property for less than what’s owed on

The owner of the Scott Foresman office campus at 1900 E. Lake Ave. hopes to sell it to a developer. it, turning over the proceeds to its lender, which agrees to accept less than full payment. Inland and a loan servicer working for bondholders are exploring that possibility, according to a recent public filing. The two parties “are in discus-

sions to facilitate a short sale of the property to the best offeror (a handful in play) in the borrower’s marketing of the property,” the document says. A representative of the servicer, a unit of Greystone Special Servicing, did not immediately return a call.

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CRAIN’S CHICAGO BUSINESS • MARCH 29, 2021 19

Offices plan to reopen soon. Does that mean apartment leasing will pick up? APARTMENTS from Page 3 Chicago for a new job or transfer— have always been a major source of demand for downtown apartments, a source that dried up last year. A lot of companies stopped hiring or cut jobs. If a downtown-based company hired someone, the new employee worked remotely. Many new hires stayed put. New research from the Federal Reserve Bank of Cleveland shows how the coronavirus severely disrupted migration patterns in Chicago and other U.S. cities. People moved out of urban neighborhoods at a higher rate than normal, but the flow of people moving in dropped in much bigger numbers. Urban neighborhoods in Chicago experienced an increase in the net outflow of 43,000 residents from April through September compared

The flow of workers into downtown could help apartment owners fill their buildings. Out-of-towners are just trickling in now, say landlords and brokers. But leasing has picked up the past few months, partly because downtown landlords have been offering such great deals to attract renters to their buildings. “People are trying to take advantage while they still can,” says Amanda Letchinger Olker, founder and managing broker at RL Accelerated, a Chicago-based apartment brokerage.

VOLUMES UP

Leasing volumes also have increased at Downtown Apartment Co., another Chicago brokerage. Apartment move-ins rose 22 percent in January compared with a year earlier, 30 percent in February and 55 percent so far in March, says Ben Creamer, “IF THERE’S ONE THING THAT the firm’s principal and WOULD SLOW DOWN THE RECOVERY, managing broker. Marquette is starting IT WOULD BE A SLOW REOPENING.” the year strong, too: After dipping as low as 86 perRon DeVries, Integra Realty Resources cent last year, the occupancy rate at the Mason, with the average for the same pe- a 263-unit building it owns in the riod over the prior three years, ac- Fulton Market District, is back in cording to the study. But the drop in the mid-90 percent range, Reckelmove-ins accounted for the bulk of hoff says. The developer has a lot the change, 29,000 residents, versus riding on the recovery, with nearly 14,000 people moving out. 600 apartments under construction Migratory patterns could work in on the western edge of Fulton Marthe apartment market’s favor this ket and another 210 in the works. year. With vaccinations on the rise While the direction of the downand the end of the pandemic on town apartment market will dethe horizon, many companies are pend heavily on hiring and relogetting ready to reopen their down- cations, other variables will make town offices in the coming months. a difference as well. After the pan-

demic descended on Chicago, many 20-something professionals fled the city and moved back in with their parents. Now, tired of living at home, some are starting to move back, either downtown or to a Chicago neighborhood, brokers say. Demand this year will also rely on the movement of older professionals who left downtown for an apartment building in the suburbs or a smaller property in a neighborhood. One class of renter that’s likely gone for good are younger couples or families who ditched their downtown apartment for a house in the suburbs. Empty-nesters will play a role as well. COVID-19 disrupted the plans of many empty-nesters to move from the suburbs to a downtown apartment. David Hendrickson, a mortgage banker who works downtown, postponed his move last year. “No restaurants, no bars, no movie theaters—why would I go downtown?” says Hendrickson, 60. “It’s basically signing up to sit in an apartment and do nothing else.” But Hendrickson and his wife plan to make the move this year. They sold their house in Barrington in February and are living in their second home in Lake Geneva for now. They plan to get an apartment in Streeterville this fall. “I want to live where I can walk to work,” he says. “It’s very appealing.” The downtown market needs a lot more people like Hendrickson to come back. More importantly, landlords need companies to give their employees another reason to move downtown—by calling them into the office. One big wild card: what down-

◗ TURNAROUND TIME? Occupancies at downtown Class A apartments fell a bit further in the fourth quarter, but rents stabilized, suggesting the market may be pulling out of its downward spiral. OCCUPANCIES AND RENTS Downtown Class A occupancies

Net rent (per square foot)

100% $2.55 100% $3.50 $2.55 $3.50 95% 95% $3.00 $3.00 90% 90% $2.50 $2.50 85% 85% 87.3% $2.00 87.3% $2.00 80% 80% ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 $1.50 $1.50 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 * Net rent factors in the value of concessions like free rent.

ABSORBTION 4,000

3,700 3,700

4,000 3,000 3,000 2,000 2,000 1,000 1,000 0 0 -1,000 -1,000 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 Absorption is a key measure of demand, representing the change in the number of occupied apartments. Figures for 2021-22 are estimates. Source: Integra Realty Resources

town offices will look like post-pandemic. If downtown businesses shrink their offices and allow more employees to permanently work from home some or all of the time, demand for downtown housing could suffer. “If there’s one thing that would slow down the recovery, it would

be a slow reopening or opening at much lower levels,” says Ron DeVries, senior managing director in the Chicago office of Integra Realty Resources, an appraisal and consulting firm. “If they have 10 to 20 percent of the workforce working remotely, that’s a significant impact on housing downtown.”

In a metro area with a tight real estate market, Gold Coast has a glut of homes and M.K. Pritzker long before he became a politician, remains the highIt’s a useful mindset to have when est price in the neighborhood, more trying to sell an upper-end home than a dozen years out. A stalled Gold Coast mansion these days on the Gold Coast, where Chez’s home is just one in a logjam market matters to the rest of the city because high net worth buyers who of big-dollar mansions for sale. In mid-March, there were so could go to the Gold Coast but inmany Gold Coast homes for sale at stead opt for Winnetka, Lake Forest $5 million and up that at the current or Hinsdale take their property tax pace of the market, it would take payments, private-school tuition nearly 12 years to sell all of them, the and restaurant tabs with them. It biggest glut in this longtime report- also shows how quickly a place that er’s memory. Fourteen homes were just a few years ago was a magnet for listed at $5 million or more, and in mega-bucks buyers can start to look tarnished, a cautionary tale for other fashionMANY OWNERS FEEL THAT “THE able areas. It looks like more people want to get MARKET WILL COME TO THEM. out of the Gold Coast than want to get in. SOMEBODY WILL RECOGNIZE THE But oversupply won’t VALUE OF WHAT THEY ARE OFFERING.” necessarily push prices down in this tony Jenny Ames, agent, Engel & Volkers neighborhood. While in most circumstancthe past five years, there have been es that would be the case, most of these high-end sellers have not yet six sales at those prices. The Gold Coast, about 18 square slashed prices or sold at discounts, blocks from Walton Street to North seemingly because, as Chez says, Avenue and from Lake Michigan they don’t have to sell. Much has changed since the to a few blocks west, is looking less golden than it did as recently as Pritzkers moved to the Gold Coast 2007, when the neighborhood had from Evanston. Developers have three of the Chicago area’s high- put up spectacular condo towers est-priced home sales, at $8 million, whose shiny newness and fami$9.2 million and $14.5 million. The ly-sized spaces drew high net worth highest of them, a purchase by J.B. buyers’ eyes away from historical GOLD COAST from Page 1

P019_CCB_20210329.indd 19

mansions that need updating. Tim Salm, a Jameson Sotheby’s International Realty agent who represented the sellers in two $5 million-plus home sales in 2020, says both were relatively new construction. One, a State Parkway home that went for more than $5.9 million, was built in 2019, and the other, a Cedar Street home that sold for a little over $5.3 million, was built in 2016. “They had all the bells and whistles,” Salm says in a text message. The pandemic added a new hindrance. Upper-end buying tilted toward suburban homes with lots of outdoor space. Among multimillion-dollar buyers, “the pandemic-related flight to the suburbs has been real,” says Katherine Malkin, a Compass agent who primarily works with high-end downtown properties. At the moment, Malkin is representing two homes in the logjam: an Astor Street mansion that has been on the market for three years and taken $2.7 million in cuts, to the present asking price of $6.25 million, and a 20,000-square-footer on Burton Place that went up for sale in November at $18.75 million. Two doors west of the Burton Place mansion, a home priced at $13.5 million came on the market in October 2020, and half a block

north on Astor, a house came back on the market at $9.35 million in November 2020 after it was listed from 2005 to 2008. Two doors past it is a house that’s been on the market since August 2018 for $9.95 million.

HOLDING ON

The owners of homes like these, Malkin says, “have an asset sitting on the southeast corner of their balance sheet, and they’re not going to accept a loss on it. They’re comfortable holding it until somebody comes along who values it as much as they do.” Discount sellers disappoint their neighbors, who feel the drag on the market value of their own homes. Of course, some sellers cut and run. In early 2020, a Dearborn Street mansion whose seller had spent at least $6.9 million to buy and rehab it sold for just $3.8 million. Jenny Ames, the Engel & Volkers agent representing Chez’s mansion, says that more typical among owners of these homes is the feeling that “the market will come to them. Somebody will recognize the value of what they are offering.” Chez, a lifelong Chicagoan who now has not only the Astor Street and California homes but an apartment in New York, says that “I simply cannot understand why people are not paying more for homes in Chicago.”

While spasms of social unrest in 2020 contributed to steep drop-offs in sales in places like Streeterville, River North and the Loop, Ames doesn’t believe it impacted the Gold Coast mansion market. “People who were in high-rises watching it out their windows on Michigan Avenue: They had a front row seat, and it shook them up,” Ames says. “If you were in one of these big homes on North State Parkway or Dearborn or Astor, the social unrest wasn’t that close.” The Chicago area’s notoriously high property taxes aren’t scaring away buyers either, in Chez’s estimation. “People who are paying multiple millions for a house aren’t going to stop because of the tax bill,” Chez says. His property tax bill on Astor Street is about $80,000 a year, but “California, where property taxes are configured more favorably than Chicago, has onerous personal income taxes.” Even if they’ve been extensively rehabbed, Gold Coast mansions are still narrow relative to homes in Lincoln Park or new condos built broad like suburban ranch houses. Historical homes often “have some sort of limitation versus new construction,” Salm says. Potential buyers “have to commit to doing their own renovation and a lot of buyers don’t want to wait,” he says.

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20 MARCH 29, 2021 • CRAIN’S CHICAGO BUSINESS

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Chicago spreads vaccines across 150 providers VACCINES from Page 1 providers in Chicago. Obtained through a Freedom of Information Act request, the numbers— which cover the start of the rollout through March 12—offer a window into the city’s vaccine rollout at a time when two providers are under fire for allegedly misallocating doses. While some cities and states have funneled most of their doses to large hospitals, mass vaccination sites or independent pharmacies, Chicago spread vaccines across a network of more than 150 providers—doling out small numbers of doses to doctors and pharmacies, and tens of thousands to fast-growing primary care networks and community health centers. Major academic medical centers got larger amounts, but a smaller share of the total than similar institutions received elsewhere. Some industry observers say this approach helps the city reach hard-hit neighborhoods and residents who don’t have primary care providers and live up to its pledge for equity. But Chicago’s strategy has drawbacks, too. Early struggles at some of Chicago’s numerous providers slowed the initial ramp-up of vaccinations in the city. Controlling all those providers is another challenge, as controversies involving Loretto Hospital and the Innovative Express Care clinics show. With 12 percent of its population fully vaccinated, Chicago still trails the statewide average of 15 percent, and lags far behind some downstate communities. As of March 25, Adams County had fully vaccinated nearly 30 percent of its population, and counties like Peoria and Champaign have each vaccinated roughly 20 percent. Those counties got the biggest per capita vaccine supply from the state and relied heavily on large vaccination sites. City officials say Chicago’s vaccination rate would be higher if the federal government would provide more vaccines, noting that 94 percent of vaccines received by the city are administered within a week. “Our rate limiter has really been supply, and not the efficiency of getting vaccine out, nor into arms,” says Dr. Candice Robinson, CDPH medical director. Robinson says the city’s diversified roster of providers—more than 150, as of March 12, and 450 more signed up—has boosted vaccination rates in hard-hit communities. “Our equity numbers are showing the fruits of those labors,” Robinson says. Logistics expert Hani Mahmassani of Northwestern University says other big cities are starting to adopt Chicago’s approach. The thought process for many now is, “the more we could go into the neighborhoods, make it accessible to folks, the better,” says Mahmassani, who is studying vaccine distribution under a grant from the National Science Foundation. The city distributed half of its doses to hospitals. Chicago’s four

w CALLING ALL VACCINATORS Unlike cities that rely on a small number of large vaccination facilities, Chicago distributes doses through a wider array of providers, in hopes of reaching people in all communities. PERCENTAGE OF VACCINES THAT THE TOP 10 DOSE-GETTERS RECEIVED Dec. 6 to March 12

Chicago Department of Public Health

Number of doses

10.2% 96,988

University of Illinois Hospital

6.4%

61,250

University of Chicago Medical Center

6.4%

60,450

Rush University Medical Center

6.4%

60,450

Northwestern Memorial Hospital

6.1%

Oak Street Health

5.7%

Jewel-Osco Cook County Health Esperanza Health Centers Innovative Express Care*

4.8% 4.5%

57,530 54,600 46,000 42,310 35,600

3.7%

32,300

3.4%

DOSES DISTRIBUTED BY PROVIDER TYPE Dec. 6 to March 12

25.2% Academic medical centers

2.1% Other settings

15.7% Physician groups

9.7% Pharmacies

14.5% Safety-net hospitals *CDPH stopped first doses as of March 23. Source: Analysis of Chicago Department of Public Health data

academic medical centers—Rush University Medical Center, Northwestern Memorial Hospital, University of Chicago Medical Center and the University of Illinois Hospital—got a quarter, safety nets just under 15 percent and other community hospitals about 10 percent. About 30 percent of the city’s doses went to community and federally qualified health centers, as well as small doctors’ groups and primary care networks. Ten percent went to pharmacies, including chains like Jewel-Osco and Walgreens. CDPH kept about 10 percent, which has been doled out at City Colleges and other sites. There is a downside to a diversified roster, Mahmassani points out. More providers might mean more mistakes. Chicago learned that lesson firsthand in recent weeks as it cut off two of its top vaccinators amid controversy. Innovative Express Care, which received 32,300 doses from the city, was accused of misallocating shots meant for Chicago Public Schools staff. The clinic denies the charge. And Loretto Hospital, a West Side safety net chosen by the city to administer the first COVID-19 vaccines, has reportedly vaccinated people who are connected to hospital leaders, despite not being eligible for shots under the city’s protocols. Loretto received more than 25,000 doses from the city—more than any other safety-net hospital. Asked whether the decentralized nature of the city’s campaign makes it harder to enforce guidelines, Robinson says the health department is constantly in contact with providers and that, for the most part, they’ve all followed the rules.

8.0% Other hospitals

10.3% Chicago Department of Public Health 14.5% FQHCs/Community health centers

Chicago-based primary care network Oak Street Health has received 54,600 doses since December, about 6 percent of the city’s supply. Of all the places that Oak Street Health is vaccinating people across the country, Chicago has been the most successful at tapping into its vast network of medical providers, Executive Medical Director Dr. Ali Khan says, noting that the city rewarded speed and efficiency, giving extra doses to providers who were willing to extend their reach beyond their current roster of patients. “I think it was a home run,” Khan says, noting that cities like Dallas and Memphis, Tenn., have struggled with equitable rollouts. Both cities have lower vaccination rates than Chicago. Dallas County gave 58 percent of its doses to major hospitals, while health centers, doctors and pharmacies got a combined 5 percent. The rollout drew fire for neglecting minority and low-income communities. When the county tried to address disparities by limiting vaccinations to certain ZIP codes, state officials threatened to cut the county’s supply. As it stands, 20 percent of people there have gotten at least one dose, and 10 percent are fully vaccinated. Memphis-area officials pushed doses to a few large sites, like the city’s fairgrounds. But after they were snarled by traffic problems and wasted doses, Shelby County, where Memphis is located, turned over its vaccination program to city officials, who have been working to push doses to more providers and vaccinate more African Americans. The first-dose vaccination rate in Shelby County is 20.6 percent, and 9.7 percent are fully vaccinated there.

3/26/21 2:24 PM

CRAIN’S CHICAGO BUSINESS • MARCH 29, 2021 21

Seafood distributor Fortune International reels in deals amid pandemic online sales. Fueling the growth is a capital infusion from Bahrain-based Investcorp, which acquired a majority stake in Fortune early last year for an undisclosed price. Fortune’s expansion eventually could position the company to provide Investcorp with an opportunity to cash out through an initial public offering or sale. Dave Tayeh, head of private equity in North America, says it is still early in the investment cycle and there are no current plans to exit. For now, Fortune plans to keep growing through acquisitions and capitalize on an expected explosion of pent-up demand as COVID restrictions on restaurants fall away. Reaching $1 billion in annual sales would make Fortune “one of a very small number of companies with that type of scale and reach,” Tayeh says. “The larger we can get both in existing markets and new markets, the better array of products and services we can provide to the client.” Already, Fortune ranks among the top regional seafood-focused distributors in the country, along with California’s Santa Monica Seafood and Atlanta’s Inland Seafood. Smaller players such as Villa Park-based Supreme Lobster & Seafood also compete in Fortune’s markets, as do national distribution giants Sysco and US Foods. Rosemont-based US Foods reported more than $8.1 billion in meat and seafood sales in 2020.

OPPORTUNITIES

COVID’s calamitous effects create opportunities for well-funded acquirers in the fragmented food service sector. Coronavirus upended the seafood supply chain from docks to restaurants. With so many restaurants closing, seafood distributors couldn’t always get paid. Unpaid invoices total about $2.2 billion, according to the National Fisheries Institute, a 300-member trade association. But Fortune is not bottom-fishing, says CEO Sean O’Scannlain. “We want high quality acquisitions that are going to add value,” he says. “We’re not looking for somebody who’s in trouble that we can pick up cheap.” The company most recently acquired Neesvig’s, a Wiscon-

JOHN R. BOEHM

FORTUNE from Page 1

Sean O’Scannlain, CEO of Fortune International, says he wants to find “high quality acquisitions that are going to add value.” sin-based seafood and meat processor and distributor that also operates a retail store and online food order fulfillment center—two segments the pandemic boosted. Fortune got its first big grocery customer in 2009, when it won a regional contract with Whole Foods. A 2012 acquisition expanded the company’s gourmet offerings, while others took Fortune into more states and added new products from sausage and meats to chocolate. Diversification enables distributors like Fortune to reduce their reliance on restaurants, which account for 70 percent of seafood sales nationally, according to the National Fisheries Institute. “For companies that have taken this opportunity to diversify between their retail and restaurant offerings, now they’re in a position to say, ‘How much can we rely on restaurants?’ ” says Gavin Gibbons, vice president of communications for the organization. Before COVID, Fortune got

70 percent of its business from restaurants. That dropped to 40 to 45 percent at the low point, but O’Scannlain says it has rebounded to about 60 percent of sales. He says maintaining relationships with chefs, even when the restaurants were closed, will speed up recovery.

FISHING FOR DEALS Fortune International plans to acquire two to four companies a year and reach $1 billion in revenue in the next four to five years.

2001: Sean O’Scannlain founds Fortune Fish & Gourmet.

Source: Crain’s reporting

P021_CCB_20210329.indd 21

ADVANTAGE

Many chefs who work with Fortune point to those solid relationships as the company’s competitive advantage. Some chefs say they have worked with O’Scannlain since before he founded Fortune and taken the relationship along as they moved from restaurant to restaurant. The chefs say they know Fortune will supply quality products and deliver orders on time. O’Scannlain left his job at another Chicago-area seafood distributor to launch Fortune in 2001. He named the company for Fortune Bros. Brewing, which O’Scannlain’s great-great-grandfather founded in 1866. It operated until the late 1940s, including through Prohibition—ostensibly

2009: The company is awarded the regional distribution business for Whole Foods.

2012: Fortune expands its gourmet division with acquisition of JDY Gourmet.

2014: Fortune acquires sausage maker Chef Martin Old World Butcher Shop.

making pasta but brewing beer in the back. Competition among seafood distributors is likely to intensify after the pandemic, which is expected to leave a shrunken restaurant industry in its wake. O’Scannlain says he doesn’t know how many of Fortune customers have closed permanently, but the Illinois Restaurant Association predicts about 20 percent of the state’s 25,000 restaurants won’t reopen. That means distributors will compete for a smaller pool of customers with more leverage to demand perfection from suppliers as they reopen. Restaurants won’t hesitate to switch to a new distributor if one falters. “The minute a company like Fortune slips is the minute Supreme Lobster starts getting my fish order, and they know that,” says Aaron Cuschieri, executive chef at the Dearborn restaurant in Chicago. Cuschieri buys cod for fish and chips, beef for burgers and other products from Fortune. The Loop restaurant reopened

2017: Fortune acquires e-commerce company Lobster Gram. 2016: Fortune acquires Coastal Seafoods of Minnesota, expanding reach in upper Midwest.

this month after being closed since early November. Cuschieri has concerns—Will customers show up? Will his new, streamlined menu be a hit? Not having to worry about the quality of the food Fortune delivers is a plus, he says. Fortune sourced products from 67 countries last year, including cheeses and olive oil from Europe, Spanish ham, shrimp from Vietnam and India, and crabmeat from Indonesia. O’Scannlain says the company has facilities in nine states, more than 650 employees and 180 delivery trucks on the road. Fortune must now prepare for an expected demand surge as the restaurant world reawakens. With orders already rising, Fortune has ramped up hiring despite worries in some quarters that a recent uptick in COVID cases may cause public officials to clamp down on restaurants again. O’Scannlain dismisses those concerns: “The barn door is open, and the horses are out. And they’re not going back in.”

2018: Fortune does $180 million in annual sales.

2021: Fortune is on track to do $425 million in annual sales.

2019: Fortune acquires Morey’s Seafood in Missouri, Classic Provisions in Minnesota and Jubilee Seafood in Alabama. Fortune does $265 million in annual sales. 2020: Global private-equity firm Investcorp acquires a majority stake for an undisclosed price. Fortune acquires the Kansas City division of Seattle Seafood, Missouri’s Eurogourmet and Wisconsin-based seafood and meat processor and distributor Neesvig’s. Fortune does $275 million in annual sales.

3/26/21 2:30 PM

22 MARCH 29, 2021 • CRAIN’S CHICAGO BUSINESS

Heating bills spike after freeze GAS from Page 3 Most area businesses, government agencies and schools buy their natural gas from a third-party supplier rather than from a regulated utility like Nicor Gas or Peoples Gas. Generally, buying gas from a supplier has been cheaper for businesses than getting it from the utility. But ultra-low market prices of natural gas in recent years masked the risk inherent in such contracts. In months like this past February, when demand is higher than normal due to severe weather, businesses that thought their low prices were locked in can get nasty surprises. Often, the fixed price is for historically typical usage; when consumption is higher than that, the remainder is passed along at a “market” price. That’s supposed to reflect the supplier’s cost of buying fuel, but there’s not a lot of transparency. Prices for that surplus in the February bills so far have ranged from $2.30 per therm to $3.90 per therm and above, consultants say. That’s 10 to 15 times higher than the cost of natural gas in recent years, which has been between 20 and 30 cents per therm. The dollar toll of higher February gas bills for business customers can only be estimated at this early stage. But it’s conservatively estimated to be at least $100 million more than last year in the city of Chicago alone,

based on usage history with Peoples Gas and higher consumption this year, according to consultants. Areawide, additional costs likely will reach well into the hundreds of millions. Blame for the worst energy price shocks since the polar vortex winter of 2014 lies with a handful of days in February, when gas production and pipeline infrastructure in Texas and other Southern states froze up. That supply shutdown, combined with a spike in demand thanks both to the cold weather and the electricity crisis in Texas, sent spot prices soaring and drove up costs for industry middlemen. Some, like Toronto-based energy supplier Just Energy, have filed for bankruptcy protection. Larger suppliers like Chicago-based Exelon’s Constellation and the Direct Energy unit of Princeton, N.J.-based NRG Energy, can absorb the short-term financial blow. The question for those companies will be how aggressively they seek to recover those costs from customers. Contract terms can be squishy, and there has been talk that retailers might justify higher costs by pointing to the unprecedented nature of the February market chaos. Any such arguments invoking “force majeure,” or an act of God no one could have foreseen, are bound to end up in court. A Direct Energy spokeswoman said that some customers have con-

The mid-February cold snap in Texas caused gas production and pipeline infrastructure to freeze up. tracts in which they pay extra for price protection during high-volume months. Others have some market exposure. “When (business) customers exceed their contract thresholds on high priced days, like what happened last month, they may pay a higher price depending on their negotiated contract terms,” spokeswoman Christina Allen says in an email. Constellation spokesman Paul Adams said about a quarter of the

company’s gas customers in Illinois “may experience higher than normal bills for the month. In recognition of the difficulties this may cause, the majority of those affected have been automatically enrolled in a deferred billing plan that will spread the higher costs over several months at no added cost.” Once the short-term toll is determined, businesses, schools and others will have to decide how to better protect themselves from a recurrence. Everything is negotiable.

“When your current contracts are coming due, try to mitigate that risk,” consultant Schuttenberg says. Another option is to buy from the local utility, whether that’s Peoples, Nicor or North Shore Gas. The price often is higher than from a supplier, but it’s fixed regardless of usage. Consultants don’t expect widespread migration back to utilities. “Maybe some small guys will,” Paluch says. “The big guys won’t. Everyone’s out there trying to save a buck.”

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3/26/21 2:29 PM

CRAIN’S CHICAGO BUSINESS • MARCH 29, 2021 23

A model house that’s still mod half a century later A home for sale in Michigan City, 60 miles from the Loop, is a time capsule of fashionable life in the 1960s BY DENNIS RODKIN

BOB COSCARELLI PHOTOS

At this adoringly preserved house, the exterior is as brightly colored and the interior as sunny and comfortable as it was in 1964, when an Ohio company built it to showcase the enameled aluminum panels that give it street-side pop. The home on Cleveland Avenue in Michigan City, Ind., was a new model built by Alside Homes of Akron, Ohio, when Dr. Robert Frost and his wife, Amelia Frost, spotted it. “They were told, ‘We can build one just like it for you,’ ” says Karen Valentine, the current owner, “but they said, ‘No, we want this one, exactly the way it is.’ ” What the Frosts purchased then included not only the house, built from prefabricat-

“THEY SAID, ‘NO, WE WANT THIS . . . EXACTLY THE WAY IT IS.’ “ Curent owner Karen Valentine

ed modules, but also furnishings, built-ins and a kitchen outfitted by vendors for Alside. Nearly all of it is still in place 57 years later. Valentine and her husband, Bob Coscarelli, bought it fully outfitted from the original owners five years ago and now are putting it on the market. They’ve made some additions, most notably building a swimming pool on a formerly overgrown second lot and enclosing the yard with a seethrough fence that echoes the look of the house. They also updated the roof, all utilities and flooring. But for the most part, the house remains a time capsule of fashionable life in the 1960s. Valentine, who’s in human resources, and Coscarelli, a commercial photographer, have been Chicagoans with a part-time house in Michigan City, 60 miles from the Loop. They now plan to live in Indiana or Michigan full time and are looking for a home sized to that. They put the Alside house, also known as the Frost House, on the market March 25, represented by Rudy Conner of @properties. The price for the three-bedroom house, 2,350 square feet on about three-quarters of an acre, is $750,000.

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

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3/26/21 1:11 PM

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