Crain's Chicago Business by crainschicago

EYE-GRABBER: Hubbard’s Cave plan includes a glassy ‘habitable billboard.’ PAGE 10

RETAIL: After a brutal 2020, sales are poised to rise this year. PAGE 32

CHICAGOBUSINESS.COM | MAY 10, 2021 | $3.50

Nicole Wolter, president of HM Manufacturing in Wauconda: “The supply chain right now is a complete disaster.”

YOU CAN’T ALWAYS

GET WHAT YOU NEED Local manufacturers face shortages of everything from lumber and plastic to steel and semiconductors BY JOHN PLETZ TANVEER KHAN FOUND OUT WEDNESDAY MORNING that 20,000 computer chips he was expecting at Morey, an electronics manufacturer in Woodridge, wouldn’t arrive in time for an upcoming production run. By midafternoon, the company found a different supplier who could deliver the chips at a price 20 percent higher. Every day a small team of workers at Morey scours the market and works the phones, talking with distributors and manufacturers, scrambling to find parts. Such shortages are rare in normal times. Now they occur daily. “In 30 years I’ve been doing this, I’ve never seen anything like it,” says

Missing splashy local bank deals?

Chicken sandwiches take flight at McD’s BY ALLY MAROTTI McDonald’s new chicken sandwiches have sold well in their first two months on the menu, but they appear unlikely to overtake poultry leader Chick-fil-A. The Chicago-based fast-food giant entered the chicken sandwich fray in late February, offering three takes on the new sandwiches: Crispy, Spicy and Deluxe, all served on a potato

roll with various toppings. McDonald’s franchisees had long asked for a sandwich that would compete with chicken stalwarts and tap the hottest menu trend in fast food. Three out of five U.S. customers are interested in trying a premium chicken sandwich, according to recent survey from market researcher Datassential. That demand pushed U.S. sales at chicken-focused fast-food restaurants—a category that includes Popeyes, KFC and Chickfil-A—to more than $32.2 billion in 2020, up 7.6 percent from a year earlier, according to market researcher Euromonitor International. U.S. sales at their burg-

West Suburban, the area’s second-largest privately owned bank, seeks a buyer BY STEVE DANIELS

MCDONALD’S

High-stakes poultry foray delivers promising early sales

JOHN R. BOEHM

See SUPPLY on Page 35

McDonald’s chicken sandwich er-focused counterparts, on the other hand, dropped 2.9 percent to $113.8 billion in 2020. By the time McDonald’s rolled out its new offerings this year, See CHICKEN on Page 36

The largest deal for a privately held local bank in nearly five years is brewing. The parent of Lombard-based West Suburban Bank, the second-largest privately owned bank in the area, is seeking a buyer, according to multiple sources. At nearly $3 billion in assets and with more than 40 branches sprinkled throughout the western suburbs, the bank could fetch $360 million or more. That

would amount to about 1.5 times its book value at the end of the first quarter. West Suburban is one of a dwindling breed on the Chicago banking scene—a privately held bank large enough to provide a meaningful market share boost to a buyer or serve as a platform for an out-of-town player seeking to break into the market. Observers say the banks interested in West Suburban appear See BANKS on Page 35

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DAVID GREISING

JOE CAHILL

Pritzker is seeing through the haze around energy reform. PAGE 2

Governor lets ComEd get away with it. PAGE 4

5/7/21 4:51 PM

2 MAY 10, 2021 • CRAIN’S CHICAGO BUSINESS

Let’s think big, Chicago—at least on two fronts

kills it off, the gambling palace will produce hundreds of millions of dollars to shore up cash-short city fire and police pension funds, with other tax income flowing from adjacent entertainment, hospitality and hotel space that the city would like in the package. Team Lightfoot has carefully reached out to big Las Vegas players but suffered a loss a few days ago when MGM pulled out of the city’s request for proposal competition, citing high tax rates. Unless someone else pops in, that leaves in the race the Wynn casino operation, Hard Rock and Rush Street RUN SOME NUMBERS. YOU NEVER hometown Gaming, Chicago billionaire Neil Bluhm’s firm. KNOW WHAT MIGHT HAPPEN. Some industry buzz has another firm kicking tires here, Bears have had it at Soldier Field, Malaysian-based Genting Group, at least the Soldier Field we know. but there’s also chatter that Hard Let me begin with casinos. Rock is focused elsewhere. After a series of false starts, Anyhow, despite denials across Lightfoot finally is on her way to the board, some insiders believe grabbing a prize that her preRush Street is the favorite for two decessors had only dreamed of. Unless the city gets too greedy and reasons. One, Bluhm’s daughter, ike trees sprouting leaves and opening up after a Chicago winter, local developers are beginning to think again about their own potential openings now that the shadow of COVID-19 is receding quickly. The question is whether they’ll think big enough and in a creative enough way—especially at Mayor Lori Lightfoot’s City Hall. I’m thinking of two things in particular that may have more synergy than you might expect: hopes for a Chicago casino and a spate of renewed talk that the Chicago

Leslie Bluhm, went to law school with Lightfoot, and the family raised more than $200,000 for her mayoral campaign. After all, this is Chicago. Two, Rush Street has hooked up in its bid with Related Midwest, developer of the 78 property on vacant land just southwest of the Loop. Related surely could use a big project for its very promising but somewhat stalled project, which arrived at just the wrong time: mid-pandemic. It’s located in the right spot, too, with plenty of space near downtown hotels and good highway access. However, that doesn’t mean it couldn’t be better with a nice entertainment district right next to the casino in the form of a domed NFL football stadium with which it could share parking expenses and perhaps other overhead. I have no reason to believe Related is pondering so, but that doesn’t mean Team Lightfoot couldn’t. Name it Pritzker Stadium, too, to ensure wider buy-in. Another two-birds-with-one-

GREG HINZ ON POLITICS

stone possibility is at Soldier Field itself, located just across the tracks to the east of developer Bob Dunn’s proposed One Central complex. As in the case of Related, there is no sign Dunn is interested in building a dome. But what about doming (and somewhat) expanding Soldier Field, adding a retractable roof? That was considered in the 1980s, when the Bears agreed to their current Soldier Field lease, and rejected because of cost considerations. But construction techniques have changed a lot since then. Ponder this: Dunn made his name in the development business by becoming involved in constructing or rebuilding football

stadiums, including MetLife Stadium across the river from Manhattan, Lambeau Field in Green Bay and U.S. Bank Stadium in Minneapolis. His proposed One Central complex of huge parking lots and hundreds of thousands of square feet of restaurant and retail space likely could squeeze in some Bears fans a few times a year. Further ponder this: A mayor who’s in at least some re-election trouble—and a Bears fan herself— likely could find a way to get some political credit if she built both a casino and a real home for the Bears, one that could host a Super Bowl or a Final Four tournament. Think big, folks. Think big. Run some numbers. You never know what might happen.

Pritzker is seeing through the haze on energy reform

ow this is what a governor in full is supposed to look like. With the close of the 2021 spring legislative session just three weeks away, Gov. J.B. Pritzker has put down a marker on the politically charged subject of utility regulation. And he did so, uncharacteristically, by bucking the unions—a rare Pritzker move, indeed. And they asked for it. A coalition of unions representing workers in the energy sector moved last month to front for ComEd in its effort to lock in higher rates and force customers to pay a premium to prevent a couple of nuclear power plants from shutting down. They even hired a former lobbyist for ComEd’s parent company to aid the cause. ComEd needed the help. After the company’s central role in the landmark public corruption scandal of the last two years, no elected official wants to cozy up to the utility. Supporting union jobs is politically more palatable. But Pritzker isn’t buying into that calculation, even though his loyalty to the state’s union voters at times seems to have no bounds. He offered his own utility regulation proposal late last month that seeks to protect jobs, yes, but also holds ComEd and its parent company Exelon accountable, not just for the past, but also in the future. The lawmaking is far from finished. The union-backed effort to sweeten already generous Illinois regulation still is very much alive. Pritzker will need to hold his ground and exert strong leadership in the legislative process in order to thwart the joint ComEd-union effort to enrich the big utility and protect union jobs, with millions of ComEd customers paying the bills. Pritzker has a strong proposal, though, thanks in part to some deft leadership by Christian Mitchell, deputy governor for public safety, infrastructure, energy and envi-

P002_CCB_20210510.indd 2

JOE CAHILL: Pritzker lets ComEd get away with it. PAGE 4 ronment. Beginning last August, Mitchell led an inclusive process to write a sophisticated and comprehensive bill designed to modernize utility regulation, punish ComEd for its illegal efforts to manipulate legislation under former House Speaker Michael Madigan and take steps toward a future of clean energy. The bill itself is 900 pages. With each comma and codicil, billions can be at stake. A more digestible summary runs eight pages. Single spaced. In small type. The highlights include: phasing out coal by 2030; keeping Exelon’s Byron and Dresden nuke plants operating, at a cost to ratepayers of “only” about $350 million over five years; and requiring extensive audits, including one of ComEd’s investment in its electricity grid since the company’s larcenous “Smart Grid” program passed into law in 2011. Passage of that law, plus a 2016 rate hike, both benefited from ComEd’s aforementioned illegal influence peddling. And while the ComEd-backed “Climate Union Jobs Act” seeks to perpetuate some features of the Smart Grid program—while claiming it does the opposite—the Pritzker bill seeks to restore the Illinois Commerce Commission’s say over utility infrastructure spending and rates. It also seeks full restitution to ComEd customers from any illegal conduct. Pritzker until now consistently has sided with unions on everything from pensions to an elected school board for Chicago. With this first major from them, he may now learn the benefits of drafting common-sense legislation that benefits a far broader population of electricity customers.

The bill also marks a departure from a relatively timid posture Pritzker previously has taken on contentious matters. On redistricting, he never did define what a “fair map” must look like before declaring last month he essentially will sign whatever the legislature hands him. On ethics reform, Pritzker has laid out limitations on lobbying and called for an end to the revolving door into lobbying for former lawmakers. But he has been long on applause lines and short on specifics in public comments so far. Now comes the pending tussle ahead of the legislature’s sched-

DAVID GREISING ON GOVERNMENT

uled May 31 adjournment. For his proposal to remain intact, Pritzker will need to show skill in leading the legislature against strong resistance. Consumer and clean energy advocates are happy to see Pritzker step forward, with Mitchell showing expertise as the governor’s utility point person. Victory on behalf of consumers

and accountability for ComEd are far from assured. But at least Pritzker is staking out a strong position—and taking on the fight. Crain’s contributor David Greising is president of the investigative watchdog Better Government Association.

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CRAIN’S CHICAGO BUSINESS • MAY 10, 2021 3

Would you live in a mall?

Keller Williams agent Molly Mann represented the sellers of this house, which sold in five days.

This Chicago developer is betting more than 600 people will say yes BY ALBY GALLUN

JOHN R. BOEHM

HOMES ARE SELLING FAST EVERYWHERE Here are the places where they’re selling like greased lightning AFTER MORE THAN 50 POTENTIAL BUYERS walked through his clients’ West Lawn bungalow in its first three days on the market, Jorge Luna jacked up the asking price by 10 percent. “I did it to slow down the traffic,” says Luna, who heads the Luna Realty Group in Berwyn. “And it eliminated any low offers that people were thinking of making.” Two days later, the three-bedroom bungalow on Kildare Avenue went under contract to a buyer who in late March paid $235,000. That’s a

sale at 18 percent over the original asking price, $199,000, after just five days on the market. The real estate market has been moving fast the past several months, fueled by low interest rates and pandemic-related lifestyle changes, but no place has been as fast as the city’s West Lawn neighborhood. Houses in the neighborhood, south of 59th Street and east of Midway Airport, sold in an See FAST SALES on Page 37

BY DENNIS RODKIN

“SELLERS WORRY WHERE THEY’LL GO IF THEIR HOUSE SELLS IN A MINUTE, LIKE THEY’RE HEARING.” Molly Mann, agent, Keller Williams Elite

Tim Anderson is on a quest to urbanize a quintessentially suburban fixture: the shopping mall. The Chicago developer is building more than 600 apartments in two properties, Hawthorn Mall in Vernon Hills and Fox Valley Mall in Aurora, part of a bold experiment to reposition the malls and ensure their survival during the Amazon era. By adding housing to the mix, the redevelopments could bring some urban verve to malls sapped of energy as department stores and other retailers have shut down. Anderson’s firm, Focus, and the owner of the malls, Dallas-based Centennial Real Estate, aim to replicate the symbiosis that exists in cities and in some suburban downtowns. They’re betting the apartments will support retail and restaurants, and vice versa. At Hawthorn, on the site of a former Sears store, they’re creating an integrated package with 311 apartments above 52,000 square feet of ground-floor retail space opening out onto new sidewalks and streets. Focus isn’t just plopping an apartment building down on a nearby parking lot. If it works, the apartments will attract both suburban empty nesters and aging millennials who want to leave the city—but maybe not completely. “They want to go to something they could go to in Fulton Market,” says Anderson, founder and CEO of Chicago-based Focus. “That’s what we’re trying to do.” See ANDERSON on Page 37

Box-maker packs up profit as online shopping soars Packaging Corp.’s new dilemma: How to spend all that cash BY JUDITH CROWN Packaging Corp. of America has capitalized on surging e-commerce demand during the pandemic. Now the Lake Forest company that produces those ubiquitous brown boxes faces a strategic question: what to do with a $1 billion cash reserve. Consumers working remotely or just laying low at home have been ordering up light bulbs, coffee makers and flat-screen TVs, delivered to their doorstep. Shippers need boxes, now in

P003_CCB_20210510.indd 3

tight supply, that are made of fluted paper sandwiched by kraft linerboard. Industry shipments last year climbed more than 3.6 percent to 407 billion square feet of corrugated product, an alltime high, according to the Fibre Box Association in Itasca. Shares of PCA are up nearly two-thirds from a year ago, trading over $150. At the end of April, the company reported first-quarter net income jumped nearly 18 percent to $166.5 million, or $1.75 a share, while sales rose almost 6 percent to $1.8 billion.

Rising prices for containerboard and strong demand will only add to the cash reserves in coming months. “They’re sitting on a cash pile and it keeps getting bigger,” says Mark Wilde, packaging and forest products analyst at BMO Capital Markets. Another acquisition could be in the offing: “It’s striking that when the stock price got cheap last spring, they didn’t buy back stock or make another move,” Wilde says. See PACKAGING on Page 38

 BOX BOOM Surging e-commerce shipments during the pandemic are boosting Packaging Corp. of America, which makes cardboard boxes. PACKAGING CORP. OF AMERICA Monthly closing stock price $160

$152.31

2021

120

$1,708.7 $1,807.2

Net income in millions $141.7 2021 $166.5 2020

Earnings per share

40 0

Net sales in millions 2020

2020 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May* * As of May 5

2021

$1.49 $1.75

Note: For three months ended March 31

Source: Yahoo Finance, Packaging Corp. of America

5/7/21 4:13 PM

4 MAY 10, 2021 • CRAIN’S CHICAGO BUSINESS

JOE CAHILL

CHICAGO COMES BACK

ON BUSINESS

out that his bill requires restitution of charges related to the bribery campaign itself. In other words, ComEd must return any customer charges that covered the company’s costs of paying Madigan’s pals. But it gets to keep the far greater sums it collected from customers under the legislation itself. The spokeswoman also notes that Pritzker’s bill would end the “formula rate” system and restore much of regulators’ power to reject ComEd rate hikes. That’s a win for consumers, but it won’t make them whole. Only refunds of excessive charges under the 2011 and 2016 laws can do that. A spokeswoman for ComEd says infrastructure investments under the formula rate regime “have provided billions of dollars of proven value that benefits Illinois families and businesses.” An Exelon spokesman argues the subsidies that kept the two nuclear plants open have produced “economic, consumer, public health and environmental benefits” that exceed their costs “by at least eight to one.” I don’t doubt that formula rates and nuclear subsidies COMED AND EXELON OBTAINED produced some benefits for customers. The question BILLIONS THROUGH BRIBERY. is whether they paid too much for those benefits. If so, they deserve refunds. than $700 million in additional If Pritzker really wants to prorevenue for ComEd. Another bill tect ratepayers, he would propose passed in 2016 required utility a re-examination of ComEd’s customers to pay $235 million rates over the past decade. annually for 10 years to support Applying the new ratemaking two financially ailing Exelon standards in Pritzker’s bill, the nuclear power plants. Illinois Commerce Commission When someone obtains a could determine whether charges benefit through bribery, fraud under the formula rate system or other subterfuge, the approwere fair and order refunds of any priate punishment is to require amounts that don’t pass muster. that person to return the benA similar approach would efit to those it was taken from. recompense customers for ComEd and Exelon obtained any unfair nuke plant subsidy billions from customers through payments. In another favor to the utility’s bribery. Exelon, Pritzker’s bill would Prosecutors indicted three subsidize two more plants that former ComEd executives, a the company has threatened consultant and a lobbyist in the to close because it says they’re scheme. Four denied wronglosing money. doing, and one former utility Yet his proposed subsidy for official pleaded guilty. Madigan the Dresden and Byron plants is hasn’t been charged and mainless generous and more rigorous tains his innocence. ComEd than the ongoing supports for agreed to pay the federal govplants in Clinton and the Quad ernment a $200 million fine in Cities. Dresden and Byron its deal with Lausch. would get $71 million annually, What ComEd and Exelon provided an independent audit haven’t done is reimburse cusshows they really need finantomers for one dime the compacial help. Why not put Clinton nies collected under legislation and Quad Cities under the obtained by illegal means. Laussame program going forward ch could have required reimand re-examine prior subsidy bursement as a condition of the payments so that regulators can deferred prosecution agreement, require refunds of any excessive but he didn’t. charges? Pritzker also could have These two steps would force required reimbursement under ComEd to return any ill-gotten the legislation he proposed gains to customers and show last month. He didn’t, either. A crime doesn’t pay in Springfield. spokeswoman for Pritzker points A review of Illinois Gov. J.B. Pritzker’s proposed energy legislation leads to an inescapable conclusion: Crime pays. The sweeping package Pritzker proposed April 28 includes everything from renewable power mandates to labor standards and electric vehicle rebates. But Pritzker’s bill is also notable for something it leaves out: any requirement that electric utility Commonwealth Edison and parent company Exelon return billions of dollars’ worth of benefits they received through a long-term bribery campaign in Springfield. In a deferred prosecution agreement with U.S. Attorney John Lausch last year, Chicago-based ComEd admitted to giving jobs and contracts to associates of then-Illinois House Speaker Michael Madigan as part of an effort to win passage of favorable legislation. The bribes paid off. In 2011, Madigan greenlighted a bill that reduced the power of utility regulators to scrutinize electric rates, establishing a ratemaking formula that has generated more

P004_CCB_20210510.indd 4

Good leaders find the right questions to ask

GETTY

Pritzker lets ComEd get away with it

And they don’t always call for ‘yes’ or ‘no’ answers. Here are some guidelines for creating a workspace for honest responses and revealing brilliant insights. 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: We’ve been espousing this theme that leadership is the art of asking great questions more than it is offering great answers. Brené Brown takes it further and says that great leaders ask for help and are seen asking for help, which normalizes and celebrates that behavior in workplaces. Leaders who ask questions elevate a behavior that getting it right is more important than being right. And leadership coming out of COVID requires an inclusive posture. EMILY DRAKE: So true. This is a moment where leaders who have hidden behind the veneer of needing to be right are having to step out into an environment where no one person actually knows what the answer is. Attempts to project definitive answers will be seen for what they are: either inauthentic or faulty, especially if they haven’t been made collaboratively. It is counterintuitive for some but certainly true from the research that we ultimately trust people who show nuance, ask for help, admit when they don’t know things, defer to experts and ask great questions. These are the folks who, over time, we trust because they won’t delude themselves. We want to work at places and follow leaders who are committed to getting it right versus being right. TC: OK so let’s talk, then, about what some great questions are. For starters, good questions are not binary. They move beyond

“yes” and “no.” I find this area of research around binary decision-making fascinating—both because people are drawn to the simplicity of two choices and also because so few decisions have two outcomes. Our brains are wired to set us up for failure in this way. I remind people that polarization, something we have talked about a lot, only works with two options, or two poles, as it were. Introducing a third or fourth option reduces the temperature in any conversation and introduces a little healthy confusion which forces people to be for something, rather than simply against something. ED: In the case of two options, people too easily confuse opposing one option with supporting another. Not choosing Option A is not the same as choosing Option B, and leaders are the ones, oftentimes, who are presenting the options, so we have a responsibility here. Another thing I’ll add to the art of asking questions is that they should seek to understand something. Call it curiosity, one of my favorite traits. This is as much an implication on a leader’s willingness to listen as the questions themselves. A question like “what could we have done better” is a good one, but it also must be a sincere one. The good news for leaders who can feel overwhelmed by feeling the need to respond to feedback is that oftentimes, simply (really, sincerely) hearing and acknowl-

edging what could have been better is, in and of itself, the fix. People are not seeking a strategic shift following every conversation, just simply an acknowledgment of a shared truth. TC: I really like that, and I’ll add, too, that questions need not always be framed around the differential of what we need to do better. Companies so rarely frame positive, ideation-oriented questions like: “What makes this place special?” “When we get it right, what are we doing in those instances that is special?” “What do you appreciate most about working with Xavier,” or “what could we uniquely and strategically do to capture the hearts of our customers emerging out of COVID?” These questions reveal brilliant insights, if leaders ask them and create the space for the answers. Of course, the discipline required here is that leaders understand that a good meeting is one in which other people do the talking, and they do the opinion-collection. ED: I’m practicing that all the time. Definitely a work in progress. In all of this, the theme is democratizing our work, bringing others into the process, elevating their ideas, surrendering our egos and sharing credit where it’s due. Cultures that operate in this way are durable, fun, emotionally safe and arguably more successful. If leaders want to provoke a conversation, feel free to share this article and ask these questions: “How would we describe the kinds of questions we ask here?” “How could we ask better questions?” “How can we elevate other voices?” “What’s one cultural trait we should embrace, and one we should thank for its service and now say goodbye to?”

5/7/21 3:47 PM

CRAIN’S CHICAGO BUSINESS • MAY 10, 2021 5

‘Unsustainable’ pension woes hang over Chicago, Lightfoot says In a speech to potential investors, the mayor combines optimism about the city’s future with a dire warning BY GREG HINZ Coupling a boatload of optimism with a dire warning, Mayor Lori Lightfoot told investors from around the country that Chicago is well positioned to recover from the COVID-19 pandemic and is a good place for them to allocate their cash. But her remarks May 6 were far different on the subject of underfunded city pension funds, a problem that has bedeviled mayors for the past two decades. Though workers deserve what they’ve been promised, she said, “that promise will not be met” unless Springfield lawmakers come to the table with financial aid or other reforms. “We need to force a solution,” Lightfoot said, adding there needs to be “a reckoning.” The mayor’s comments came at the city’s annual investors’ conference for bond buyers, financiers, developers and corporate brass who are considering bringing their enterprise to the city.

met if these pension systems are so underfunded,” Lightfoot said, with the city pension system “unsustainable in its current form.” Lightfoot did not use the word “default.” But some financial experts have warned that some of the city’s four pension funds, particularly those covering firefighters and police, may have trouble pay-

ing promised benefits within a few years if they don’t get help. Another of Lightfoot’s plans—a big Chicago gambling casino, likely somewhere in the central area—will help, with city taxes and fees from the casino dedicated to police and fire pension relief. But though some casino operators have expressed interest in a Chicago location, it’s still unclear how strong that interest will be at a time when much gambling is moving to the internet from brickand-mortar locales.

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Thirty one companies have moved operations to Chicago in recent months “despite the pandemic,” she said, and the message she’s now getting from corporate officials is that they want to come back downtown as it’s difficult to “create a corporate culture only on video.” She also pointed to her signature Invest South/West program, which has shown some recent success in luring investment to long ignored South and West Side neighborhoods. Lightfoot additionally noted the city was able to bring home broadband services to thousands of school-age children with the help of hundreds of millions of dollars in federal COVID-relief funds. The mayor shrugged off other areas of concern, saying that “significant progress” has been made on police reform. She also didn’t mention recent property tax hikes and asserted that city schools are performing well, although constant fights with the Chicago Teachers Union are “not helping.” But Lightfoot made no effort at positive spin when it came to pensions, which she termed “the biggest problem” facing city finances. Noting recent legislative approval of a measure that will boost pensions for some Chicago firefighters despite opposition from her and many tax watchdog groups, Lightfoot declared that “Springfield can’t keep doing things to us. . . .(This is) a classic unfunded mandate.” With the city struggling to achieve adequate pension funding, the Legislature and governor need to “make us whole,” Lightfoot said. “Everybody needs to come to the table.” “That promise (to workers of guaranteed benefits) will not be

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5/7/21 3:52 PM

6 MAY 10, 2021 • CRAIN’S CHICAGO BUSINESS

LaSalle Street office buildings go up for sale

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That’s the backdrop for the two latest offerings, which will test investor appetite for different types of buildings on the street. The roughly 700,000-squarefoot building at 2 N. LaSalle St. could fetch bids in the range of $200 million, or close to $300 per square foot, according to sources familiar with the property. A sale at that price would complete a major turnaround by Fortress and Hearn, which swooped in with a $42 million infusion in 2016 for a majority interest in the building and to help Norfolk, Va.-based owner Harbor Group International stave off default on a $127.4 million loan it took out on the property when it bought it in 2007 for nearly $153 million. The new owners renovated the lobby and built out a tenant amenity floor with a fitness center, lounge and conferencing facility, then punctuated the turnaround with a big lease in 2019 when it signed the city of Chicago to a 15-year deal for almost 223,000 square feet that will expand to almost 300,000 square feet in 2023. The building, one-third vacant when Fortress and Hearn recapi-

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2 N. LaSalle St. talized it, will be 85 percent leased when the city adds the expansion space, according to JLL. JLL is expected to market the property as an opportunity to add value by leasing up the building’s vacant top floors. There’s a lot more space to fill one block north at BentallGreenOak’s 151,768-square-foot building, which Sun Life Financial—it later acquired real estate firm Bentall Kennedy and formed BentallGreenOak—bought from Hearn in 2016 for $32.3 million, according to public records. The building was close to 80 percent occupied at the time, according to data from research firm Real Capital Analytics. Ownership has since put an additional $10.5 million into the 95-yearold building, two-thirds of which went into capital improvements that include a lobby renovation, elevator modernization and updates to basic building equipment, according to a Cushman marketing flyer. But the building has lost tenants over the past five years and is now just 60 percent leased to 32 tenants with an average size of under 2,900 square feet. The lower occupancy is why the property is expected to fetch bids in the range of $20 million, sources say, or about 62 percent of what it sold for five years ago. It’s unclear whether there is any debt on the property, and a BentallGreenOak spokeswoman couldn’t be reached. Cushman is playing up the building as a destination for smaller tenants who want proximity to downtown government and court buildings. The brokerage notes in marketing materials that 75 percent of all new, renewed and expanded leases signed in the central business district since 2019 have been smaller than 10,000 square feet.

5/7/21 3:51 PM

CRAIN’S CHICAGO BUSINESS • MAY 10, 2021 7

BMO Harris calls biz bankers back to the office In the latest plan among large financial services firms, Chicago’s second-largest bank will return about 1,000 workers to its downtown headquarters beginning next month BY STEVE DANIELS Chicago’s second-largest bank is returning its business bankers and associated staff to the office, beginning next month. BMO Harris Bank’s commercial bankers will come back to downtown Chicago one month before the city’s largest bank, JPMorgan Chase, is requiring its workers to return to the office. Chase CEO Jamie Dimon announced late last month that all U.S. workers would be expected back in offices in July. BMO Harris’ plans so far pertain only to its commercial banking staff. Separate plans are in the works for wealth management and other areas. Many retail bankers already are working in person. That affects 2,000 workers nationally, about half of whom are in Chicago, a spokesman says. BMO Harris employs about 7,000 in total in the Chicago area. Another large downtown employer, Citadel, also is planning to return most workers to the office beginning in June. Between Citadel, Chase and BMO Harris, well over 10,000 workers previously at home will be downtown this summer, at least for portions of the week.

In a note last week to workers, BMO Harris CEO Dave Casper said: “Our management team believes that there are many benefits to being together again in an office environment. Spontaneity of ideas, collaboration with colleagues, solving client issues and winning new mandates are best done in person. My biggest concern, however, and perhaps hardest to measure, is the loss of mentoring and learning that is best taught in the moment and when we are present.”

era wasn’t working while I’ve been dressed like this,” Casper said, looking down at his sweatshirt. “But those times now are quickly, quickly coming to an end,” he said. Casper has expressed his opinion before on the importance of employees being in the same physical location. He also said in his

written message that coming back to the office is a symbol of support for reviving downtowns where local businesses have struggled to survive as the normal throng of office workers stayed in their homes. Not all financial services companies are singing the same song, however. Credit card company Discover Financial Services, with headquarters in north suburban Riverwoods, has told workers they can work from home until at least

Sept. 7. “We don’t expect to return to full capacity right away but anticipate implementing a hybrid structure that combines both onsite and remote work,” spokesman Jon Drummond emails. “We plan to communicate our long-term work-from-home strategy later this year.” Currently, 99 percent of Discover’s 18,000 U.S. workers, including call-center agents, are working from home.

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Like Chase, BMO Harris is asking employees to come in 50 percent of the time to start. Casper made clear that accommodations for more work-from-home flexibility were available, but he emphasized that workers needed to explain their issues to their managers. In a lighthearted video following up on his note to employees, Casper began speaking from his backyard dressed in workout clothes with a towel over his shoulder, and then finished the message from the office in a shirt and tie. “There’ve been a few times when I’ve been on a Teams call and I’ve fibbed a little bit and said my cam-

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EDITORIAL

A win—and a warning

hicago’s manufacturing community got a much-needed dose of good news when a Canadian electric vehicle maker on May 7 announced plans to build a factory in Joliet that will create more than 800 jobs. Montreal-based Lion Electric says it will spend $70 million over three years to build and run a facility to make up to 20,000 electric buses and trucks a year. Lion Electric’s arrival in the Chicago area builds on what is turning out to be a growth industry for the region. And it’s worth noting that Illinois won the project over Texas and Michigan, though it didn’t offer the highest dollar-incentive package. That’s in part because Illinois has a lot to offer a company that’s betting on a post-combustion-engine future. The state’s most notable entry in this category is Rivian, which is bringing electric pickup trucks and SUVs to market later this year and is also busy building a fleet of 100,000 electric-powered delivery trucks to Amazon, one of its principal financial backers, at its factory in Bloomington-Normal. In March, New York-based hydrogen vehicle maker Hyzon Motors said it will begin producing fuel-cell components in Bolingbrook later this year at what promises to be the largest plant of its kind in the U.S. A slew of other companies and organizations are helping to raise Illinois’ profile in the automotive business of the future. One is Here Technologies, the digital mapping company that used to be known as Navteq, which is developing GPS-enabled navigation devices with partners like BMW

And there’s hope that, if COVID-19 begins to sink on Gov. J.B. Pritzker’s priority list, he will be able to deliver on one of the attributes that made him an attractive candidate for the office he now holds: his deep business experience and the connections that he could leverage in Illinois’ favor. Illinois has long needed a salesmanin-chief—a role we all hoped Bruce Rauner

LION ELECTRIC’S ARRIVAL IN THE CHICAGO AREA BUILDS ON WHAT IS TURNING OUT TO BE A GROWTH INDUSTRY FOR THE REGION.

LION ELECTRIC

ritzker

8 MAY 10, 2021 • CRAIN’S CHICAGO BUSINESS

If Gov. J.B. Pritzker could embrace the role of the state’s salesman-in-chief, perhaps Illinois would land more companies like Lion Electric. to make driverless cars a reality soon. Argonne National Laboratory and the University of Illinois at Urbana-Champaign’s engineering school, meanwhile, are working together on fuel cell development. On the logistics front, DHL in 2019 opened an innovation center here—one of just three worldwide—to explore how artificial intelligence can reshape the business of moving goods around. These relatively recent

entrants to the scene—along with more traditional players like Ford’s Torrence Avenue production campus, Stellantis’ Jeep production plant near Rockford, Navistar’s test center and engine plant in Melrose Park, and Urbana-based automotive parts maker Flex-N-Gate—are burnishing Illinois’ reputation as a place with the talent and know-how to build the next generation of transportation technology.

could perform while in office, though he had a habit of bad-talking the state’s business climate in a way that many feared was a turnoff to potential investors. Not that he didn’t have reason to worry about the business climate. A survey of 383 CEOs reported May 5 confirms what we already know: Illinois is considered one of the worst states to do business, coming in at No. 48. Executives rapped the state for tax policy and regulatory climate. If we were taking the survey, we would add that the governor could do much to improve the business climate here if he would quit sidestepping Illinois’ pension troubles by calling on his allies in the labor movement to come to the table and fix what’s broken. If he could accomplish this, perhaps Illinois would have reason to celebrate even more wins like the Lion Electric investment.

YOUR VIEW

We need vaccine passports, but they’ll never happen

So, what are the obstacles to ent-up demand for domesvaccine passports? tic and international travLike citizenship passports, or el is overwhelming. TSA enrollment in Global Entry and checkpoints are routinely seeing TSA Precheck, a government over one million screenings per agency verification and validaday, with many days topping 1.5 tion process stands behind the million. The traditional spring information associated with travel season has begun while your passport or enrollment. widespread COVID-19 vaccinaWith COVID-19 vaccine distrition is occurring, with upwards of three million doses being ad- Sheldon H. Jacobson, bution, the supply chain headministered daily. Ph.D., is a founder winds that had to be overcome Amidst all of this, discussion professor of com- just to get people vaccinated required a makeshift system to of a “vaccine passport” has sur- puter science at deliver and administer vaccines faced. This would provide proof the University of and traverse the last mile of getthat a person has been vaccinat- Illinois at Urbating shots into people’s arms. ed against COVID-19, with the na-Champaign. Asking an agency like the Cenbelief that they are safe from infection and less likely to spread the virus. A ters for Disease Control and Prevention to vaccine passport would provide their own- backfill the verification process would be er with unfettered access to everything a bureaucratic nightmare. Relying on the that travel offers, much like the old normal private sector like the Vaccine Credential Initiative would still require a significant many of us yearn for. Sounds good in theory. The problem is government involvement. Without such that vaccine passports will not work, and if a verification process, vaccine passports they are implemented, will not be effective. would be subject to forgeries, particularly

for those who are not interested in being vaccinated or believe that the health risk due to the virus has been overblown. Given that in some areas of the country, people are unwilling to wear a face covering in public, asking these same people to be vaccinated is a bar too high for many to jump. Additionally, the travel industry, particularly air, hotels, cruise lines and rail, have been overwhelmingly impacted by COVID-19. They are all ripe to welcome back customers to regain economic stability. Asking customers to provide a vaccine passport presents yet another obstacle to their recovery. As such, they will advertise the requirements, but when faced with losing customers, will likely turn a blind eye if a customer cannot meet them, creating trust issues between customers and the travel industry. This is similar to what is occurring today at many hotels, which advertise face covering requirements, but do not turn customers away if they refuse to comply. It is clear that vaccines are the best de-

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

P008-P009_CCB_20210510.indd 8

fense we have against the virus, but they are not 100 percent effective. As such, vaccine passports only indicate that a person is at significantly lower risk of contracting or transmitting the virus, not at zero risk. Although for any one individual, this risk is small; at the population level, across millions of people, this risk is measurable. That is why, even at a large amusement venue like Disney World, the population risk over several weeks among all vaccinated visitors could lead to a handful of rogue infections. Vaccine passports are a great idea that will never occur and, if they do, will not be successful. The strongest path forward for reinvigorating travel is widespread vaccination, ongoing surveillance of vaccine effectiveness and preparation for booster vaccination if or when the effectiveness of current vaccines wanes. The best protection that an individual can take is to get vaccinated and continue to follow the necessary steps to prevent infection and transmission if infected—something that a vaccine passport cannot provide.

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

5/7/21 3:28 PM

Re: “ vacc May It w to be distr avail M tion peop wast

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CRAIN’S CHICAGO BUSINESS • MAY 10, 2021 9

READERS RESPOND Crain’s recent stories sparked conversations on Facebook: Re: “CVS and Walgreens have wasted more vaccine doses than most states combined,” May 3: It was a dumb idea to give them vaccines to begin with. The problem wasn’t lack of distribution points, it was lack of doses available. Most counties opened mass vaccination sites and could have vaccinated more people had they had these doses that were wasted by drug stores.

coach is the site selector, it will be incomplete, fumbled or intercepted. ALD. GILBERT VILLEGAS, 36TH WARD Why will this horrible idea not go away?

Has to be some kind of ongoing conversation between the McCaskey and Duchossois families at some tennis club on the North Shore. Sweaters around their necks. “I have an idear.” GEARY YONKER

TIM MURPHY

Re: “ ‘Arlington Park Bears’ creeps back into the conversation,” April 28: Don’t worry, if the same quarterback

Then watch the NFL put a second team

right back into the city once the Bears move to the suburbs. #chicagojaguars

Crain’s adds to multicity research team Sophie Rodgers has joined the research team that serves Crain’s Chicago Business and sister publications in three cities. Rodgers comes to Crain’s from investment Sophie Rodgers firm William Blair, where she did research for investment bankers and analysts. She earned her bachelor’s degree in English and a master’s in library and information sciences with a concentration in competitive intelligence at the University of Illinois at Urbana-Champaign. In

graduate school, Rodgers did research internships with John Deere, the Business Intelligence Group and State Farm Insurance. At Crain’s, Rodgers will be part of the team that researches and creates the award-winning lists that give Crain’s readers exclusive insights into the city’s business scene—everything from our list of Chicago’s largest privately held companies to the biggest foundations to the largest law firms. “We are delighted to welcome someone with Sophie’s experience and expertise to our multicity research team,” said Crain’s Editor Ann Dwyer.

TREY HANCOCK

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y 3 e of n or e at e it y nt n. s e n-

y cn to s s repll ul

at e or ie er s oo e d a

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

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CIO OF THE YEAR

AWARDS

A Special Section in Partnership with ChicagoCIO The annual Chicago CIO of the Year® ORBIE® Awards program honors chief information ofﬁcers who have demonstrated excellence in technology leadership. Winners in the Global, Large Enterprise, Enterprise, Large Corporate, Corporate and Public Sector categories will be announced May 14 at a virtual Awards ceremony.

2021_CIO AWARDS.indd 99

FROM OUR CHAIR

KEYNOTE SPEAKER

LEADERSHIP AWARD

Inspire CIO Chair Lisa Dykstra discusses the elevated role of CIO post pandemic

A conversation with IBM President Jim Whitehurst

Linda Jojo talks teamwork and innovation

4/28/21 3:40 PM

CONGRATULATIONS 2021 CHICAGOCIO AWARDS NOMINEES Brunswick Corporation

Generac Power Systems

TIM DICKSON

SCOTT KINSELLA

MICHAEL PEGUES

MINDY SIMON

AMIR AROONI

SUSAN DONIZ

KEVIN KOMETER CME Group

ASHLEY PETTIT

State Farm Insurance

DAN SIMPSON

MATTHEW BADEN

ED EARL

SVEN KRAUSE Hillrom

JAVIER POLIT

Mondelez International

NARAYANAN SITARAMAN

SIVA BALU

MOHAMED EL-DEMERDASH

JUNE LEMERAND

JANE POSSELL

ALLEN SMITH

SCOT BERKEY

JOHN FLOOD

MICHAEL ADAMS

Discover Financial Services Camping World

Boeing

Federal Signal

YMCA of the USA Illinois Housing Development Authority

DOUG BESSO

HighTower Advisors

BRADLEY BODELL Trustmark Insurance

MICHELLE BORNINKHOF McDonald’s

COLIN BOYD

Komatsu America

JO ANN BOYLAN

First Midwest Bancorp

MICHAEL BROOKS

GE Healthcare HSBC

BRYAN FOWLER RLI Corporation

Pace Suburban Bus

Snap-On

KEVIN LOWELL US Cellular

SUSAN LUCAS

TED GATY

Cooper’s Hawk Winery & Restaurants

MIKE GIRESI

First American Bank

Paylocity Molex

RON GUERRIER HP

SUREN GUPTA Allstate

TRACY HARRINGTON

COLETTE MANN

BOB MCCORMICK DePaul University

DARIN MCDONALD AIM Specialty Health

BILL MICKOW Follett

LKQ Corporation

Federal Reserve Bank of Chicago

KULDIP MOHANTY

DANIELLE BROWN

DANIEL HENRY

BROCK MORRISON

Whirlpool

MARK BROWNING Exelon Utilities

TONY BUTTRICK Wintrust Financial

MARYANN BYRDAK Feeding America

BOBBIE BYRNE

Advocate Aurora Health

DOUG CADDELL

McDonald’s

JOHN HOLMES

Portillo’s Restaurant Group

GRETCHEN HORN

Brookfield Properties

STEVE INMAN Chicago Cubs

ANSON JOHNSON

United States Gypsum - USG

JANICE KAPINOS

Mayer Brown

Rust-Oleum Corporation

SUNITHA CHAMARTI

ERIN KARAM

HUB International Sasser Family

HEATHER NELSON UChicago Medicine

ERIC NESLON Kraft Heinz

RR Donnelley

AUGUSTUS (GUS) OAKES ATI Physical Therapy

LAURIE PANELLA RAJEN PAREKH

KRISTEN CHARLTON

RAJEEV KHANNA

SUSAN CZARNECKI Golub Capital

ABHI DHAR TransUnion

Navistar

PINKY RAINA

U.S. Soccer Federation

SCOTT RAMSBOTTOM Anixter

PepsiCo

MIKE PARISI

Conagra Brands

Grant Thornton Int’l Ltd. Crate & Barrel Baker Tilly

STEVE SNYDER

Mercy Home for Boys & Girls

THOMAS SOUTH Northern Trust

ROBERT STONE Jenner & Block

UMESH SUBRAMANIAN Citadel LLC

JOHN SUDDUTH

HNI Corporation

KRIS RAO

Metropolitan Water Reclamation Disctrict of Greater Chicago

MADHU REDDY

LACHLAN TIDMARSH

Republic Bank of Chicago

MARVIN RICHARDSON Health Care Service Corp.

RICK RINEHART

Carle Foundation Hospital

BILL ROCHOLL

CCC Information Services

KEITH ROHLAND US Foods

KADER SAKKARIA

MICHELLE KASSON

Argo Group

Life Fitness

JULIE RAGLAND

KEN O’BRIEN

SUJA CHANDRASEKARAN

The AZEK Company

Cree Lighting

BRIDGET QUINLAN

ED RYBICKI

Marquette University

CommonSpirit Health

CNA Financial

CHRISTOPHER PRZYBYSZ

SAM NICITA

Federal Home Loan Bank of Chicago

Dina Health

ReedGroup, a Guardian Co.

City of Aurora, IL

Vyaire Medical Ruffalo Noel Levitz

RAJ SAMPOORNAM Byline Bank

MELISSA SCHEPPELE A. O. Smith

PATRICIA SCHMEDA Elkay Manufacturing

DIANE SCHWARZ

Blue Cross Blue Shield

FRANCESCO TINTO

Walgreens Boots Alliance

MANISH TOMAR

KPMG North America

PRAKASH UPADHYAYULA Wolters Kluwer

TONY VADEN ABC Supply

JASON VAN DEN EEDEN Oak Street Health

RICH VOINOVICH Equity Residential

EDWARD WAGONER JLL

TIM WALTER

Randa Apparel and Accessories

NICOLE WHITE

Redwood Logistics

AON

Illinois Tool Works

DAVID KING

KRISTINA PASCHALL

FARHAN SIDDIQI

TEFFANI ZADEH

Ahold Delhaize

Aon

RUSTY PATEL

SHAZIA SIDDIQI

JANET ZELENKA

Blue Health Intelligence

DOUG KING

Northwestern Medicine

JBT Corporation DRiV

Johnson Controls

Verizon

Stericycle

Open technology built for change

2021_CIO AWARDS.indd 100

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SPONSORED CONTENT 2021 CIO of the Year Awards

CIO CHAIR Pandemic Elevates CIO's Strategic Role in 2021 of CIOs, the answer is in the room. The challenge one CIO is facing has likely been solved by another CIO. What was their experience? What did they learn? What would they do differently? How could other CIOs benefit from sharing their knowledge?

LISA DYKSTRA

SVP & CIO Lurie Children’s Hospital of Chicago

ince last March Chief Information Officers everywhere have enabled the largest work-from-home experiment in the history of the world. Thanks to these innovative technology leaders, organizations have implemented and scaled technology solutions to weather the pandemic disruption and emerge as stronger organzations. Technology has enabled our new virtual lives; provided access to healthcare, entertainment, food, and products delivered to our homes; and connected us with colleagues, friends and loved ones. Technology has helped us adapt, adjust, and survive our new abnormal. Without the leadership, planning, and foresight of CIOs, conducting business would be impossible under these circumstances. ChicagoCIO brings together leading CIOs of Chicagoland’s largest organizations to help CIOs maximize their leadership effectiveness, create value, reduce risk and share success. Through member-led, noncommercial programs, CIOs build meaningful professional relationships with colleagues facing similar challenges, solving problems and avoiding pitfalls. Throughout this crisis, ChicagoCIO members have collaborated locally and nationally with CIOs from across industries. In any gathering

As the CIO, you are transforming your organization into a digital business, no matter what industry. The best way to sharpen your leadership acumen is to join a premier peer leadership network with other leaders. The industries and size may be different, but winning approaches to effective leadership and problem solving are transferrable. Every leader’s perspective is valuable and contributes to the conversation - and everyone wins when leaders engage, share ideas, experiences and best practices. For over twenty years, InspireCIO has been inspiring CIO success through the annual CIO of the Year ORBIE Awards – but this is just the tip of the iceberg. By joining ChicagoCIO, technology executives take their leadership to the next level through yearround, member-led programs and interaction. The power of CIOs working together – across public and private business, government, education, healthcare and nonprofit organizations – creates enormous value for everyone. Together, we are transforming our organizations with technology and enriching our region and our world. On behalf of ChicagoCIO, congratulations to the nominees and finalists on their accomplishments and thank you to the sponsors, underwriters and staff who make the ORBIE Awards possible.

LISA DYKSTRA 2021 Chair, ChicagoCIO SVP & CIO – Ann & Robert H. Lurie Children’s Hospital of Chicago

A Caring Culture Powered by Technology Congratulations to Brad Bodell for being named a Chicago CIO of the Year® ORBIE® Award finalist! Employee benefits that are secure, easy to administer and simple to use require great people backed by the right technology. You and your team underpin Trustmark’s caring, client-first culture.

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CONGRATULATIONS, GUS! ATI Physical Therapy would like to congratulate fellow team member Augustus “Gus” Oakes for being named a CIO of the Year finalist. With your leadership in information and technology, we deliver exceptional results and experiences for our patients every day.

2021 CIO of the Year Awards

KEYNOTE SPEAKER

A Conversation with IBM President Jim Whitehurst By Jane Adler

ndustry leader Jim Whitehurst is an advocate for open principles as a catalyst for business innovation. In fact, he published a book in 2015 with Harvard Business Review Press titled: “The Open Organization: Igniting Passion and Performance.” As current president at IBM, Whitehurst is responsible for the IBM Cloud and Cognitive Software organization and Corporate Strategy. Prior to IBM, he was president and CEO at Red Hat, the world’s leading provider of open-source enterprise software solutions. As keynote speaker at the 2021 Chicago CIO of the Year ORBIE Awards, Whitehurst recently shared his thoughts on industry innovations.

unique security, regulatory and compliance needs of a particular industry, like the IBM Cloud for Financial Services. So today it’s really more about where applications are built than where they reside. And that’s why having a hybrid cloud fabric to integrate these growing cloud ecosystems is so important. Q: What advances can we expect in cognitive software? A: We’re right in the middle of a “Cambrian explosion” of AI advances, from machine learning capabilities to the development of neuro-symbolic AI. All of which is enabling businesses to drive more insight and value from their AI models. The biggest advances are in areas like automation, including key business processes like

"In many companies, technology is the primary source of competitive advantage." Q: What trends do you see in Cloud computing? A: I think we’re seeing the very definition of cloud computing change. It used to be that cloud computing was all about giant data centers that hosted applications. But today cloud is becoming a computing model in which the processing can happen anywhere data is produced: in a data center, on premise, at a factory, in a retail store, or even in a car. We’re also seeing the rise of highly specialized, industryspecific clouds tailored to the

JIM WHITEHURST, President, IBM

customer service, but also IT operations themselves; modernization, especially the ability to integrate and analyze key data; prediction, particularly around planning, budgeting and forecasting; and security, such as enabling detection and response to threats across multicloud environments. Q: How will the role of the CIO change amid these trends? A: In today’s economy, companies increasingly compete on the basis of digital innovation. CIOs are responsible for building the

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engines of that innovation. So, the CIO’s role has expanded well beyond automating backoffice functions and driving operational efficiency. In many companies, technology is the primary source of competitive advantage. And that means the CIO has much greater influence in defining and executing business strategy. Q: What lessons have you learned from the workfrom-home shift during the pandemic? A: Too many lessons to list here. But we’ve gained a new understanding of how important culture is to business strategy. And we’ve learned how different –– and difficult –– it is to affect culture in a remote-only work environment. For example, we’re missing all the subtle, non-verbal cues that communicate so much in the workplace. So, we’ve had to be very thoughtful about how to replace those interactions. Q: What changes are here to stay? A: We’ve seen a number of industries take huge steps forward in digital capability,

from digital banking to telemedicine. These changes –– and the consumer behaviors that drove them–– are here to stay. And that’s a good thing. Q: What will the role of the CIO look like in five years, 10 years? A: As more competitive advantage is driven by innovation, I think the responsibilities of the CIO will continue to expand and evolve. It's becoming a position of business leadership, not just technology leadership. Q: What advice would you give to CIOs? A: Think short- and long-term. Speed is critical, of course. But remember that the technology decisions you make today, during this time of accelerated digital transformation, will dictate your competitiveness for decades. So be quick, but wise. Lay the technological foundations for future success. And be open to innovation coming from multiple sources, including your business partners, customers and in some cases, your competitors.

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2021 CIO of the Year Awards

LEADERSHIP AWARD RECIPIENT LINDA JOJO

EVP Technology & Chief Digital Officer United Airlines, Inc.

Teamwork Accelerates Innovation By Jane Adler

echnology leadership was put to the test this year like at no other time. A quick pivot to an online environment created a big challenge: How to keep business up and running. “We got scrappy,” says Linda Jojo, winner of the 2021 Chicago CIO Leadership Award. “We rallied.” United Airlines Chief Digital Officer Jojo credits her 2,000-person team for a quick response. “We accelerated innovation,” she says. A few examples: Within 30 days into the pandemic, the airline had touchless kiosks for customers to check their bags. An app was created to help travelers navigate COVID protocols and requirements. Artificial intelligence helps check travel documents to reduce the workload of agents and contact centers. An “agent on demand” now allows customers

to upgrade their tickets or change seat assignments without waiting in line to talk to an agent in person. Another challenge has been managing a remote workforce. United never shut down, but Jojo’s team of developers and support staff worked mostly from home. “My

“Leadership is really about having a great team,” says Jojo, who believes leaders should surround themselves with people from diverse backgrounds with different experiences. “We are stronger together than any individual.” Over her career, Jojo has worked in a variety of industries.

airline, bringing unique insights and experiences to her role at United. “It makes a difference,” she says. Diversity is a priority for Jojo. Ever since she attended college at Rensselaer Polytechnic Institute in Troy, New York, she was struck by the lack of women and people of diverse backgrounds in

Her other passion is helping her alma mater attract qualified women and people of color to enroll there. She is a member of the Board of Trustees at the school. Looking ahead, Jojo sees the CIO role becoming more customer centric and strategic. The pandemic has highlighted

“We are stronger together than any individual.” tactics changed,” she says. Meetings and check-ins had to be scheduled, unlike informal encounters when work was in person. Jojo is honored to receive this year’s Chicago CIO Leadership Award. “This recognition validates the incredible work the team here at United has been doing and I have had the privilege to lead,” she says.

Prior to joining United in 2014, Jojo was the chief information officer at Rogers Communications, Canada’s leading wireless, cable and media company. She has also held other technology leadership roles including at GE. Jojo’s varied career has been an advantage. Though her professional life took off in other industries she landed at an

technology. To make a difference and prepare young people for careers in technology, she focuses on two organizations.

technology as a pivotal engine of corporate growth. “No matter what industry you’re in, technology is critical,” she says.

Jojo is Vice Chair of the Board of Trustees of Chicago’s Adler Planetarium. “Everybody can look up,” she says. “It’s about getting young people excited about math and science while they’re learning about the sky and the stars.”

Reflecting on the past year, Jojo was looking forward to more in-person meetings as the pandemic subsides. She was recently planning a trip to Denver. “Everyone is excited,” she says. “We’re travelling again.”

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GLOBAL FINALISTS Over $2 billion annual revenue and multinational operations Abhi Dhar has more than 25 years of experience in a wide array of technology and related roles, including product development, digital product management and information security in complex and regulated technology environments. He joined TransUnion in 2019 from Packyge, a last-mile delivery startup he founded. Before that, he held IT management roles at Walgreens, TravelClick, Cendant Corp., PriceWaterhouseCoopers and AT&T. He co-invented a patent for a communication device that triggers notifications and routes a customer to a prescription-ready location, and is a frequent speaker on technology topics at industry events.

SUCCESS STORY

Sven Krause is a digitally immersed technology and finance executive with deep experience in enterprise-wide transformation programs. He has a 20-year record of delivering value-centered transformation programs in the life sciences, pharma and medical device industries, guiding teams that are leveraging new technologies to help improve operating models, business processes and overall business performance. He joined Hillrom in June 2020 following a 17-year career with Ernst & Young, most recently as a partner/principal and leader of its Americas SAP Life Sciences advisory.

SUCCESS STORY

Kuldip Mohanty is a seasoned global business technology executive with over 25 years of experience and expertise in delivering business transformation and operational efficiency with technology. Earlier in his career, he held several global leadership roles across North America, Europe and Asia in the workforce solutions, financial services and outsourcing industries where he gained experiences spanning across technology strategy, global delivery, business transformation programs and P&L leadership. He joined HUB International in January 2020.

SUCCESS STORY

ABHI DHAR EVP & CITO TransUnion

SVEN KRAUSE CIO Hillrom

“Last year, I made the case to our board that we evolve our technology paradigm— to re-think how we work and provision infrastructure by moving to cloud-based technologies. This mission is more than just a move to the cloud, but rather an opportunity to fundamentally change how we deliver our solutions. Our board approved a more than $200 million investment over three years to migrate our infrastructure to the cloud and automate the way we work. With this effort we’re upskilling our people with cloud-based capabilities that furthers their development as a world-class team that’s trained and comfortable operating in that future.”

“Digital transformation is not about technology, it's about people. When I joined Hillrom, our digital journey was ongoing with the usual challenges. To guarantee the success of the journey, we had to take one step back to ultimately make two steps forward. We strategically aligned our leadership team, added new talent, refocused the scope and goals of our journey around our purpose, and calibrated our partners. We're now moving full-steam ahead delighting our customers, our employees and our caregivers, and you’ll hear about it in the market as we're advancing connected care.”

“Every leader’s success is a manifestation of their team’s success. My greatest achievement is creating a cohesive culture where every member of my IT team feels empowered, has a voice and has a clear line of sight to how their contributions make an impact on the enterprise. We’ve created an environment where IT is viewed as a business partner that’s built on the premise of trust fostered by open communication and transparency. Leadership is a privilege, and it’s my responsibility to enable a platform for my team to succeed and thrive.”

KULDIP MOHANTY CIO HUB International Kris Rao has more than 20 years of management and leadership experience driving profitable transformation initiatives in his current role at HNI Corp., as well as previously with Ricoh USA, Hospira, Motorola and Oracle. He has managed budgets of more than $160 million and globally dispensed staffs totaling over 900. He has had repeated success defining enterprise technology, vision, strategy and roadmaps to bolster top- and bottom-line growth at global high tech, health/pharmaceutical and manufacturing companies. Most recently he was named by the MIT Sloan School of Business as one of the top four CIOs in the United States.

SUCCESS STORY

Edward Wagoner, a 24-year veteran of JLL, now spends more time with clients, leveraging his unique expertise to help them create, implement and manage their digital strategies. This follows more than 15 years of being globally responsible for all aspects of JLL’s technology, including business strategy, marketing, development, deployment and support. Prior to his global CIO role, he was CIO for the company’s Americas region overseeing the management and delivery to clients and account teams in North, Central and South American markets. Earlier in his career, he held financial management roles with MetLife, Insignia Financial Group and KPMG Peat Marwick.

SUCCESS STORY

KRIS RAO CIO & CDO HNI Corp.

EDWARD WAGONER CIO Digital JLL

“HNI is embarking on a digital transformation journey to improve revenues, reduce costs and improve customer satisfaction. After my first 60 days, we restructured IT to align with the business and become more agile, reconstructed the portfolio to focus on business results, recruited talent, drove business and IT agility bootcamps and established governance to monetize business results. After establishing a foundation, we championed digital initiatives that have successfully delivered visible business results. The biggest achievement was taking IT from waterfall project focus to MVP using agility, innovation, short-burst sprints, experimentation, fail early/fail fast and collaboration—while having fun in the process.”

“Every entity in every industry is realizing unprecedented demands for their real estate portfolio. Workplace supports your brand and helps attract and retain talent. Employees are demanding a better and safer workplace experience. The C-suite is expecting optimized portfolios. Everyone expects greater sustainability in our built environment. The right workplace digital strategies have never been more important . . . and with the right ones in place, you will deliver a greater impact than ever before. JLL Technologies is the first-of-its-kind team combining commercial real estate experts with world-class technologists to deliver transformational technology to meet all of these hybrid workplace needs.”

Congratulations, Chicago CIO of the Year Winners & Nominees! ®

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LARGE ENTERPRISE FINALISTS Over $3 billion annual revenue Maryann Byrdak spent the first 25 years of her career managing restaurant and retail transformation initiatives, which prepared her for her current role leading technology transformation at the nation’s largest hunger-relief and food rescue organization. She was part of the executive team at Potbelly that guided the IT department through many digital and customer experience innovations. Before that, she held leadership roles at Fortune 500 companies, including POS implementations at Sears, merchandising transformations at OfficeMax, and merger integrations between OfficeMax and Office Depot.

SUCCESS STORY “The pandemic created an unprecedented test of the Feeding America network and resolve. Demand skyrocketed while our supply chain was disrupted. I’m deeply proud and humbled to be leading our technology team’s response, in partnership with the incredible commitment and generosity from our donors, to rise and meet the needs of the moment. The technology team quickly adapted to evolve the way we use data and technology to find food sources; innovate and evolve our systems; and equitably get food to the people that need it the most. At the same time, we continued advancing our technology modernization journey.”

MARYANN BYRDAK CIO Feeding America

BOBBIE BYRNE CIO Advocate Aurora Health

Bobbie Byrne is board certified in both pediatrics and clinical informatics. She is currently responsible for all IT applications, information security, infrastructure, clinical informatics, data warehousing and business intelligence across the Advocate Aurora Health’s 25-hospital system. Previously, she served as Edward Elmhurst Health’s chief medical officer and before that its chief information officer. Earlier in her career she was a senior vice president - clinical solutions for Eclipsys Corp. (now Allscripts) and was a health care consultant at Cap Gemini Ernst and Young. She is active in the informatics work of the American Academy of Pediatrics, having served on the organization’s physician advisory council for informatics.

SUCCESS STORY

Suja Chandrasekaran is an industry-recognized digital transformation leader and value creator. Before joining CommonSpirit Health in 2019, she held chief of information and digital technologies positions at Walmart, Kimberly-Clark, Nestle S.A and The Timberland Co. She has a reputation as a talent developer and mentor for tech and business leaders, women in technology, Asian American leaders, startup founders/ CEOs and others, and is the founder/facilitator of T200 - Women CXOs in Tech, focused on lifting women in technology. She serves as a nonexecutive director on the boards of American Eagle Outfitters, Barry Callebaut and digital supply chain technologies company Blume Global.

SUCCESS STORY

SUJA CHANDRASEKARAN CDO & CIO CommonSpirit Health

“Everyone has their 2020 COVID-19 story. There are heroes all around us. For Advocate Aurora Health HIT, our hero story is delivering everything required for patient care excellence in COVID along with completion of a very strategic single patient record project. Even our lab, overwhelmed with new COVID testing volume and requirements changed systems in 2020. The proof of this success was that less than 10 days after the last go-live—at a time when we would normally be stabilizing—we turned to our brand-new single patient record to run our mass vaccine program.”

“Suja Chandrasekaran led the organization with resiliency and empathy to accomplish the mission of serving millions of patients in an unprecedented pandemic. She rapidly accelerated the digital transformation and enabled virtual care platforms that provided care to patients in a safe and timely manner, saving lives and improving outcomes. The successful response to COVID-19 with minimal disruption to operations, care providers, and the patient experience, was one of the major accomplishments of her leadership. In addition, she launched several employee engagement initiatives for well-being of her team.”

Kevin Lowell ensures that U.S. Cellular’s information systems support a first-class wireless experience for customers. He oversees all areas of IT, including application development and delivery, infrastructure, enterprise analytics and cybersecurity. He joined the company in 2003, and prior to his current position served as vice president of its engineering and network operations. In that role, he was responsible for ensuring the quality of the company’s high-speed network so that customers would have an excellent wireless experience. Previously, he held leadership positions at Sprint PCS, including director of network field operations.

SUCCESS STORY

Marvin Richardson has helped oversee several successful projects at HCSC, including the launch of a multiyear initiative to modernize and enhance its claims platform, and a new customer engagement program that enables advocates to provide personalized service and build lasting trust and relationships with members. Before joining HCSC in 2016, he served as chief technology officer for Aon and Electronic Data Systems. He also worked as a technology leader at Oracle and was co-founder and leader at two successful startups. He has been recognized as InfoWorld’s “CTO of the Year” for Consulting Services and was named by CTO Magazine one of the “Top 25 Most Influential CTOs.”

SUCCESS STORY

KEVIN LOWELL SVP IT U.S. Cellular

MARVIN RICHARDSON SVP & CIO Health Care Service Corporation

“My greatest accomplishment is creating and sustaining an inclusive and diverse culture where people can do great work in service of something bigger than themselves. Here’s what we did: We created a program for aspiring leaders, and the results have been outstanding. We’ve attracted, trained and supported diverse cohorts, and many of these diverse ‘graduates’ have been promoted into leadership roles. These engaged and inspired associates are getting outstanding results, and they’re doing it in an environment where all associates are empowered to reach their potential.”

“In March 2020, IT moved all HCSC employees to remote work arrangements for the first time in history. Teams swiftly deployed over 20,000 pieces of equipment, 6,000 new digital security tokens and increased network traffic capacity by 400 percent. We created a COVID-19 tech triage center to solve technical issues during the move and deployed advanced cybersecurity monitoring and response capabilities across the company. Our team’s continued resiliency and flexibility enabled us to accomplish all this while improving our timely project delivery measure to 92 percent, shrinking our program spending where needed, retaining all staff and breaking company records for system reliability.”

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2021 CIO of the Year Awards

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ENTERPRISE FINALISTS Over $1 billion annual revenue Tim Dickson joined Generac last August, where he is creating and executing an enterprise-wide IT strategy and digital architecture as the company transitions to a global energy technology solutions company. Prior to that, he spent two years as vice president of digital business platforms at Laureate Education, a $5 billion enterprise consisting of 65 international university institutions. He previously served as the vice president of front office IT at Motorola Solutions and before that as a divisional CIO leading emerging technologies, M&A and user experience for Dell, Inc.

TIM DICKSON CIO Generac Power Systems Gretchen Horn has spent her entire career as an IT professional, starting out as a software developer/architect and over time moving into leadership roles. Today, her mission is operational excellence that enables IT to support the business agility necessary for our rapidly evolving world. In earlier years she worked in a variety of industry verticals both as a consultant and full-time employee, gaining business acumen in multiple disciplines. For the past 14-plus years her focus has been retail real estate—leading technical initiatives that drive revenue, optimize performance and provide exceptional experiences for partners, tenants and shoppers.

GRETCHEN HORN SVP & CTO Brookfield Properties, Retail Group Anson Johnson is responsible for the development and execution of USG’s IT strategy. He oversees a team of more than 170 with accountability for the company’s IT architecture and risk management, IT program management, digital innovation, customer-facing systems and end-user support. He joined USG in 2013 as director of IT. Prior to that, he held leadership roles with Stericycle and Waste Management. He is an executive sponsor of USG’s Defend The Rock (military and veteran) Employee Resource Group, and serves on the board for College Church and Outreach Community Ministries.

SUCCESS STORY “As the first CIO at Generac and reporting directly to the CEO, IT has been elevated. The new mission, vision and purpose to become a strategic enabler for achieving business growth is well underway, and we're starting to see some early, encouraging results. With this new responsibility, I’ve both challenged and inspired the IT organization to do more and go faster, and they’ve responded. They have deep aspirations and have taken advantage of the recent leadership and technical training to transform themselves and become a trusted, valued and innovative partner of the business.”

SUCCESS STORY “My team is composed of many diverse talents. Every single IT product and service requires collaboration across multiple teams, and everyone is typically juggling multiple concurrent projects. I provide a space where every contribution is valued, trust is at the center of everything and growth opportunities are abundant. I encourage my team to think beyond the technology and to focus on value-driven business outcomes. Directly defining success provides tangible insights into the value of IT. More importantly, it also provides an opportunity for each individual to see the direct impact of their efforts toward our company's successes.”

SUCCESS STORY “The year 2020 was a difficult one for many firms, but for the USG IT team it was a Cinderella story. We solidified a seat at the table that determines the future at USG—a seat earned through trust, hard work, leaders with grit, commitment to our employees and real business value delivery. IT reduced total costs by just under 40 percent, improved employee engagement and delivered new technology solutions within USG and to our external customers. We’re now sought out as super communicators that partner with business leaders to solve real problems that drive the future of our company.”

ANSON JOHNSON VP & CIO United States Gypsum - USG Ed Rybicki has more than 20 years of IT experience setting and executing technology strategies for private-equity, private and public global corporations across a broad range of industries. In his current role, he is responsible for Vyaire’s technology initiatives including software, infrastructure, application development tools and processes, operations and cybersecurity. He also guides the overall direction for the company’s health care technology products, sponsors the creation of a data and analytics platform, and focuses on how technology can create value in companies and their customers. Previously, he was CIO at Merieux Nutrisciences, a global laboratory services company.

SUCCESS STORY

Rich Voinovich has been with Equity Residential for nearly 16 years and is currently responsible for all facets of IT leadership including application and infrastructure operations, IT support, application development, project management and unified communications. His career has been focused on business process engineering, aligning technology with business strategy to reduce costs, increase efficiencies and improve quality. He excels in partnering with business units to translate strategic goals into innovative process and technology solutions. Prior to joining Equity Residential he held consulting and project management roles with ADP and Intuit.

SUCCESS STORY

“We ramped up all facets of IT to handle the unprecedented surge in business demand for respiratory products during the COVID-19 pandemic. Within 90 days, we scaled up production of six ventilator product lines to over 20 times, measured against any historical period of Vyaire. Simultaneously with the applications and infrastructure ramp-up, we built a cloud-based enterprise data platform and harmonized data from 12 ERPs into one portal for analytics. This initiative, called Project Insight, was the cornerstone in giving all of Vyaire the analysis it needed to ramp up the business to meet the global demand for respiratory products.”

ED RYBICKI SVP & CIO Vyaire Medical

RICH VOINOVICH SVP IT Equity Residential

“Great leaders are made great by the team they lead and the partnerships they build. I’ve worked hard to create relationships, build trust and make every member of my team feel valued. This has built a mutual respect and drives a shared vision for simplicity—leveraging technology to simplify and automate business processes with a focus.”

SUCCESS STORY

JANET ZELENKA EVP, CIO & CFO Stericycle

My success story is grounded in a commitment to service. I’m proud to work at Stericycle, where, as a provider of regulated waste services, we “protect what matters” by helping our customers safely dispose of infected medical waste. I’ve achieved professional success as both a CFO and CIO of two public companies, but what matters most is making the world a better place. As a Trustee of Rockford University, I’ve worked to advance technology’s positive impact on education and sponsored the establishment of an Esports team and technology sports center on campus.

CONGRATULATIONS BRIDGET QUINLAN

Janet Zelenka has a strong breadth of expertise across corporate finance, accounting, IT and operations. She joined Stericycle in June 2019 as executive vice president and CFO, and one year later assumed the additional role of CIO—responsible for the financial management of the $3.5 billion global services company and for advancing the company’s technology-enabled transformation. Previously, she spent 15 years with Essedant, in roles that included CFO and CIO, and prior to that she spent 16 years at SBC/ Ameritech (AT&T) in a range of IT, financial and operational roles. She serves on Rockford University’s Board of Trustees.

Vice President of IT, on your nomination as a finalist for the 2021 Chicago CIO of the Year® ORBIE® Awards. We are so proud of your many accomplishments and leadership across the organization! Your Life Fitness Family

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LARGE CORPORATE FINALISTS Over $500 million annual revenue Brad Bodell is not afraid to “learn fast, fail fast and innovate,” thanks to having over 20 years in IT leadership, including previous positions with CNO Financial Group and MetLife. He joined Trustmark in 2018, bringing a transformation focus that has helped the company prosper even in the midst of a pandemic. A massive undertaking to move applications from the data center in the company’s Lake Forest headquarters to the cloud is nearly complete. And under his leadership, Trustmark has launched a talent development plan to help IT associates learn new skills and advance within the company.

SUCCESS STORY “My focus on empowering our talent has been my greatest accomplishment since I arrived at Trustmark. I’ve done this by re-architecting our job families to provide associates with clear visibility to their career options. In addition, we’ve created personalized training recommendations based on self-reported skills. By better aligning our skills to the roles, we’ve seen a large jump in in the morale of IT associates. Coupled with our focus on greater communication to associates, IT morale jumped 41 percent from 2019 to 2020 and helped Trustmark win a Chicago Tribune Top Workplace award in 2020.”

BRAD BODELL SVP & CIO Trustmark Insurance Michelle Kasson has more than 25 years of corporate IT experience, spanning the consumer product goods, food and pharmaceutical industries. Before joining AZEK Co. in 2019 she was IT director at the J.M. Smucker Co. for 11 years, and before that spent 17 years in a variety of IT roles with Procter & Gamble, where her early IT growth was shaped. Her primary responsibility currently is IT strategy, services and operations across the entire AZEK portfolio of companies and brands, including developing IT solutions to further drive efficiencies, accelerate innovation and promote operational excellence.

SUCCESS STORY “My greatest accomplishment is onboarding to a fast-moving train and arriving on time with my luggage! My first year included integrating an acquisition, an IPO, remediating 75 percent of the IT material weakness, replacing the service desk, implementing a managed security service and driving a new culture of accountability in the IT team. This is all possible because the AZEK leadership team is inspiring and makes it easy to choose to work on the meaningful projects. It’s an amazing culture of teamwork and forward progress.”

MICHELLE KASSON VP & CIO The AZEK Company

Bridget Quinlan has 20 years of IT experience in application design, architecture, analytics, strategy and program management. In her career at Life Fitness, she has developed and implemented complex multi-faceted IT strategies, identified and created transformational organizational capabilities, designed and led both acquisitions and divestitures from IT due diligence through system integration, and has led large-scale, cross-functional programs. She is also a mentor, a leader for gender equality in the workplace and a board member of a local community nonprofit organization serving low-income families.

BRIDGET QUINLAN VP IT Life Fitness

SUCCESS STORY “The wholesale transformation of our company’s fundamental IT operations was our most invigorating recent success. Our former parent company’s decision to divest catalyzed a complex orchestration to decouple our shared enterprise IT ecosystem and reimplement our own IT systems and corresponding processes, while also transitioning from data centers into new cloud environments. We built entirely new infrastructure, security and help desk operations from the ground up to deliver purpose-built IT services. The incremental value returned by this transformation initiative to our now independent company has been significant, and is evidenced by substantially stronger customer service metrics, turnaround times and system performance.”

Allen Smith has served as the Baker Tilly’s CIO for nearly 20 years, leading all technology strategy and execution across the firm and also serving in senior leadership roles for Baker Tilly International. Under his technology leadership, the firm’s revenue has grown by more than 1,000 percent and he has established a strong track record of results by creating and fostering a culture driven by collaboration and camaraderie among his team. Prior to joining Baker Tilly, he served in senior leadership and technology roles in a variety of organizations, including technology start-ups, hyper-growth enterprises and outsource service providers.

SUCCESS STORY

Tim Walter is an IT business leader with over 20 years of experience and a proven record operating large-scale e-commerce websites, digital marketing, global Internet infrastructure and enterprise business applications. He joined Randa in 2017 where he is responsible for all technology of the company’s wholesale and direct-to-consumer business. Previously, he held CIO/technology roles at The Packaging Wholesalers, XSport Fitness, RMG Network’s Mall Media Division, CrossCom National and Uline Shipping Supplies. While at CrossCom, his leadership resulted in a 2010 CIO 100 Innovation Award for online mapping technology used to monitor service staff across the entire United States.

SUCCESS STORY

ALLEN SMITH CIO Baker Tilly US

TIM WALTER SVP & CIO Randa Apparel & Accessories

“My greatest accomplishment is the team I’ve created, retaining critical talent and inspiring them to execute on the technology vision that’s propelled Baker Tilly from being the 24th largest to the 10th largest accounting firm in the US. Creating an environment that develops and retains talent is key. Fostering personal experiences and opportunities for one-on-one interactions with all team members is critical. Sometimes we can be blinded by the desire to partner with other business leaders and miss the opportunity to do the same with our own team. The relationships I’ve built drive team engagement, performance and firm results.”

“Shortly after joining Randa, I realized the need to modernize our environment and build stronger relationships across the company. My team and I worked to become trusted and reliable strategic partners. The role of the IT department changed from being viewed as a utility, to that of a business enabler. Our emphasis began with business processes and building customer engagement. From building actionable reporting, expanding B2B and omni-channel, to our new direct-to-consumer e-commerce offerings, our success and collaboration continue to grow with the company.”

SUCCESS STORY

NICOLE WHITE CIO Redwood Logistics

Congratulations on Your Nomination

“My biggest success story is building a strategy and a team to execute on leveraging our proprietary integration platform to provide cloud-based solutions as a replacement for monolithic operating systems. This allows us to utilize the best technology paired with data science to drive operational excellence across our own organization and for our customers' supply chains. The Redwood leadership team provides the passion and support that motivates the technology team to excel at building digital freight solutions for the supply chain industry. We wouldn’t have been successful without this level of support or my innovative team.”

Nicole White joined Redwood in 2019 with an extensive background in IT. Previously, she served as vice president of IT for both DCLI and REZ-1 (now Blume Global). She also served as vice president of IT strategic projects for XPO Logistics, where she worked on acquisition, integration and technology strategy. Throughout her career, she has been responsible for transforming multiple organizations’ back-end processes to successfully integrate acquisition, improving legacy infrastructure, as well as successfully leveraging data to drive better decisions.

Madhu Reddy, SVP & CIO, has been named a 2021 Chicago CIO of the Year ORBIE Awards Corporate Finalist! His excellence in technology leadership helps guide Republic Bank forward.

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2021 CIO of the Year Awards

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CORPORATE FINALISTS Up to $500 million annual revenue Sunitha Chamarti has a track record of aligning business strategy, innovation and technology while balancing assessment of IT’s effectiveness to deliver business benefits. She has managed crossfunctional teams and championed a people-first culture to promote innovation, transparency and accountability. Her experience spans multiple industries—including transportation, utilities, retail, insurance and banking—and across Asia Pacific, Europe, Canada and South America. She has led transformational initiatives, M&A integrations and deployed modern engineering practices, while supporting infrastructure, operations and service management.

SUCCESS STORY

Susan Czarnecki is responsible for designing and delivering stateof-the-art technology solutions to create efficiency, mitigate risk and grow revenue for the firm. She also defines, manages and executes a robust cybersecurity and data governance programs, while overseeing the technology solutions department’s infrastructure, team and vendor relationships. Prior to joining Golub in 2010, she was an executive director at Morgan Stanley, and before that held technology management roles at Van Kampen Investments, Budget Rent-a-Car and First Chicago.

SUCCESS STORY

“ReedGroup technology was on a two-year journey to driving stability and reliability while supporting significant growth in 2019, while handling a 130 percent increase in call volumes due to COVID-19. Technology teams successfully migrated to Amazon Web Services (AWS) and implemented digital platforms to simultaneously drive self-service and operational stability. In addition, teams moved to scaled agile delivery methodology that significantly helped time to market and customer centricity.”

SUNITHA CHAMARTI CIO ReedGroup

SUSAN CZARNECKI CIO Golub Capital LLC Augustus Oakes oversees all critical IT functions at ATI, including business applications, technology services, interoperability, IT security, and cloud and digital technologies. He took on his current role last August after serving as interim CIO and before that vice president of business technology—a role he assumed when he joined the company in 2018. Over the last two years, he and his team have modernized and re-tooled ATI’s IT capability and infrastructure, utilizing novel cloud and digital technologies to support the company’s growth and operational efficiencies. Previously, he held IT management jobs at KPMG, Walgreens and Jones Lang LaSalle.

“I am very proud of the role our technology solutions team played in seamlessly pivoting to a 100 percent work-from-home environment when the COVID-19 pandemic hit. Our team had previously ensured we had a ‘work from anywhere, anytime’ architecture, and last spring, we ensured that hundreds of employees— many in Chicagoland—were equipped with the hardware, support, security solutions and enhanced network and video-conferencing capabilities needed to facilitate a period of heightened productivity remotely. We achieved this while also executing on an ambitious agenda of strategic technology projects.”

SUCCESS STORY “My most significant accomplishment has been cultivating a winning team—one that I am proud to lead, and one that helps enable ATI Physical Therapy deliver exceptional patient care every day! I am also proud of our technology journey, one that started with building trust and alignment with our business; transforming our core (elevating our people, moving to the cloud, and focused strategy and execution) and finally helping support our business, providers and patients with technology solutions, including our world-class electronic medical records. Very proud of the team and value delivered!”

AUGUSTUS OAKES CIO ATI Pinky Raina has spent the last two years leading the finance, human resources and IT functions at U.S. Soccer Federation. She has extensive experience in change management and facilitating continuous improvement initiatives across all the functions she has led. Before moving to the sporting and entertainment industry, she led finance and IT in public and private corporations in the manufacturing industry, including the Marmon Group and IDEX Corp. She was recently featured in SheBelieves, a movement to encourage young women and girls to reach their dreams—athletic or otherwise—inspired by the U.S. Soccer Women’s National Team.

SUCCESS STORY “The speed at which I drove change in our highly fragmented and siloed technology organization has been critical to our success. We were thoughtful and intentional in outlining and refreshing our 30-60-90-day plans. We have now created a collaborative and cross-functional technology organization at US Soccer that is re-defining our organization's technology strategy and building the foundation to execute against that strategy at record speed. With an eye to adding diversity to the technology landscape, we are also inaugural hosts to UIC's Chicago ‘Sprinternships,’ a program to help launch women into technology careers.”

PINKY RAINA Head of IT, CFO & CHRO U.S. Soccer Federation Madhu Reddy is responsible for all elements of IT and digital at Republic Bank, including strategy, innovation, solution delivery, operations and cybersecurity. With more than 20 years of multinational and multicultural work experience in the banking industry, he has a holistic approach to technology and data analytics use with sensitivity to cultural, political and organizational issues. He has delivered outstanding value by taking calculated risks, creating competitive differentiation, operational effectiveness, profitable business growth and bottom-line impact. By building/galvanizing high-impact teams, he has developed IT strategy and translated business needs into technical solutions in a complex environment under tight budget constraints.

MADHU REDDY SVP & CIO Republic Bank of Chicago

SUCCESS STORY “I am proud of leading and transforming a reactive IT function into a highperformance customer-focused business partner. Modernizing our technology and innovating to ensure our digital capabilities drive our company strategy of enabling great customer experiences. The team had an outsized impact that is truly outstanding by all measures and is serving the organization extremely well, winning us accolades. We delivered business outcomes by creating cross-functional teams to leverage data analytics, automation, and innovation. We’ve got a team that moves fast, in anticipation of changes in our customer’s needs and our organization.”

SUCCESS STORY

RAJ SAMPOORNAM SVP & CIO Byline Bank

“My greatest success is when IT finds new ways to execute our bank's vision and mission, to be the bank our customers deserve, contributing to local communities and assisting our customers. I felt proud when our IT team developed an innovative and automated solution to process PPP loans during the pandemic. We were able to pivot priorities and collaborate with the business units to get our customers access to PPP loans in a short period of time. This solution helped the timely processing of over 3,700 customer applications resulting in $635 million in PPP loans that retained more than 56,000 jobs.”

Raj Sampoornam has more than 24 years of IT experience, and is currently responsible for Byline Bank’s technology and digital strategy, overseeing its IT infrastructure, applications and analytics, business analysis and technology operations teams. He joined Byline in 2017 as director of enterprise applications and analytics, and was promoted to his current role in 2018. Previously, he spent more than 15 years at Banco Popular, where he headed the business intelligence and analytics team and contributed to several transformative initiatives and M&A activities. He began his career helping organizations solve their business problems by developing custom software and analytics solutions.

CONGRATULATIONS

to Kevin Lowell, a 2021 Chicago CIO of the Year ORBIE Award finalist. UScellular™ is proud of your leadership and contributions in a difficult year. It is an honor to have you represent our company as an award finalist. Thank you for all your hard work. ®

YOUR BUSINESS NEVER STOPS. Flexible technology for a scalable world. Dell Technologies and VMware are proud sponsors of the 2021 Chicago CIO of the Year Orbie Awards. DellTechnologies.com

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2021 CIO of the Year Awards

SPONSORED CONTENT

PUBLIC SECTOR FINALISTS Government, education and nonprofit organizations Scot Berkey is recognized as a servant-leader, value-driven executive with over 30 years of experience in executive leadership roles, organizational change management, management consulting, technology services, outsourcing, and large program and project management. He has a strong industry record of success in providing strategic direction to executive management and boards. He is currently responsible for all aspects of IT at IHDA, including enterprise business continuity planning and the enterprise COVID-19 Incident Command Team. He also co-chairs the largest COVID rental and mortgage assistance program in the nation, which is distributing over $450 million to Illinois residents in need.

SUCCESS STORY

Tracy Harrington began her career with the Federal Reserve Bank of Chicago in 1995 and her tenure has encompassed multiple areas of management within bank supervision, application development, program management, operations and risk management. She was promoted to assistant vice president in 2009, to vice president in 2012 and to her current role in 2015. On behalf of the Federal Reserve System, she is responsible for FedLine, the electronic access solution used by financial institutions to conduct daily payments transactions. She oversees all strategic and operational aspects of the FedLine business including architecture, security, portfolio management, product and pricing, application development and operations.

SUCCESS STORY

Heather Nelson has spent the last two decades in health care IT, joining UChicago Medicine in 2014 as executive director of applications systems. She was named interim vice president/CIO in 2017, then vice president/ CIO in 2018, and promoted to SVP/CIO in 2019. Previously she held IT leadership roles with Baystate Health in Springfield, Mass.—including a stint as interim CIO—and Spectrum Health in Grand Rapids, Mich. She is a member of the American College of Healthcare Executives and the Society for Information Management, and is a certified health care CIO. As a volunteer, she provides IT consulting services to the Misericordia leadership team in Chicago.

SUCCESS STORY

"The distribution in 2020 of over $330 million of Federal CARES funds for emergency rental and mortgage assistance kept over 56,000 families from losing their homes. No other state in the nation was as effective or was able to create the paper-free technology platform that IHDA put into place. We kept families from becoming homeless, kept children in their schools and kept homes with the owners who had responsibly paid their mortgages—in some cases for decades. IT had a seat at the table and IHDA’s IT team delivered.”

SCOT BERKEY CIO Illinois Housing Development Authority

TRACY HARRINGTON SVP & CIO Federal Reserve Bank of Chicago

“As SVP and CIO, I’m responsible for ensuring secure, reliable access for approximately 10,000 financial institutions to conduct more than $4 trillion each day in payments, contributing to financial stability for the country. Payments include wire transfers, securities transfers, ACH, check and cash, which are critical to the U.S. economy. In recent years, the greatest accomplishment has been executing on the strategy to deliver the next generation of FedLine solutions with higher levels of security, resiliency, availability and innovation to set the foundation to process payments 24x7x365 in future years.”

“I’ve always said that in UCM IT we’re the people that take care of the people that take care of patients. Watching my teams support the health system during our response to the pandemic in 2020 and now, supporting our vaccination efforts, has been amazing and humbling. Their dedication, passion and creativity are second to none. I’m so very proud of each and every one of them and am honored to be part of their team. They make me a better leader and I learn from them each and every day.”

HEATHER NELSON SVP & CIO UChicago Medicine Michael Pegues was appointed to his role in 2017 by Aurora Mayor Richard C. Irvin. An Aurora native and U.S. Army veteran, he began his career in IT support for AT&T and PepsiCo in the Chicago area, then as a civilian automation officer with the U.S. Army in Italy. He later held senior IT positions at Hewlett-Packard (France), Vodafone (Hungary) and Morgan Stanley (Hungary, New York City). In his current position, he drives processes and technology change to enhance public administration and safety, promote economic development and civic engagement within Illinois’ second largest city.

SUCCESS STORY “As the City of Aurora’s CIO, the single greatest accomplishment is the development and implementation of the technology strategic plan, which promotes a new vision for the way our city harnesses the opportunities that IT offers. Transforming Aurora into a new technologically progressive community will serve both government agencies and constituents alike.”

MICHAEL PEGUES CIO City of Aurora Illinois

John Sudduth has more than 25 years of IT experience and is skilled in defining organizational structure, resource requirements and mission/ vision alignment. His industry IT experience includes professional services, legal, retail, government and health care. As an IT leader, he has used his CIO roles to make IT a value adding partner rather than a cost center. Since assuming the CIO role at MWRD in 2015, he has completely revamped internal controls and has implemented a standardized IT governance framework resulting in the reduction of IT audit findings from 23 to zero in four years.

JOHN SUDDUTH CIO & Dir. IT Metropolitan Water Reclamation District of Greater Chicago

SUCCESS STORY “My greatest accomplishment at MWRD has been transforming an IT department that was traditionally looked at as a break/fix help desk, into a department that’s a strategic thought partner with the business. The COVID-19 pandemic really put my team to the test when we were tasked with building a remote work solution over the span of a weekend. I consider this my greatest recent accomplishment because the work that the IT department did enabled MWRD to continue its critical mission of protecting Cook County’s water supply during one of the most challenging periods of our lifetime.”

WHO'S WHO? CHAPTER CHAIR

CHAIR EMERITUS

MEMBERSHIP CHAIR

MEMBERSHIP CO-CHAIR

PROGRAMS CHAIR

Danielle Brown Whirlpool Corporation

Kevin Lowell UScellular

Brock Morrison Sasser Family Companies

OFFICERS Lisa Dykstra Lurie Children's Hospital of Chicago

Yvonne Scott Crowe LLP (ret)

David Hoag Options Clearing Corporation

PROGRAMS CO-CHAIR

AWARDS CHAIR

AWARDS CO-CHAIR

PHILANTHROPIC CHAIR

WISCONSIN HUDDLE LEADER

Bridget Quinlan Life Fitness

Jeanine Charlton Merchants Fleet

Kevin Boyd University of Chicago

Scot Berkey Illinois Housing Development Authority

Allen Smith Baker Tilly

*At-Large Advisory Board Member

Michael Adams Brunswick Corporation

William Berry Empire Today

Jonathan Beyer Evangelical Lutheran Church in America

Abhi Dhar TransUnion

Tim Dickson Generac Power Systems Inc

Sabina Ewing Abbott

Tracy Harrington Federal Reserve Bank of Chicago

Anson Johnson USG Corporation

Linda Jojo United Airlines

Vince Martin* Sidley Austin LLP

Paul Martin Baxter International

Carleton Nolan* City of Chicago

Marcio Ribeiro* DOM's Kitchen & Market

Rob Sarkis American Hospital Association

Robert Bushey CohnReznick

Maryann Byrdak Feeding America

Bobbie Byrne Advocate Aurora Health

Jeff Cole* OneSpan

Sean Freeburger Huron

Conal Gallagher Flexera

Erica Geil Snyk

Ron Guerrier HP

Praveen Jonnala CommScope

Andy Jurczyk Seyfarth Shaw

Rajeev Khanna Aon

Steve Laurent GE Healthcare

Andy Konchan Calamos Investments

Jim Maza Assurance Agency

Frank Modruson Modruson & Associates LLC

Kuldip Mohanty Hub International

John Mohr MacArthur Foundation

Chris Nash Adtalem Global Education

Heather Nelson* UChicago Medicine

Michael Pegues* City of Aurora

Ryan Pikus RJW Logistics Group

Jane Possell CNA

Patrick Powers Crowe, LLP

Diane Randolph Retired

Michael Rapken 27G

Madhu Reddy Republic Bank of Chicago

Marv RichardsonHealth Care Service Corporation

Bill Rocholl CCC Information Services

Elliott Rodgers Ulta Beauty

Simona Rollinson Isaca

Jason Ruger* Motorola

Kader Sakkaria Ruffalo Noel Levitz, LLC

Raj Sampoornam Byline Bank

Dan Simpson* Grant Thornton

Brad Bodell Trustmark Companies

Diego Ferrer Chicago Department of Aviation (CDA)

Thomas South Northern Trust

John Sudduth Metropolitan Water Reclamation District of Greater Chicago

Tim Theriault Wellmark, The Vitamin Shoppe & Alliance Data

John Walls ADM Investor Services

Nicole White* Redwood Logistics

#1 Cybersecurity Company in the World Leading Every Evolution of Cybersecurity Most Deployed Most Validated Most Patented Broadest Portfolio

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Congratulations to the 2021 Chicago CIO of the Year Award Winners and Nominees

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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 ACCOUNTING / CONSULTING

CONSTRUCTION

HEALTH CARE

RSM US LLP, Chicago

Interior Construction Group, Inc., Chicago

Zing Health, Chicago

RSM US LLP is pleased to announce that Noopur McKenna has joined the firm as a business development director. Noopur is an accounting and business development professional with a strong blend of experience in assurance, advisory and consulting services. Beginning her career as an auditor and later leading growth strategies at a consulting firm, Noopur’s passion and talent in nurturing and developing relationships led to her successful transition as a business development leader at RSM.

Interior Construction Group, Inc. (ICG), a commercial interior general contractor founded in 1988, is pleased to welcome Jaime Zwierzynski as Business Development Manager. Jaime will primarily focus on establishing new and maintaining existing client relationships within the commercial real estate community. She previously held business development roles in the real estate industry and has a proven track record building brands, landing project opportunities and increasing market share.

Chicago-based insurer Zing Health proudly names Vince A. Lanni as Executive Vice President of Broker Relations and Telesales. As a top sales executive, Vince builds Medicare field marketing organizations that respect and respond to seniors’ needs. Most recently, Lanni built out Oak Street Health’s broker channels and trained agents nationwide in productive, compliance-focused practices. He plays a key role in Zing Health’s market expansion as a trusted source of Medicare Advantage Health plans.

LAW

Thompson Hine, Chicago

Freeborn & Peters LLP, Chicago

Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 8 offices renowned for its commitment to innovation, is Randolph pleased to welcome Simone A. Randolph and Layla Dotson Lumpkin to its Chicago office as partners in the Real Estate and Corporate Transactions & Securities practice Lumpkin groups, respectively. Randolph focuses on complex commercial real estate and finance transactions, with over $500 million in closings for lender clients in just the last two years, and advises large real estate portfolio holders on all aspects of property ownership. Lumpkin concentrates on corporate transactions, including mergers and acquisitions, venture capital financing, commercial contracts and commercial financing transactions.

Lillian Grappe Lamphere is an Associate in Freeborn’s Litigation Practice Group and a member of the Antitrust and Insurance Coverage Teams. Lillian has experience representing publicly traded corporations, local businesses, insurance carriers, and individuals in contract disputes, real estate disputes, unfair trade practices, premises liability, noncompetition, and utilities regulation. Prior to Freeborn, Lillian was a Litigation Associate at Phelps Dunbar LLP.

ARCHITECTURE / DESIGN

Kahler Slater, Chicago / Milwaukee Kahler Slater has named architects Al Krueger and Glenn Roby as CEOs, fulfilling strategic succession plans for the internationally Krueger known architectural, strategic advisory and design firm. Krueger and Roby will lead the implementation of the firm’s strategic plan focusing on the growth of our people, Roby design excellence and expanding our reach. In addition to firm leadership, both CEOs will continue to serve clients as experts in their markets. Krueger will continue leading Kahler Slater’s nationally recognized Healthcare Team and growing the firm’s strategic advisory services. Roby will continue to lead the Corporate, Hospitality and Residential Teams including the rapidly growing Chicago office.

HUMAN RESOURCES CONSULTING

Ragan Consulting Group, Chicago Thomas A. Corfman has been named a senior consultant at Ragan Consulting Group, which advises clients on brand journalism, public relations and internal communications. He was previously director of communications for Cook County Treasurer Maria Pappas. Before joining Pappas in 2017, Tom was a journalist at Crain’s Chicago Business and the Chicago Tribune, covering commercial real estate, health care and politics. Tom began his career as a civil rights and criminal defense attorney.

United Service Companies, Inc., Chicago United Service Companies is thrilled to announce the promotion of Miguel A. Perez, PHR, SHRM-CP, to VP of Human Resources. Miguel has been with United since 2001, holding various roles including Director of HR for U.S. Aviation Services, and most recently Director of HR for United Service Companies. Miguel is a results-oriented HR professional who has proven his dedication to his role and company. He has excelled at any challenge presented to him and represents a true leader in any position. Congrats Miguel!

NON-PROFIT

United Way of Will County, Joliet Kamala Martinez has been named President & CEO of the United Way of Will County. She previously served as CEO of KidsMatter Foundation and Executive Director of the RR Donnelley Foundation. Martinez has also sat on many nonprofit boards, including Naperville Cable Television 17, Indian Prairie Education Foundation, the Art Institute of Chicago, and Hispanic Alliance for Career Achievement (HACE). Martinez holds a BA from the University of Iowa and has been a resident of Will County since 1996.

TECHNOLOGY

LAW

Freeborn & Peters LLP, Chicago Jacob R. Schuhardt is an Associate in Freeborn’s Litigation and Insurance and Reinsurance Practice Groups. Jake has experience conducting research and writing legal memoranda on a variety of issues including SEC disclosure requirements, defamation law, and real estate lease terms. He handles drafting legal briefs and contractual documents, and reviewing documents for internal and government investigations. Jake was previously an Associate at Fried, Frank, Harris, Shriver & Jacobson LLP. PRIVATE EQUITY

FSB Companies, Chicago The FSB Companies welcomes Coleman Gunter, CPA to the team as VP of Accounting & Finance. Prior to FSB, Coleman began her career as an auditor with PwC. She later moved to the advisory practice as a manager in the M&A financial due diligence group. Coleman will lead efforts in financial reporting & analysis, cash flow management, and prospective investment due diligence. Coleman was raised in Alabama and is a southerner at heart, though she enjoys exploring the city of Chicago with her family.

Discovery Partners Institute, Chicago BUSINESS SERVICES

Crescent Cleaning Company, Chicago Lauren Smith has joined Crescent Cleaning Company, a boutique owned and operated janitorial company serving Chicagoland for 50 years. Crescent specializes in both union and non-union work in commercial offices, museums, medical offices, education, industrial, and construction cleans. As Business Development Manager, Lauren brings over 10 years of sales, new client acquisition, project management, and new product development success to the Crescent team.

HEALTH CARE

INSURANCE BROKERAGE

Sinai Chicago, Chicago

Lockton, Chicago

Sinai Chicago is pleased to announce the addition of Dr. Olusegun Ishmael as Associate Chief Medical Officer for Sinai Medical Group (SMG). Dr. Ishmael will provide clinical and operational oversight for care management, clinical leadership and quality for SMG/Physician Enterprise. He will be focused on clinical innovation and value-based care models. Dr. Ishmael brings extensive experience providing care to underserved populations through emergency, family and preventive medicine.

Lockton is thrilled to announce the promotion of Robert Wierema to President of its Chicago and Wisconsin offices. This appointment reflects Lockton Midwest’s commitment to its culture, clients and community. Since joining Lockton, Robert has proven himself as a leader in business growth and culture. In his expanded role, he will work closely with service teams while continuing to serve on the Midwest Executive Committee and advise his clients on risk management and human capital strategies.

Discovery Partners Institute (DPI) is pleased to announce that Michael Fitzsimons and Adriann Anderson have joined the DPI team. Michael Fitzsimons Fitzsimons, Associate Director of Research and Development Programs will work with the R&D science teams to support them in acquiring new funding, finding Anderson academic and industrial partners, and generally supporting their research goals. Adriann Anderson, Senior Coordinator of Business Operations supports the business and administrative function for all parts of the Discovery Partners Institute operations.

REAL ESTATE

Newcastle Limited, Chicago Mark Tumiel joins Newcastle Limited as Senior Vice President, Human Resources. Mark will lead the firm’s HR function, responsible for cultivating a high-performing culture and talent strategies. He brings a 20-year track record in creating unique employee experiences, developing talent and building employer of choice organizations. He is a member of the Society for Human Resource Management and has been an active volunteer with numerous LGBTQ+ organizations.

32 MAY 10, 2021 • CRAIN’S CHICAGO BUSINESS

After a slow 2019 and brutal 2020, retail sales are poised to rise 6 percent this year As bad as last year was, local sales would have fallen even further without a boost from pot sellers

BY ALBY GALLUN

STORES SHUTTERED

The pandemic pummeled retailers, restaurants and their landlords last year. Many national chains closed stores or filed for bankruptcy and some just stopped paying their rent to conserve cash. Malls including Gurnee Mills, the Louis Joliet Mall and Yorktown Center ran into loan trouble. Lenders filed foreclosure suits against the North Riverside Park Mall and the Arboretum of South Barrington. Government restrictions to slow the spread of the coronavirus took an especially heavy toll on the retail sectors. Nonessential retailers shut down completely in the early days of the pandemic; restaurants were limited to carryout and, later, severe restrictions on seating. Online retailers also offered consumers a COVID-safe option that sucked shoppers out of stores. U.S. e-commerce sales jumped 32 percent in 2020 after

ARTURO REY/UNSPLASH

fter suffering from malaise in 2019 and full-blown panic in 2020, local retail businesses have reason for optimism in 2021. Chicago-area retail sales plunged 8.66 percent in 2020, dragged down a pandemic that closed shopping malls and restaurants and encouraged housebound consumers to shop online, according to a report from Melaniphy & Associates. It was the first annual decline since 2009, during the Great Recession, when sales fell 8.74 percent. But vaccinations, federal stimulus checks, a rebounding economy and pickup in tourism will help the market recover a big share of its losses, according to Melaniphy, which forecasts a 6 percent sales increase in 2021. “The good news is we’re looking in the rearview mirror, and things can’t get worse,” says John Melaniphy, president of Chicago-based consulting firm. “They can only get better.”

COULD HAVE BEEN WORSE Chicago-area retail sales fell 8.7 percent in 2020 as the coronavirus pandemic walloped restaurants, bars and apparel merchants. TOTAL CHICAGO-AREA RETAIL SALES

2020 CHANGE FROM 2019

$140 billion

Automotive and filling stations

120

Drugs and miscellaneous stores

$125.77 billion

80 60

6.4% −30.8%

Drinking and eating places Agriculture and all others

−9.5%

General merchandise

−9.9% 13.3%

Home improvement

−12.0%

Furniture and electronics Apparel and accessories

−39.0%

Manufacturers 1990

1995

2000

2005

2010

2015

2020

−5.7% −8.7%

Total

Note: 2021 is a projection.

Two other bright spots limited the losses. Sales rose 6.4 percent, to $18.0 billion, at grocery stores, as more consumers ate at home and stocked up on essential items like toilet paper, paper towels and cleaning products, according to the Melaniphy report. And home improvement retailers notched a 13.3 percent jump, to $7.0 “AS MORE CONSUMERS RECEIVE billion. “Many consumers VACCINATIONS, MALL TRAFFIC IS who were working GOING TO INCREASE SIGNIFICANTLY.” from home undertook home improveJohn Melaniphy, president, ment projects since Melaniphy & Associates home improvement stores remained open since they were deemed essenrising 14.9 percent in 2019. But it could have been worse. tial businesses,” the report says. But sales fell in eight of the 10 Melaniphy, which compiles its figures from state Department of categories tracked by Melaniphy. Revenue data, forecast a bigger The big losers: restaurants and drop, 10 percent, in Chicago-area bars, which suffered a 30.8 persales last year. One reason sales cent drop, to $13.5 billion, and fell only 8.66 percent: pot. Recre- apparel, with a 39.0 percent deational marijuana sales, which be- cline, to $3.2 billion. “So many consumers were came legal on Jan. 1, 2020, added working from home so they more than $1 billion to the total.

P032_CCB_20210510.indd 32

−0.9%

Food stores

100

−6.1%

Source: Melaniphy & Associates

didn’t have to dress for work,” Melaniphy says. It was an especially brutal year for retail in the city of Chicago, which suffered both from the coronavirus pandemic and from looting and rioting over the summer. Retail sales in the city dove 20.7 percent last year, to $24.0 billion, pulled down by a 45.2 percent decline at bars and restaurants. Tourism all but vanished, depressing sales on North Michigan Avenue and in other shopping districts. Sales at downtown bars and restaurants crashed as professionals in the city’s office towers worked from home. “The city was just decimated because of the virtual evaporation of the downtown daytime population,” Melaniphy says. COVID-19 also victimized shopping malls. Many closed last March, reopening as the pandemic eased in late May. But malls already were struggling before the health crisis amid the slow demise of department stores, their traditional anchor tenants.

Some mall owners are trying to adapt by redeveloping their properties with new uses, like apartments. But the pandemic has disrupted a major makeover at one, Northbrook Court, which has lost two department stores and is facing an uncertain future as its owner and lender mull a sale.

SUBURBS HIT HARD

Suburbs with big malls suffered especially large declines in retail sales last year. Sales fell 19.3 percent in Skokie, the home of the Westfield Old Orchard mall, and 20.5 percent in Bolingbrook, home of the Promenade of Bolingbrook. They fell 13.8 percent in Schaumburg, the location of the Woodfield Center, the area’s biggest mall, according to Melaniphy. The sales drop has made life difficult for state and suburban governments that depend heavily on sales taxes to finance their budgets. The total sales tax fell 29.3 percent, or $22.3 million, in the 60173 ZIP code, which in-

cludes the Woodfield mall, from 2019 to 2020, according to a recent analysis by the Chicago SunTimes. Though malls remain vulnerable to e-commerce, Melaniphy sees brighter days ahead, at least this year. “As more consumers receive vaccinations, mall traffic is going to increase significantly,” he says. “The consumer is going to unleash all that pent-up demand and do some revenge shopping.” Recent news offers more reason for optimism. The return of the Chicago Auto Show in July could bring in tens of thousands of visitors to Chicago and opens the door to more big trade shows. Citadel, the big Chicago-based hedge fund manager, says it expects most of its U.S.-based employees to be back in the office by June 1; other big local employers could follow suit. And the state and city of Chicago aim to lift coronavirus restrictions and fully reopen the local economy by July.

5/7/21 3:50 PM

CRAIN’S CHICAGO BUSINESS • MAY 10, 2021 33

Will Zell’s big bet on industrial real estate pay off? BY ALBY GALLUN

If there’s anything Sam Zell doesn’t like to do, it’s running with the herd. “When everyone is going left, look right,” is a favorite saying of his. So why would one of the most famous contrarians in finance pile into a frothy industrial real estate market that’s already awash in capital from other investors? Some real estate pros are asking that question after hearing about plans by a Zell-led company, Chicago-based Equity Commonwealth, to take over a New Jersey-based industrial landlord, Monmouth Real Estate Investment, in a $3.4 billion deal. The industrial market is flourishing during a pandemic that has crushed other sectors, especially retail and hotels. With more people shopping online, demand for warehouse space is booming as retail, logistics and e-commerce firms like Amazon expand their supply chains. Property values are also soaring—not exactly a stylis-

little late to the industrial party,” Michael Bilerman, an analyst at Citi, said on a conference call May 5 with Zell and other Equity Commonwealth executives. Zell wouldn’t concede the point, saying “I don’t think we’re too late” in an industrial sector “that has a very significant amount of room yet to grow.” It’s too early to buy retail property and it’s hard to find attractive deals in the office sector, he said on the call. Plus, Equity Commonwealth is sitting on a big pile of cash to expand its industrial portfolio. “Yes, the industrial space is very crowded at the moment,” Zell said. “But I don’t think it’s crowded with too many people with $5 billion of buying capability and cash on the balance sheet. And it’s going to be up to us to take advantage of that set of circumstances.”

FLASHBACK

The Monmouth acquisition may remind some of another big deal in a hot real estate market: the $7.2 billion takeover in 2001 of Spieker Properties by EqOffice, an ”I DON’T THINK (THE SECTOR IS) CROWDED uity office real estate trust WITH TOO MANY PEOPLE WITH $5 BILLION investment led by Zell. Zell faced a lot OF BUYING CAPABILITY.” of criticism from Sam Zell, chairman, Equity Commonwealth analysts and investors for buytic fit for an investor like Zell who ing Spieker, which had a heavy seeks out-of-favor assets. concentration of office buildings “One could argue if Sam Zell in tech-heavy markets, just as the came around and put a stake in tech market was crashing. Zell the ground on retail or returning managed to write a happy ending into the office, that may have more to that story. He burnished his meaning than being arguably a reputation as a savvy market tim-

er by selling Equity Office in a $39 billion blockbuster deal in 2007, as the economy and office market were peaking. That’s one reason few investors are willing to bet against Zell, a 79-year-old with a $5.4 billion fortune, according to Forbes. Nicknamed the “Grave Dancer,” he’s best known as a buyer of distressed assets, but Zell describes himself as a “professional opportunist,” an investor with a much broader repertoire. He saw an opportunity in 2014 when he teamed up with an investor group to take over the leadership of a company called Commonwealth REIT. The Newtown, Mass.-based office landlord faced criticism for poor management and conflicts of interest that depressed its share price. Dissident shareholders tossed out the board and brought in Zell and longtime lieutenant David Helfand to run the company. They quickly moved the business to Chicago and renamed it Equity Commonwealth, an adopted sibling for Zell’s other two REITs, Equity Residential, a big apartment landlord, and Equity Lifestyle Properties, a mobile-home park owner. Since then, Equity Commonwealth has been selling off buildings and amassing a war chest for a big acquisition. It owns only four office properties today. After the pandemic sent the economy and real estate market into the dumps last spring, many investors pondered the possibility of a major distressed deal. That’s why some may have been surprised by the Monmouth deal.

BLOOMBERG

The billionaire investor, one of the most famous contrarians in finance, is jumping into an especially hot sector. He insists he’s not too late to the party.

Sam Zell, best known as a buyer of distressed assets, describes himself as a “professional opportunist.” The REIT owns 120 properties totaling 24.5 million square feet, including nine in Illinois, and it’s not struggling with low occupancies or bad debt. But Monmouth has obvious parallels to Commonwealth circa 2014. Its management and board also are facing criticism for insider-friendly arrangements and poor stock performance. Two shareholders have been agitating for change. One of them, Blackwells Capital, a New York-based hedge-fund manager, made an unsolicited $18-per-share cash offer for Monmouth in December. Even though it’s hard to find value in the industrial market today, a takeover could create value for Monmouth shareholders merely by putting its portfolio under new management.

Still, Blackwells could complicate matters for Zell by sweetening its bid for Monmouth. Equity Commonwealth’s friendly all-stock deal works out to $19.40 per share, or $19.58 including an extra dividend payment. Blackwells criticized the offer as “wholly inadequate” and said it will “consider its options” after reviewing merger documents. That raises the prospect of a bidding war for Monmouth, something that Equity Commonwealth executives almost certainly have gamed out. Monmouth shares closed May 5 at $19.35, up 6 percent but below Equity Commonwealth’s offer, suggesting that investors don’t expect higher bids. Many may be wondering how much Zell is willing to pay to join the herd.

Amtrak expansion plan gets wide backing here BY GREG HINZ An unusual coalition of labor, business and civic groups is getting behind President Joe Biden’s plan to expand Amtrak service as part of his big infrastructure plan, saying it offers “tremendous benefits to our state and region.” In a letter sent to all members of the state’s congressional delegation—Democrats and Republicans—groups including the city and state chambers of commerce, the Chicago Federation of Labor and the Civic Committee of the Commercial Club of Chicago say better connecting Chicago with other Midwest cities will pay off in the long term. “Chicago is the hub of the Midwest,” one signer, Chicagoland Chamber of Commerce President Jack Lavin, said in a phone interview. “If we get high-speed rail and more investment, it’s good for us.”

P033_CCB_20210510.indd 33

The letter specifically endorses a “vision statement” Amtrak released after Biden included $80 billion for the passenger carrier and other railroads in his $2 trillion infrastructure plan. Also signing the letter were the Environmental Law & Policy Center and the Illinois AFL-CIO.

WISH LIST

Included on Amtrak’s wish list are improvements on existing service from Chicago to St. Louis, faster speeds and decreased travel time between Chicago and the home of the University of Illinois at Urbana-Champaign, upgrades on lines to Milwaukee and Detroit, and new service to the Quad Cities and Rockford. Adding links state by state eventually would allow train travel between Chicago and Columbus; Ohio; Madison, Wis.; Duluth, Minn.; and Iowa City, Iowa,

the letter says. “When paired with ongoing efforts in Illinois and Michigan to increase train speeds to 110 mph, a bold vision of modern, fast, comfortable and convenient passenger rail service for the Midwest emerges.” That’s already the case on parts of the St. Louis line. What’s not clear, even if Biden’s bill is approved, is whether the federal government will provide any operating funding and not just capital funds for the new and expanded service, which likely will lose money on an operating basis. Biden’s bill also offers huge funding for nontransportation items that are not normally considered infrastructure, such as home health care for seniors. A smaller, $568 billion plan offered by Senate Republicans does include money for railroads: $20 billion, not nearly as much as Biden’s bill.

BLOOMBERG

An unusual alliance of business, labor and civic groups asks Illinois members of Congress to support the president’s call to spend $80 billion on rail, with new or expanded service from Chicago to destinations throughout the Midwest

Amtrak would get billions under Biden’s infrastructure plan. The two parties, including Republicans in Illinois’ delegation, also are split on how to pay for the plan, with Biden proposing to

hike the corporate income tax rate from 21 percent now to 28 percent, undoing most but not all of the Donald Trump cuts.

5/7/21 3:49 PM

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35 MAY 10, 2021 • CRAIN’S CHICAGO BUSINESS

Manufacturers struggle with supply shortages SUPPLY from Page 1 Khan, director of sourcing at Morey, which makes wireless controllers and communication devices for use for industrial and automotive uses. He previously worked at Motorola, Honeywell and Illinois Tool Works. Shortages, which triggered alarms in February when they idled big auto plants in Chicago and Belvidere, have spread to other industries and from chips to more pedestrian materials such as plastic, metals, wood pallets and cardboard boxes. “It’s not just chips: It’s everything,” says Haven Allen, CEO of mHub, an advanced-manufacturing incubator in Chicago. The global supply chain is sputtering just as the economy is starting to recover from COVID-19. Companies that can’t get parts have to turn down sales, slowing their growth as rising material costs squeeze their profits. “I have a shortage of parts, not orders,” Khan says. Spread across the economy, these effects threaten to dampen the recovery and fuel inflation. New York-based investment firm Goldman Sachs estimates the drag from semiconductors alone could reduce U.S. gross domestic product by 0.5 to 1 percentage point in 2021 while adding 0.1 to 0.4 percentage point to inflation. Motorola Solutions CEO Greg Brown said May 6 that its revenue growth for the year would be higher than the 8 to 9 percent it’s forecasting without semiconductor supply constraints. A sign of the impact came when the Institute for Supply Management reported that its Purchasing Managers Index for manufacturing slipped 4 points to 60.7 last month. Any reading above 50 signals growth. “Recent

record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy,” the group says. Lead times for production materials rose to 79 days in April, the highest since March 2018, says Tim Fiore, chairman of the PMI survey. Nicole Wolter, president of HM Manufacturing in Wauconda, is feeling the squeeze from all sides as commodity prices have soared across the board to the highest levels in 10 years. “The supply chain right now is a complete disaster,” says Wolter, whose father, Kenneth, started the 22-employee maker of gears, shafts and pulleys in 1979. Prices of metals, the primary raw material for the company’s products, have skyrocketed this year. Aluminum is up 41 percent, and steel 37 percent. “Something as basic as pallets: With the lumber shortage, I’m having a hard time getting pallets,” Wolter says. Suley Muratoglu, CEO of Proven Partners Group, a manufacturer of bake mixes and other dry food items in Elgin, is struggling to get cardboard boxes for his products. “The lead time on orders has increased from three to 14 weeks,” he says. “You’re purchasing inventory that you don’t have orders for.” Companies face uncertainty at every turn, making it hard to plan. “My suppliers are getting price increases from the mills,” Wolter says. “I’m getting prices that are good for 24 hours. I can’t even forecast. I can’t get some material until June, July, August. Some are as bad as September.”

Transportation costs are on the rise, too. Scarcity of ocean containers, made worse in March when a container ship blocked the Suez Canal for six days, caused the price of ocean freight to nearly double, says Craig Russell, CEO of Monitor Technologies in Elburn, which makes sensors to monitor level, flow and moisture levels of dry chemicals, grain, cement and plastics. For some critical parts, he turned to air freight. “It’s 10 times as expensive,” he says. “Flights were reduced. People were scrambling to get space on aircraft.” Loyola University logistics professor Maciek Nowak calls it “a perfect storm” of small catastrophes that collided with the just-in-time manufacturing ethos of keeping inventory low to free up capital. “You wouldn’t have predicted this series of events,” he says. “It has exposed so many gaps in our supply chain.”

STOCKPILES

Once seen as a curse, inventory stockpiles are now enviable. Panduit, a maker of electrical and computer networking products in Tinley Park, so far has largely sidestepped shortages of plastic resins caused by historic winter storms in Texas and Louisiana that idled plants. Brett Lane, Panduit’s chief technology officer, says the company began increasing inventory early in the pandemic in anticipation of a surge in demand later. “We were ready,” he says. “We’re a global supplier. We have inventory scattered about. We’ve been able to offer availability that others can’t.” Nonetheless, he says, “‘We’re stretching the supply chain to its breaking point.” Monitor Technologies, which employs about 40 in Elburn, has al-

SUPPLY CHAIN BREAKDOWN Shortages of various parts and material are slowing production and driving up costs for manufacturers. LEAD TIMES FOR RAW MATERIALS In days

Per pound

100

$1.20 80 60

1.00

to be mainly those already here that are looking to add on, particularly in DuPage County. As of June 30, West Suburban was the eighth-largest bank by deposits in DuPage, with $1.9 billion, or nearly 4 percent of the market, according to the Federal Deposit Insurance Corp. Whether a deal for West Suburban is clinched and at what price will say something about the zeal for continued consolidation of Chicago’s banking industry, as well as the importance of retail banking. The parent of Glenview State Bank, another longtime suburban lender prized by would-be buyers for its upper-middle-class deposit base, agreed this year to sell without testing the market to Champaign-based First Busey. If West Suburban sells, that will leave just four privately held banks in the area with more than $2 billion in assets. A sale also will reveal how bankers are thinking about Chicago’s suburbs. Twenty years ago, the western suburbs were perceived as a fast-growing region. Today, while sprawling, west suburban Chicago is considered more mature. Suitors include several pub-

P035_CCB_20210510.indd 35

licly traded local lenders seeking to grow and add market share, including Rosemont-based Wintrust Financial, Chicago-based First Midwest, Chicago’s Byline Bancorp and Aurora-based Old Second Bancorp, sources say.

FAMILY TIES

Low profile for its size, West Suburban was launched in 1962 by the Acker family, which still is the largest shareholder. Kevin Acker, son of co-founder Ralph Acker, is the chairman. His brother, Keith Acker, is bank president and didn’t respond to calls requesting comment. Representatives of Wintrust, First Midwest and Byline declined to comment. James Eccher, CEO of Old Second, didn’t respond. First Midwest, with $21 billion in assets, is perceived as the most likely buyer if only because it appears to have the most to gain. The 11th-largest bank in the six-county area by deposits, First Midwest has a branch network that’s strong in the southern and northern suburbs but sparse west of the city. It has just seven locations in DuPage and Kane counties, while West Suburban has 31 full-service branches there. West Suburban is

the region’s 18th-largest bank by deposits, according to FDIC data. First Midwest CEO Michael Scudder told analysts last month that merger discussions generally were beginning to resume after the industry largely paused dealmaking during the pandemic year. “I think consolidation in the space is likely to continue,” he said April 21. “So to the extent that we see those opportunities that align with strategically where we want to go and what we think is in the best interest of the franchise and the shareholders, we’ll certainly look to take advantage of those.” The bank, along with Byline Bank, has been the local industry’s most aggressive buyer of banks like West Suburban in recent years. Champaign’s Busey Bank, too, has shown an appetite in recent years, but it’s consumed with closing the acquisition of Glenview State Bank. For Old Second, a deal for West Suburban would nearly double its size and also prevent rivals from strengthening in Old Second’s west suburban stronghold. Old Second was the third-largest bank by deposits in Kane County as of June 30, according to FDIC data, behind Wintrust and market

$1.08

0.40

20 0

0.80 0.60

0.20 M A M J J A S O N D J F M A 2020 2021

M J J A S O N D J F M A 2020 2021

Sources: Purchasing Managers Index, Institute for Supply Management, Plastics News

ways carried more inventory than its bankers would like, Russell says. “We’re conservative generally, so we keep some extra inventory. That saved us. We haven’t had an issue yet where we can’t deliver something.” Morey, the electronics manufacturer, also has brought some inventory in-house rather than relying on vendors to manage it. “As the market gets tighter and tighter, you don’t want to pay extra or lose parts to competitors,” Khan says. As shortages pinch, competition for parts and materials is intensifying. An executive at a large electronics distributor says some big global customers are paying millions in fees to expedite shipments and instructing distributors to buy up all the available inventories of critical parts. The executive, who declined to be named because of nondisclosure agreements with customers, says many companies now want to hold as much as six months of inventory, compared with 30 to 40 days before. Disruptions in plastics could ease by June, although prices might remain high because oil is rising. The

Here’s a Chicago rarity in recent years: a big, splashy bank deal BANKS from Page 1

AVERAGE PRICES FOR HIGH-DENSITY POLYETHYLENE RESIN

leader JPMorgan Chase. “We’re very interested in (mergers and acquisitions) now that the credit fog is kind of lifted here,” CEO Eccher said on an April 22 earnings call. “Obviously, our capital levels are pretty robust. I will say that conversations are active. . . .So we are ready and very interested in finding a strategic partner.” A buyer will be acquiring West Suburban for its deposits rather than its assets or lending capabilities. Loans on West Suburban’s balance sheet make up just 55 percent of its deposits. Most banks want a loan-to-deposit ratio of at least 80 percent. That leaves West Suburban investing in a lot of low-yielding securities, which has led to returns on equity in the single digits. Loan demand has been tepid while COVID-induced uncertainty has loomed, but bankers believe demand will accelerate in the latter half of the year as companies seek to meet pent-up demand from customers. With interest rates still low, having cheap deposits to support lending will be key to maintaining bank profit margins, which have slipped along with rates. Keefe Bruyette & Woods is handling the sales process for West Suburban.

100

1.2

semiconductor shortage could drag 1.0 on through 2022 because manufacturers can’t easily increase produc0.8 tion due to the time and expense of building chip plants. 0.6 In the meantime, companies are looking 0.4 for suppliers close to home, says Chandra Brown, CEO of MxD, 0.2 an advanced manufacturing institute in Chicago whose members 0.0 include Boeing, Deere and Siemens. “You’re only as good as your weakest link. Manufacturers will be asking: ‘What in our supply chain needs to be more local?’ There will be more near-shoring and re-shoring.” That’s good for Wolter’s company. “I have so much quoting opportunity I never had before,” she says. Wolter expects sales to be up 17 percent in the second quarter from a year ago, when revenue slipped 10 percent because of the pandemic. “I can’t complain because we’re very busy. But when you can’t get materials, it’s difficult,” Wolter says, noting that one of the orders that’s been delayed because of supply constraints is for timing-belt pulleys used to manufacture semiconductors.

80 60 40 20 0

FALLING DOMINOES If West Suburban Bank is sold, its sale price likely will be the highest the Chicago market has seen for a privately held bank in five years.

LARGEST PRIVATELY HELD BANK SALES SINCE 2016 Standard Bankshares Hickory Hills Buyer: First Midwest Price: $361 million Announcement date: June 28, 2016

First Community Financial Partners Joliet Buyer: First Busey Price: $242 million Announcement date: Feb. 6, 2017

Cummins-American * Glenview Buyer: First Busey Price: $191 million Announcement date: Jan. 19, 2021

First Evanston Bancorp Evanston Buyer: Byline Bancorp Price:$169 million Announcement date: Nov. 27, 2017

Bridgeview Bancorp Bridgeview Buyer: First Midwest Price: $145 million Announcement date: Dec. 6, 2018 Source: D.A. Davidson

*Glenview State Bank

5/7/21 5:16 PM

M A

36 MAY 10, 2021 • CRAIN’S CHICAGO BUSINESS

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$29.9 billion $32.2 billion

BURGER SALES U.S. sales at burger-focused limited-service restaurants

2015 2019 2020

$103.5 billion $117.2 billion $113.8 billion

Source: Euromonitor International

The early results on McDonald’s chicken foray the chicken sandwich war was well underway and the battlefield was crowded. Competitors like KFC, Burger King and even Taco Bell have launched crispy chicken items. They’re all chasing Chickfil-A, which is a growing competitive threat to McDonald’s, and Popeyes, whose sandwich started the recent craze. But experts say that in a contest like this one, a chain doesn’t necessarily need to become No. 1 to succeed. In fact, McDonald’s new offerings could be considered at least a partial success if they keep customers from defecting to rivals offering chicken sandwiches. McDonald’s restaurants are selling about 260 crispy chicken sandwiches per day on average, according to a recent franchisee survey by Kalinowski Equity Research. Onethird of respondents said sales were higher than expected, and only 10 percent said the sandwiches were selling below expectations. “Long term, the chicken products are going to be a real positive, but it’ll be hard to tell with all the new and changing elements in today’s business. But I’m glad to have them,” wrote one franchisee responding to Kalinowski’s survey. Said another: “The second and third quarters are going to be great for same-store sales. Not too sure about the fourth quarter and 2022. Chicken intro advertising ends now, so we’ll see how the product sales hold up.”

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Sales at U.S. limited-service restaurants focused on chicken (includes chains like Popeyes, Chick-fil-A and KFC)

CEO Chris Kempczinski said during McDonald’s most recent earnings call that the company understands it needs to support the sandwiches “over a longer period of time,” rather than putting “a bunch of media weight against it for a quarter and then move on.” Even so, sales of a new item typically drop by one-third when a national advertising push ends, says Mark Kalinowski, CEO of the research firm. But even at 175 sandwiches per day, the premium-priced product would still generate 8 to 11 percent of a U.S. McDonald’s restaurant’s annual sales. “That’d be a very successful menu item,” Kalinowski says. “On top of that, McDonald’s has said,

‘Look, this is kind of the start of our chicken journey.’ There’s more to come.” Indeed, McDonald’s USA President Joe Erlinger told investors last year that chicken will be at the heart of the company’s growth strategy and that the new sandwiches in particular will offer the biggest opportunity. On the earnings call, executives said the chicken sandwiches—along with the return of Spicy Chicken McNuggets, stimulus checks and other factors—helped lift U.S. same-store sales growth to 13.6 percent in the first quarter. And in April, the chain began testing chicken-based breakfast sandwiches in Ohio and Sacramento, Calif.

“MCDONALD’S HAS SAID, ‘LOOK, THIS IS KIND OF THE START OF OUR CHICKEN JOURNEY.’ THERE’S MORE TO COME.” Mark Kalinowski, CEO, Kalinowski Equity Research

But are the new sandwiches good enough to steal customers from competitors and establish McDonald’s as a go-to for chicken? Early indicators suggest that McDonald’s still has some work to do there. “I don’t have Chick-fil-A near my stores, so the chicken products are well-received,” said one franchisee who responded to Kalinowski’s survey, but none mentioned pulling customers away from the chicken champ. Tellingly, none of the consumers polled in a rolling survey from market research firm Technomic described McDonald’s chicken sandwich as a “craveable item.” In contrast, 32 percent of recent Chick-fil-A customers and 29 percent of recent Popeyes customers called those chains’ chicken sandwiches craveable. That could indicate McDonald’s chicken sandwich isn’t driving visits to the chain, says Robert Byrne, director of consumer and industry insights at Technomic. The need to satisfy a craving is one of the top reasons people visit restaurants. It drove 43 percent of visits to

quick-service restaurants in 2020, up from 41 percent in 2019, according to Technomic. “Everybody is doing a chicken sandwich right now, and people are still sort of in that comparative space where they’re thinking about this compared to Chick-fil-A. It’s always going to be compared to Chick-fil-A, the long-standing gold standard,” Byrne says. “If it’s just not there, that doesn’t necessarily mean it’s not a successful item . . . it just means that it may not necessarily be that really strong driver of repeat visitation that you want your menu items to be.” There’s also the possibility that McDonald’s chicken sandwich sales are primarily driven by existing customers switching from burgers and other menu items rather than new customers flocking to the chain for chicken. If so, the new sandwiches won’t do much to boost customer traffic, a long-term challenge for McDonald’s. Still, they could succeed as a defensive measure by keeping existing customers from leaving to find a chicken sandwich elsewhere.

COMPLEXITY

During the pandemic, McDonald’s sped up drive-thru times by reducing menu complexity, which ultimately helped boost samestore sales growth. The chicken sandwiches add a little complexity back. That could be worth it, as long as the sandwiches do more than just cannibalize sales from other menu items, says Morningstar analyst Sean Dunlop. McDonald’s Erlinger told analysts on the earnings call that executives consider the launch successful and that McDonald’s is “selling substantially more chicken sandwiches compared to our previous chicken sandwich line.” McDonald’s is planning a loyalty program that could help boost repeat purchases of the sandwich, says Dunlop. But McDonald’s biggest challenge will be establishing itself in consumers’ minds as a place to get chicken. “For quick-service chains, so much of these products is building a following,” Dunlop says. “Chicken sandwich sales are probably not top of mind for most consumers when you think of McDonald’s still.”

5/7/21 4:45 PM

CRAIN’S CHICAGO BUSINESS • MAY 10, 2021 37

ANDERSON from Page 3 The two projects represent another step in the evolution of Tim Anderson, who has found a sweet spot in developments that combine apartments with lots of retail space. A former architect—and self-proclaimed Ludwig Mies van der Rohe fan—Anderson moved into residential development in the 1980s, struggled through the condo crash and then pivoted into apartments when the multifamily market took off after the Great Recession. Focus, founded by Anderson in 1993, has developed buildings both short and tall in places that include Wheaton, the West Loop, the Illinois Medical District, Evanston and Lake Forest. But Anderson lately has been digging deeper into suburban mixed-use developments, knowing apartment tenants will pay premium rents if they have restaurants and a good grocery store nearby. Investors will pay up, too. In 2015, a joint venture between Focus and its longtime partner, Atlanta-based Atlantic Realty Partners, completed the Reserve at Glenview, a 239unit apartment development next to a shopping center anchored by a Mariano’s supermarket. The venture sold the apartments for about $81 million two years later. Around the same time, Focus and Atlantic Realty began construction on a 260-unit apartment development connected to the 270,000-square-foot Mellody Farm shopping center in Vernon Hills, across the street from Hawthorn Mall. They sold the development, called Atworth at Mellody Farm, for $89 million in late 2019. The Atworth apartments rented up in just 10 months, much faster than projected, Anderson says. He

attributed the “unusual record-setting pace” mainly to the shopping center right out the front door. Retail tenants include REI, Athleta, the Dailey Method and about a dozen restaurants. The Atworth isn’t next to a Metra station, a convenience important to some commuters, but it’s near something in the shopping center that Anderson considers even more valuable: a Whole Foods Market. A recent study found that apartment buildings with a ground-floor Whole Foods achieve a 5.8 percent rent premium over comparable buildings nearby. “I’d bet more on Whole Foods than I would a train station,” Anderson says. Focus’ success with the Atworth impressed Centennial’s executives as the landlord was drafting up its $250 million redevelopment plan for Hawthorn Mall. Focus “was on the extremely short list” of apartment developers Centennial considered in its search for a partner to handle the multifamily chores, says Jon Meshel, senior vice president of development at Centennial. “They had that product dialed in really well,” he says. Centennial is hoping for a repeat performance at Hawthorn Mall, a 1.3 million-square-foot property at Townline Road and Milwaukee Avenue. So are the village of Vernon Hills and other local taxing bodies that rely on the mall for sales and property tax revenue. The village last month approved $46.5 million in incentives for the redevelopment, which Centennial calls Hawthorn 2.0. Crews demolished the Sears store in January, and site preparation and infrastructure work are underway. Focus expects to begin construction next month and complete the apart-

JOHN R. BOEHM

Developer aims to bring some urban verve to suburban malls sapped of energy

Tim Anderson, founder and CEO of Focus, is betting his development will result in apartments supporting retail and restaurants, and vice versa. ments by fall 2022, Anderson says. Focus also plans to begin construction of 304 apartments at the Fox Valley Mall next month. Unlike the Hawthorn project, the apartments at Fox Valley, also on the site of a former Sears store, will not have retail space underneath. Both developments will include a pedestrian-friendly main-street streetscape.

‘ALMOST LIKE A CITY’

Centennial and Focus are trying to recycle valuable real estate into something useful, but their mission is really bigger than that: to make the shopping mall cool again, or at least cool enough that people would want to live at one. Indoor malls today are derided as relics of the 1980s, like hair bands and acid-washed jeans. Right now, malls “lack 24/7 activity,” Anderson says. To make the

Where homes are selling like greased lightning FAST SALES from Page 3 average of 36 days in the first three months of the year, according to data released mid-April by the Chicago Association of Realtors and Midwest Real Estate Data. That’s faster than any neighborhood or suburb with at least 25 home sales during each of the comparison quarters. Citywide, homes sold in an average of 91 days, about 12 percent faster than they did in the first quarter of 2020. A regionwide figure isn’t available, but in all the suburban counties, the acceleration was faster than in Chicago. In Will County, homes sold nearly 47 percent faster this year, in an average of 53 days compared to 98 in the first quarter of 2020. Most sales completed in the first quarter of 2020 would have been in the contract stage prior to the pandemic shutdowns, so the comparison here is not to a faltering quarter. In West Lawn and a few other parts of the region, a 91-day sale would feel like a snail’s pace. Among them: Joliet, where homes are taking an average of 37 days to sell, and Glendale Heights at 38 days. They are mostly moderately priced areas, where buyers are nec-

P037_CCB_20210510.indd 37

essarily more sensitive to the effect of changing interest rates on how much house they can get than affluent people are. Early this year, as 30-year mortgage rates threatened to creep back above 3 percent after seven months sub-three, “buyers were like: ‘Oh crap we need to hurry up and do this,’ ” says Adam Zagata, a D’Aprile Properties agent. Zagata represented buyers who put a four-bedroom house on Austin Avenue in Clearing under contract when it had been for sale for just four days in late December and early January. “They were lucky,” he says, to be house hunting then, “before people saw interest rates go up and they jumped in.” His clients’ lucky timing delivered, Zagata says; they paid $399,000, $900 below the asking price, rather than having to bid the price up.

GET IN LINE

More recently, buyers and their agents in these neighborhoods have gotten used to standing in line to see homes that pop onto the market. “You have to if you want to see it,” says Maricela Toro, a Realty of Chicago agent. Sellers’ agents limit showings to a single day, she says, both to keep from driving the sellers nuts with constant requests to show

the house and, she believes, “to intimidate buyers, make them expect to pay higher” when they see the line. Toro made sure she was first in line when a 1950s bungalow on Moody Avenue in Clearing came on the market in mid-January. Knowing it was a good possibility for her client to buy, she showed up about 20 minutes early. On the way out from walking through with her client, “we saw the line forming, four, five families. There were more coming,” Toro says. Toro’s client was the highest bidder, she says, and wrote a contract with the seller seven days after the house went up for sale. The deal closed March 10 at $303,000, or 4.5 percent over the asking price. The pace of the market is disconcerting to people on both sides, buyers and sellers. “Sellers worry where they’ll go if their house sells in a minute, like they’re hearing,” Molly Mann, a Keller Williams Elite agent based in Oak Lawn, says. Most figure out how to deal with it, but Mann says she’s known a few to say they’ll sit it out until things slow down. Ivette Hollendoner—a Keller Williams Preferred agent whose clients’ house on Kolmar Avenue

mall relevant in the 21st century, “it’s got to be almost like a city,” with a variety of other uses, including senior living, hotels and office space. Apartments will have to do for now. They are the preferred option today for mall owners with turnaround plans. The suburban multifamily market has made it through the coronavirus pandemic almost unscathed—both rents and occupancies rose last year—and development is picking up. Investors in other sectors, including hotel and office, are still licking their wounds. Malls could represent an even bigger business opportunity for Anderson, who says he’s been talking with other owners of local malls mulling apartments at their properties. The trend is accelerating nationwide as more department stores close and struggling mall owners explore their options.

In Northbrook, the owner of Northbrook Court was ready to begin construction on a major redevelopment that would have included about 315 apartments. But those plans now are up in the air as the mall’s owner, Brookfield Property Partners, and its lender consider a sale of the property. Adding housing to malls makes sense, but the idea works best with projects that maximize the synergies between the apartments and retail, says Gail Lissner, managing director at Integra Realty Resources, a Chicago-based appraisal and consulting firm. Just developing an apartment building on the parking lot outside “doesn’t energize the mall,” she says. Focus and Centennial have avoided that mistake in Vernon Hills and Aurora, she says. “They should both do well,” Lissner says.

FAST TIMES These are the places where houses sold fastest on average in the first three months of the year. For comparison: In the city of Chicago, homes sold in an average of 91 days on the market during that time, and in Will County they sold in an average of 53 days. AVERAGE DAYS ON THE MARKET 36

West Lawn (Chicago)

Joliet

Glendale Heights Ashburn (Chicago)

Clearing (Chicago)

Evergreen Park

McKinley Park (Chicago)

Bolingbrook

Round Lake area*

Oak Lawn

Streamwood

*Includes Round Lake, Round Lake Beach and Round Lake Park Note: Includes only locations where 25 or more houses sold during the first quarter of 2021. Condo and townhouse sales are not included, and the data does not include homes that sold before officially going on the market, a common occurrence this year. Sources: Chicago Association of Realtors, Midwest Real Estate Data, ShowingTime

in West Lawn sold in five days for 3 percent more than the $269,000 asking price—says buyers should prepare for the high likelihood of having to pay more than the asking price. If they have a preapproval for a certain amount from their mortgage lender, she says, “don’t look at houses for that price. Look under

by $10,000, so you have room.” For both sides, buyers and sellers, it’s important to know that the game will move swiftly and to be ready. “I tell them if they’re not motivated to compete in this market then they shouldn’t do it,” Toro says, sounding a bit more like a swim coach than a real estate agent.

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38 MAY 10, 2021 • CRAIN’S CHICAGO BUSINESS

PACKAGING from Page 3 PCA made a big acquisition in 2013 with the purchase of paper producer Boise for $1.27 billion and has been converting capacity previously dedicated to producing office paper and newsprint. It’s continued to make targeted “bolt-on” deals in the past five years. But doubling down on containerboard poses risks for CEO Mark Kowlzan. Demand for cardboard boxes could slow as COVID lockdowns ease and consumers shift more purchasing back to brick-andmortar stores. New containerboard production capacity coming online could cause a supply glut and drive down prices later this year or early next, analysts say. For now, producers have pricing power. PCA has benefited from a series of price increases since last fall. Producers instituted a $50 increase to $765 a ton for a benchmark grade of kraft linerboard, followed by two additional increases this year to $825 a ton, according to the industry publication Pulp & Paper Week. But PCA faces headwinds in higher costs for freight, recycled fiber, chemicals and other goods, CFO Robert Mundy told analysts last month. Containerboard accounbted for nearly 90 percent of PCA’s sales last year, up from 80 percent in 2015. That could climb to as much as 95

percent of revenue this year, says Jefferies analyst Philip Ng. PCA in February said it would permanently convert capacity at a paper mill in Jackson, Ala., to produce linerboard at a cost of $440 million. Kowlzan told analysts in a call reviewing first-quarter earnings that sales volume for the company’s containerboard mills and corrugated products plants set or matched all-time quarterly records and that bookings for the first 14 business days of April were up 16 percent from the same period last year. “If a year ago somebody told you that volume was going to be up 16 percent in a given month, no one would believe you,” Kowlzan said. PCA executives didn’t respond to several interview requests.

DIVERGENCE

Shipments of corrugated boxes usually track the economy, but last year marked an unusual divergence with box shipments growing in spite of a recession. “There was a massive recession in the services industry, but goods did just fine,” says Mark Weintraub, managing director at Seaport Global Holdings. “Goods come in boxes.” PCA historically was part of the Tenneco conglomerate, which in 1999 sold the containerboard and corrugated packaging business to private-equity firm Madison Dearborn Partners. PCA went public the

ISTOCK

It pays to be a box-maker during a pandemic. But what to do with all that cash?

Demand for cardboard boxes could slow as COVID lockdowns ease and consumers shift more purchasing back to brick-and-mortar stores. following year, and two partners at Madison Dearborn serve on the PCA board. The company operates eight mills and 90 corrugated products plants and facilities. Not that it’s been a smooth ride. PCA’s net income last year fell by a third to $461 million, or $4.84 per share, while revenue dipped 4 percent to $6.7 billion. That was due to the second-quarter economic slowdown and a dramatic drop in paper sales as offices and schools shut down. Bad weather hampered operations, most notably Hurricane Laura, which impaired the company’s DeRidder, La., mill. The company is a strong per-

former compared to its two largest competitors: Its earnings before interest, taxes, depreciation and amortization last year outpaced those of Memphis, Tenn.–based International Paper and Atlantabased WestRock, according to BMO Capital Markets. PCA derives higher margins from a customer base that is more local and regional than its competitors, who sell comparatively more to national customers and on the price-sensitive spot and export markets, analysts say. If PCA pursues another deal, one candidate could be the publicly traded South Carolina-based paper producer Domtar, which has been

stung by the shrinking market for office paper and whose stock remains relatively cheap, Wilde says. But a large deal could raise antitrust concerns and prompt PCA to pursue smaller privately held firms that make boxes from a mix of virgin and recycled material. Canadian rival Paper Excellence has also been exploring a deal to acquire Domtar, according to a Bloomberg report. Any deal PCA makes will be targeted to buying virgin containerboard assets, Ng says. “PCA has the ability to convert a market that’s in secular decline—printing paper—to produce something that’s growing and generating pretty good returns.”

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CRAIN’S CHICAGO BUSINESS • MAY 10, 2021 39

All new inside a vintage Old Irving Park exterior Unwilling to build a glaring McMansion among historical houses and churches, the owners of this home filled its 110-year-old shell with a 21st-century interior; it’s for sale at just under $2 million On the outside, this house on Kildare Avenue shows all its 110 years, with porches, window bays, stained glass and other features that suit its setting among historical homes and churches in Old Irving Park. Inside, it’s a remix of the 11 decades, blending contemporary elements like a stone fireplace wall and a unique two-story combo of bedroom and library with historical features, some of them moved to new locations and some of them re-creations. When Missy and Bart Goldberg bought the house in 2008 for $550,000, “it was a classic grand old home on a corner,” Bart Goldberg says, but the second floor had decades earlier been cut up into apartments, and the building needed updating. Tearing it down was a possibility but not one they considered seriously. “We couldn’t do a McMansion type of house here,” Bart Goldberg says. Instead, they rebuilt the interior and spiffed up the stucco and wood exterior. The house is now a five-bedroom, 7,000-square-footer with an attached garage, a rarity among older homes in the neighborhood. It’s on a 6,300-squarefoot lot, a little more than twice the city standard. Empty nesters, the Goldbergs— she’s in consulting and he’s an attorney—are planning to shift full-time to a home in southwest Michigan and work remotely. They put the Old Irving Park house on the market May 5, priced at just under $2 million and represented by Mario Greco of Berkshire Hathaway HomeServices Chicago.

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