Crain's Chicago Business, August 19, 2024

Restaurant owners target affordability with wine lists

Restaurateurs are getting creative to lure customers who have grown weary of paying through the nose for their dinner I

It’s a Tuesday evening at Mano a Mano, a new pasta and wine joint along Milwaukee Avenue in Logan Square. A server is pouring a bottle of Italian white into a half-liter carafe, which glugs as it fills.

Someone has ordered the house wine.

Chefs Hsing Chen and Doug Psaltis have set their newest restaurant up to keep check prices down for diners. It shares parts of its kitchen and some staffers with sister restaurant Andros Taverna, cutting down on overhead. Psaltis talked to his truffle supplier about buying just the ends and nubby bits of the high-priced ingredient. The menu doesn’t have second courses — segundi in Italian — because Psaltis knows a $45 chicken entree would skew the whole meal. But the real trick comes in with the wine.

Mano a Mano sells red and white house wines by the quarter- or half-liter. The quarter-liter is $16 and equates to about a glass and a

see WINE on Page 22

Challenges lie ahead for Ford’s Chicago plant

Despite the automaker’s on-again, off-again plans for electric vehicle development, major changes are coming to the way Americans drive

By John Pletz

As it marks its 100th year, the Ford factory on the Far South Side — one of the largest manufacturing facilities in the state — faces a challenge that may prove greater than the recessions, wars, labor battles and even the COVID pandemic it's already weathered: the auto industry's transition to electric vehicles.

No other factory in Ford's portfolio has been in continuous operation longer than the one on Torrence Avenue at 126th Street. Along the way, the plant has produced everything from the Gran Torino and the Granada to the Thunderbird and the Taurus.

“There aren’t very many (plants) that make it to this age,” says Kristen Dziczek, a veteran auto industry researcher who is a policy adviser to the Federal Reserve Bank of Chicago. “They’ve continued to invest in that plant.

There are a lot of plants in the 60- to 80-year-old range . . . and a handful that are over 80.”

With 4,700 employees, Ford is

By Ally Marotti

“Wine is an alcohol category where operators believe they have room to take price, but the consumer is now pushing back.”

the largest manufacturer in the city and among the top three statewide. Nearly 1,100 more workers are at the stamping plant in Chicago Heights that supplies the Torrence Avenue factory, which now produces the Ford Explorer and Lincoln Aviator, along with sport-utility vehicles for police. Although Ford doesn’t provide employment numbers for companies in the supplier park near the plant, they’re estimated to provide more than 2,500 jobs.

All of which underscores the stakes for Illinois manufacturing — and for a South Side in need of jobs and investment — as Ford and its Detroit Three brethren navigate the emergence of hybrids, electric vehicles and, perhaps down the line, hydrogenpowered cars.

For the South Side region where it's been a fixture since 1924, “Ford’s been there through thick and thin, and has been an anchor,” says David Doig, president of Chicago Neighborhood

DAN MCGRATH

The White Sox may not have to look far for their new manager.

CRAIN’S LISTS

Here’s our annual ranking of the largest venture-capital and private-equity firms.

PAGES 10-13

Donna Hood Crecca, principal at market research firm Technomic

BAR PARISETTE

No other factory in Ford’s portfolio has been in continuous operation longer than the one on Torrence Avenue at 126th Street. BLOOMBERG

see FORD on Page 22

White Sox may not have to look far for

their new manager DAN

After the mercy killing of overmatched skipper Pedro Grifol earlier this month, the Sox turned their dugout over to Grady Sizemore, who flashed like a meteor through the Cleveland skies from 2004 to 2009, rivaling Jim Thome and José Ramirez as the most popular Indian/Guardian of recent vintage. A certain segment of the fan base was recognizable by the “Grady’s Ladies” T-shirts they wore to games at Progressive Field. Promoted from the coaching staff, Sizemore is said to be an interim hire, with the Sox having stated a preference for someone from outside the organization who’s currently in uniform. Not much was made of Sizemore’s background as a five-tool center fielder when he was announced.

Chalk that up to short memories, because from 2005 to 2008, Sizemore was pretty close to as good a player as baseball offered — maybe not Barry Bonds or Ken Griffey Jr., but Jim Edmonds or Torii Hunter at least. “The best player in our league,” in the words of then-White Sox manager Ozzie Guillen.

Then the injuries started, and it all unraveled for Sizemore. A groin issue that eventually required surgery, followed by operations on his elbow, back and abdomen, plus microfracture procedures on both knees. It seemed unreal when a body that had delivered so much could break down so completely — Kris Bryant before Kris Bryant.

Three teams, 209 games, 677 plate appearances over his final four seasons. In two of them, Sizemore didn’t play at all, after missing a total of nine games over those four magical seasons in Cleveland. He took his final swing with the Tampa Bay Rays in 2015, finished as a major leaguer at 33, and so much for a Hall of Fame career that might have been. He seemed headed that way after the then-Indians acquired him from the Montreal Expos — remember them? — in a trade for pitcher Bartolo Colon in 2002. Montreal had drafted Sizemore in the third round as an Everett, Wash., high-schooler and gave him first-round money to discourage him from playing

quarterback at the University of Washington.

Pretty good athlete, you might say. “If he were a track man,” said Rick Neuheisel, the Huskies’ coach at the time, “he’d be a decathlete.”

Called up to the big leagues in 2004, Sizemore was a center-field fixture by ’05 and would average 159 games, 116 runs, 179 hits, 41 doubles, eight triples, 27 homers, 81 RBIs and 29 stolen bases over the next four seasons, with a .281 batting average and an .867 OPS. He won two Gold Gloves for fielding excellence and a Silver Slugger award deeming him the best hitter at his position.

“He was a great teammate — I loved him,” Yankees manager Aaron Boone, who played two seasons with in Cleveland, told reporters in Chicago last week. “Played the game hard, really skilled, great athlete. I’m excited to see him get this opportunity.”

Boone, like Sizemore, had no dugout experience when he became a big league manager, having worked as an ESPN analyst after retiring. He’s from the Joe Torre-Dusty Baker school of very good players who became successful managers.

Bob Lemon and Frank Robinson were Hall of Fame players who combined to manage seven teams over 25 seasons.

As a “special adviser” to the White Sox, Tony La Russa likely had a say in Sizemore’s promotion, and may prove to be an apt comparison.

A $50,000 “bonus baby” shortstop with the then-Kansas City Athletics, La Russa suffered from chronic shoulder problems that limited his playing career to 132 games for three teams. He hit .199, with 35 hits and seven RBIs.

“All baseball” all his life, La Russa embraced managing at a young age and performed with Hall of Fame distinction, winning 2,884 games, six pennants and three World Series over 34 seasons with the White Sox (twice), Oakland A’s and St. Louis Cardinals.

Never, though, did he face a challenge as daunting as the one confronting Sizemore. The White Sox are a hot mess, the baseball side in the hands of a neophyte while the distracted chairman searches out a new home. The driver’s ed equivalent would be a beater car with a bent frame, bald tires, a balky transmission and an oil leak.

If Sizemore can fix that, the Hall may call after all. And it should.

The road to success is full of zigs and zags

Ilaunched the project “Beyond the Status Quo” a month ago with the first four of “50 Career Insights for Gen Z and Millennials.” Today, I’ll delve into four more insights that I believe are crucial for building a fulfilling and dynamic career:

Do what you love

Michael

Fassnacht is former CEO of World Business Chicago and is now chief growth officer at Clayco in Chicago.

Choosing a career path is one of the most significant decisions in a young person’s life. Unfortunately, societal and familial pressures often push young people towards traditional and seemingly prestigious fields such as business or medicine. However, true fulfillment comes from pursuing what you love. To discover your true calling, explore various industries and roles.

Start as a teenager by taking on part-time summer jobs in diverse sectors like restaurants or retail. As you move on to college, internships become invaluable. They offer hands-on experience in your field of interest and help you build a network of professional contacts. Additionally, campus jobs can teach financial independence and provide further experience. The more jobs you try, the better you’ll know what you truly love — and what you don’t.

It’s OK to zig-zag

Life is not a straight line, and

neither is your career. One of the most important lessons I’ve learned is that everyone has their own unique path, and it’s usually a winding one. Despite this, many young professionals feel pressured to follow a linear, predefined career path, often dictated by societal expectations or parental pressure. It’s equally concerning when parents tie financial support to specific majors or career choices, limiting their children’s ability to explore their true interests.

Embracing detours can be incredibly enriching, like taking a gap year to travel abroad or work in a different industry. These detours are not deviations from your path but necessary chapters in your long-term journey.

Build and nuture your network

Networking is a fundamental aspect of career development that I only fully appreciated later in my career. Initially, I believed that success was solely a result of the quality of my work and my accomplishments. I was wrong. I came to realize that cultivating a diverse network of professionals is equally indispensable.

Networking isn’t just about making contacts; it’s about building meaningful relationships with people across various industries and roles. Attend in -

dustry events, join professional groups, and maintain connections with your colleagues. These relationships will be invaluable throughout your career, providing business opportunities, valuable advice, and support when considering a career change.

We are all outsiders

Despite having lived in the U.S. for almost 25 years, I still occasionally feel like a foreigner. However, I have learned to embrace this feeling with curiosity and openness. This sense of being an outsider has been a constant companion in my career, from founding a marketing tech firm in San Francisco without a computer science background to becoming the CEO of a major advertising firm without industry roots, and taking on a political role in the Chicago mayor’s office without ever having worked in politics. Recognizing that we all experience being outsiders in some way helps us connect more deeply with those around us and navigate our careers with greater insight and empathy for others. Carving out a fulfilling career is full of nuances. Embracing what you love, welcoming the zig-zags of life, building a robust network, and recognizing our shared experiences of being outsiders are a few of the crucial elements that have helped me navigate the unpredictable. These insights have made me a better colleague and leader, and I believe they will serve you just as well.

Dan McGrath

Climate change is slowing moving to the Sun Belt

the implications for Chicago and other cold-climate cities are obvious in a stud y from two economists at the Federal Reserve Bank of san Francisco |

By Dennis Rodkin

Climate change is undoing the pattern of migration from cold parts of the U.S. to warmer parts that air conditioning accelerated in the 20th century, according to a recent study from a pair of Federal Reserve economists.

The implications for Chicago and other cold-climate cities are obvious in a study that says “the U.S. population is starting to move away from areas increasingly exposed to extreme heat days toward historically colder areas, which are becoming more attractive as extreme cold days become increasingly rare.”

In their July paper, “Snow Belt to Sun Belt Migration: End of an Era?” two vice presidents of the Federal Reserve Bank of San Francisco, Sylvain Leduc and Daniel Wilson, provide data that shows a

Winter in Illinois has gotten warmer, on average, by a little more than half a degree in each decade since 1980.

The Washington Post’s Climate Lab reported in March

An earthquake is about to hit homebuying

Here’s what to know about the long-planned change in how we buy and sell houses

By Dennis Rodkin

The ground is about to shift under the real estate industry as a fundamental change in the way we buy and sell houses takes effect, but most Chicago leaders in the field say after considerable shakeup it will leave little damage.

That is, if everybody will just chill.

“It’s only change, nothing to be afraid of,” said Mark Pasquesi, president of brokerage for Berkshire Hathaway HomeServices Chicago. “I don’t think any of this will be difficult if we embrace the change.”

The change, which upends the century-old standard of agents for a buyer and seller splitting a commission paid by the seller, was announced five months ago but went into effect over the weekend. It’s one of the terms of the settlement reached by the Chicago-based National Association of Realtors after a federal jury found the long-held commission standard amounted to the real estate industry colluding to keep commissions — and by extension home prices — higher than they need to be.

The biggest difference that took effect Aug. 17 is that a seller’s offering on a multiple-listing service can’t include any details about how the buyer’s agent will be compensated. That leaves buyers tasked with ensuring their brokers will get paid.

“It’s going to feel foreign to everyone” who’s bought or sold a

house in the past several decades, said Laura Ellis, president of residential sales at Baird & Warner. In the past, the entrenched “cooperative commission” setup relieved buyers of ever having to consider how their agent would get paid.

The biggest difference is that a seller’s offering on a multiple-listing service can’t include any details about how the buyer’s agent will be compensated.

The NAR’s settlement stipulates that before touring properties with an agent, buyers will have to sign an agreement that says, among other things, that they know they’re responsible for the agent getting paid if a deal gets made. While not unprecedented — some brokerages, like Baird & Warner, had been advising buyers’ agents to use these agreements for years — they’ll now become a requirement. Ellis, Pasquesi and others told Crain’s that while the change is epochal, it’s also no big deal. Because the NAR’s settlement decline in migration in the U.S.

After a slow start, private-equity firms gear up

Monroe Capital CEO theodore Koenig says the Fed’s reticence to cut interest rates during the past two years will prove beneficial

By Mark Weinraub

After a turbulent two years, activity in the private-equity sector is forecast to pick up in the rest of 2024 with a smoother economic outlook providing a glide path for dealmaking.

“Regulatory change, talent, higher interest rates, the outlook for a recession, all of those things seem to be somewhat settling down,” said Joe Schulte, assurance principal in private equity at BDO, an accounting, tax and business advisory firm.

Chicago-based BDO surveyed

484 U.S. private-equity fund managers, operating partners and chief financial officers at 208 PE-backed companies for a snapshot of the private-equity market.

Respondents from the Chicago private-equity community were more optimistic than the rest of the country, with 87% of those surveyed expecting deal valuations to be higher in six months, compared with 81% of all those surveyed. But a year ago, privateequity funds showed a similar optimism for deal activity and valuations that ultimately never

materialized, BDO said.

In the first quarter, 1,382 deals were made, down from 1,978 a year earlier, according to PitchBook. In the Great Lakes region, there were just 200 deals, a drop of 27% from the first quarter of 2023 and the slowest first quarter in 10 years.

Expected interest rate cuts in the coming months will likely spur a fresh wave of dealmaking, which has been bottled up by the high costs of borrowing. Private-equity funds were

Law firm expands downtown space after hiring spree

Barnes & thornburg unloaded part of its Wacker Drive office before the pandemic. Now it has taken it back.

By Danny Ecker

A law firm that offloaded about a quarter of its Chicago office space before the COVID-19 pandemic has added it back to make room for its growing attorney headcount.

Barnes & Thornburg has signed a lease extension for 96,000 square feet at its longtime office at 1 N. Wacker Drive, according to a statement from the firm. The new deal reclaims one floor of the building that the firm previously subleased to law firm BakerHostetler, meaning Barnes & Thornburg will maintain its leased footprint in the tower but add to the space it actually occupies. Barnes & Thornburg, which has been in the building since 2002, also extended the term of its lease by about six years, through 2036.

While the move doesn’t fill empty space in a vacancy-plagued downtown office market, it’s good news for landlords grappling with space cutbacks as many companies embrace the rise of remote work. Downsizing office tenants have eaten away at building owners’ bottom lines, driving up the downtown office vacancy rate to a record high and combining with high interest rates to fuel rampant foreclosures and other distress.

Barnes & Thornburg has run counter to the prevailing office leasing trends by reducing workspace before the public health crisis and expanding in its wake. The firm subleased the 45th floor at 1 N. Wacker to BakerHostetler in 2018, a move it made after

changing its office layout on the three floors below to accommodate just more than 90 local attorneys it had at the time, said Michael Carrillo, managing partner of the firm’s Chicago office.

Then the Indianapolis-based firm started growing faster than expected during the pandemic. It got by with more attorneys working remotely and a desk hoteling system that ensured the threefloor space would suffice, but with 135 attorneys today and more than 220 total employees including staff, “we’re busting at the seams,” Carrillo said. “Anytime we bring in a new person, the question is, ‘Where are we going to put them?’ “

The growth prompted Barnes & Thornburg last year to look at retaking the 45th floor ahead of an April 2024 end to BakerHostetler’s sublease term. With an eye on encouraging attorneys and staff to work regularly from the office, Carrillo said his firm is now building out the new floor with an event space, additional conferencing space and a new social lounge to compel people to gather.

“We don’t want to force them to do these things, but we feel like we have a great team and that when people spend time together, they want to spend more time together,” he said. “We want to (encourage) that in an organic way.”

Law firms have been a mixed bag since 2020 when it comes to resizing office space. Crowell & Moring, Winston & Strawn and Neal Gerber & Eisenberg are among those that have scaled down their workspace over the

past couple of years.

But some have bucked the trend by bulking up their Chicago offices, including New York-based White & Case, as well as Wilkie Farr & Gallagher, which opened its first Chicago office in the early days of the public health crisis. Win for landlord

Barnes & Thornburg’s recommitment to its Wacker Drive office notches an important win for its landlord — Newport Beach, Calif.-based real estate firm Irvine — after some leasing losses in recent years at the 1.4 millionsquare-foot tower. The law firm is the 50-story building’s sec-

ond-largest tenant.

Irvine took a hit before the pandemic when another one of its largest tenants, banking giant UBS, reduced its footprint in the building by close to 100,000 square feet. More recently, financial services firm Northwestern Mutual and quantitative trading firm Aquatic Capital Management signed on to move their local offices to the revamped building at 225 W. Randolph St. Northwestern Mutual recently listed for sublease its 50,342-square-foot space on two floors just above Barnes & Thornburg’s office, according to a marketing flyer. Irvine picked up its own new

tenant from another building last year, when it signed law firm Gordon Rees Scully Mansukhani to a 10-year lease for nearly 30,000 square feet. Despite losing the space it subleased, BakerHostetler also signed a direct lease on the 37th floor of 1 N. Wacker.

“Companies like Barnes & Thornburg understand the importance of being together to drive productivity, innovation, and develop the next generation of talent,” Irvine Company Office Properties President Roger DeWames said in a statement. “We are thrilled they are expanding at One North Wacker and Irvine Company will continue as their workplace partner.”

Still, Irvine is now facing one of its most important leasing hurdles from its largest tenant, professional services giant PricewaterhouseCoopers, which has an imminent option to terminate its lease for close to 280,000 square feet in the tower, according to sources familiar with the matter. PwC could recommit to the building with a new long-term lease, but it’s unclear whether it will maintain its existing footprint.

A PwC spokeswoman said the company is “still evaluating its options” ahead of its lease termination.

Brokers John Goodman, Eric Feinberg, Brandon Nasatir and Isabel Schwartz in the Chicago office of real estate services firm Savills negotiated the lease extension on behalf of Barnes & Thornburg. Irvine’s Greg Tait and Maggie Brophy represented the landlord.

Former Salesforce offices in River North could become apartments

A local developer is nearing a deal to buy the mostly empty former Salesforce office property in River North with a vision to convert it into apartments amid flagging demand for workspace.

Chicago Development Partners is in talks to purchase the majority of the office building at 111 W. Illinois St. for around $17 million, according to a source familiar with the matter. Most of the 156,263-square-foot portion of the 10-story building at Illinois Street and LaSalle Drive has been vacant since last year, when the San Francisco-based tech giant moved from 114,000 square feet at the property to the new Salesforce Tower at Wolf Point.

No deal has been completed, and negotiations could still fall apart at a difficult time for developers to land financing for office building purchases. But the sale price would be a staggering discount to the property’s pre-pandemic value.

German real estate firm GLL paid $75 million for the office portion of the building when it was fully leased to Salesforce and

co-working provider WeWork.

The property today is owned by Australian financial services firm Macquarie, which took control of the property through its 2018 acquisition of GLL.

Many office properties have seen their values plummet over the past few years after interest rate hikes and remote work pummeled demand. Macquarie’s building is a more severe case because it is only 23% leased and has just one paying office tenant in co-working company Industrious, which opened a location in space that WeWork previously shuttered.

Japanese steakhouse Roka Akor leases ground-floor retail space for its restaurant. The building also includes three contiguous floors operated and owned separately by the Erikson Institute, a nonprofit graduate school.

Converting the empty office space into apartments would line up with a push by city officials to repurpose vacant office space into residential uses. Chicago taxpayers are poised to chip in $151 million in subsidies to help developers on and near LaSalle

Street turn outmoded office space into apartments, part of a push to restore regular foot traffic downtown.

Other office-to-residential conversion projects have emerged in the central business district, including a recent proposal from a Connecticut-based firm to convert the mostly empty office building at 500 N. Michigan Ave. into 320 apartments.

It’s unclear how many apart-

ments Chicago Development Partners may be contemplating at 111 W. Illinois, and the firm’s principal, Howard Weiner, did not immediately respond to a request for comment.

But marketing materials for the property from brokerage Cushman & Wakefield suggested the space could accommodate 145 rental units, including studio, one-bedroom and two-bedroom apartments. Cushman enlisted

HKS Architects to put together a conceptual plan as they marketed the building for sale.

A Macquarie spokesman declined to comment.

After initially plummeting early in the public health crisis, demand for downtown apartments came on strong and fueled big spikes in rent. Landlords have continued to have negotiating leverage with tenants over the past couple of years, though rent growth has slowed as newly built apartment buildings have opened.

Chicago Development Partners is known for a series of shopping center and residential projects it has completed, primarily on the city’s North Side.

Skokie-based Alter Group developed the 111 W. Illinois building and sold off the lower three floors to the Erikson Institute before breaking ground in 2006. The majority of the building remained empty during the Great Recession until Salesforce signed its lease in 2012.

Cushman brokers Cody Hundertmark, Tom Sitz and Dan Deuter are marketing 111 W. Illinois St. for sale.

By Danny Ecker

1 N. Wacker Drive DANNY ECKER

111 W. Illinois St. | DANNY ECKER

New south suburban airport could bring over $1B in economic activity, study says

State and local officials still have misgivings with the proposal that’s been kicked around for decades

By Andrew Adams, Capitol News Illinois

A new airport in Chicago’s far south suburbs could bring thousands of jobs and a $1 billion economic impact, according to a new report, but state and local officials expressed concerns about the future of the long-delayed project.

A study from the Illinois Economic Policy Institute, a think tank with ties to organized labor, found that building a cargofocused airport in the south suburbs would create around 6,300 total jobs.

The plan for an airport in the south suburbs has been proposed and discussed in various forms for decades, with the earliest proposals coming in the 1960s. The state has commissioned several studies on the plan’s viability since the early 1990s.

While previous proposals included passenger travel, the current plan is for a cargo-only airport between Beecher and Peotone. The state currently owns 89 percent of the land needed to build such an airport.

In 2019, lawmakers allocated $162 million in capital funding to build a new interchange on Interstate 57 to, at least in part, allow more traffic to reach the area where the airport could be built. Construction is set to begin in the current fiscal year, which the report suggests will bring in an additional 1,500 jobs and boost economic activity by $314 million.

The airport would also generate approximately $24 million each year in economic activity and $2 million each year in state and local tax revenues, according to the report.

“Once it is built, the south suburban airport would have these long-lasting positive effects well after the construction phase,”

ILEPI economist Frank Manzo

said in an interview.

ILEPI Transportation Director Mary Tyler, a co-author of the report alongside Manzo, noted that the south suburban region has become a freight hub boosted by the rise in e-commerce over recent years.

“You’ve got I-57. You've got, in Joliet, the inland port, the navigable waterways,” she said. “It’s obvious because you can see Will County has already grown so much in terms of distribution centers and all the other freight growth that the industry has already viewed that as a key area.”

Increase in freight traffic

Tyler noted that freight traffic at O’Hare Airport in Chicago and in Rockford almost doubled between 2010 and 2022. Air freight traffic in Rockford alone grew by 273 percent over the same time, partially due to e-commerce giant Amazon building a facility there in 2016.

“The Chicago area is primed for air cargo,” Tyler said.

The Illinois General Assembly has recently taken several steps

to advance progress on the longdelayed south suburban airport.

In 2023, state legislators passed a law requiring the Illinois Department of Transportation to develop a process for requesting contractors and other developers to submit plans.

A spokesperson for IDOT said the department is working on a “request for qualifications,” an early step in the bidding process for large projects like this, but the department has not released it.

Earlier this year, lawmakers revisited the subject and passed a bill that allows IDOT to accept unsolicited bids for the project. That legislation awaits the governor’s signature before it can go into effect.

Rep. Will Davis, D-Homewood, who sponsored both bills, said in an interview he is frustrated with the project’s slow progress. He said that political leadership in the state has “failed to bring us all together” to push the development forward.

“When we talk about growth and development in the state of Illinois, it doesn’t get much bet-

ter than an airport,” Davis said.

Davis pointed to the Perot Field Fort Worth Alliance Airport in Fort Worth, Texas, as an example of the kind of development that he’d like to see in the south suburbs. That airport, which opened in the late 1980s, serves as a regional hub for FedEx and Amazon Air.

“Why would we not want a thriving development like that in Illinois?” he said.

Davis said that, in his district, which includes Harvey and Oak Forest, there is “excitement” about the project.

But some in Will County, where the project is slated to be built, remain opposed.

Sen. Rachel Ventura, D-Joliet, voted against both recent bills dealing with the airport and remains opposed to a cargo airport in the area.

In an interview, she said the boom in warehouses and freight traffic in recent years has contributed to increased flooding and higher maintenance costs for local roads.

“All of that burden goes to the

residents here,” Ventura said.   Ventura also said that Will County residents and local governments are “exasperated” and feel like they have not had a seat at the table during discussions of the airport.

Longtime critic

Judy Ogalla, who was first elected to the Will County Board in 2012 and elected to be the board’s chair in 2022, lives near Peotone. Ogalla is a longtime critic of the airport plan and has pushed the board to oppose the project.

She calls her home an “island,” one of the few parcels of land near her that hasn’t been purchased by the state as part of the development of the airport.

She said the airport is “unnecessary,” adding that the state owning so much land has impeded the abilities for communities like Peotone and Beecher to grow.

“In these communities, their growth has been stunted,” she said.

She also noted that because the state owns so much of the land, some local governments, like a nearby water conservation district, have lost out on tax revenue that otherwise would have supported their operations in the roughly 20 years since the state started purchasing land.

“I think there’s a better use for the land,” Ogalla said.

Ogalla instead advocates for using that land for agricultural research and education, something the board included in its most recent state legislative agenda.

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to hundreds of print and broadcast outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation, along with major contributions from the Illinois Broadcasters Foundation and Southern Illinois Editorial Association.

Pat Ryan’s firm goes shopping for builders insurance

By Mark Weinraub

Patrick Ryan’s wholesale brokerage insurance firm bought Florida’s US Assure, bolstering its offerings for builders as the company looks to take advantage of long-term trends needed to alleviate the country’s housing shortfall.

Financial terms of the deal were not disclosed. The acquisition is expected to close in the third quarter.

“US Assure is one of our industry’s oldest and highest quality programs, and has developed an outstanding business in a diffi-

cult class,” Ryan, founder, chairman and CEO of Ryan Specialty, said in a news release. “Specializing in builder’s risk, US Assure underwrites a diversified portfolio of residential, commercial, and remodeling projects in nonurban locations as well as large metropolitan areas.”

Acquisitions have been a key part of Ryan Specialty’s strategy since its founding by the retired Aon founder and CEO in 2010, using deals to build up the company to its place as the nation’s second-largest wholesale insurance brokerage, behind Char-

lotte, N.C.-based AmWins Group.

“This transaction meets all our M&A criteria — a strong cultural fit, strategic, and accretive — and aligns with our mission of providing innovative industryleading solutions for insurance brokers, agents, and carriers,” Ryan said in the news release.

Ryan Specialty’s most recent acquisition was the purchase of Castel Underwriting Agencies, which it closed in May.

US Assure, based in Jacksonville, Fla., focuses on the small- to middle-market segment of the builders risk insurance market. It

was founded in 1977 and has relationships with more than 20,000 active agents.

“The United States still faces a material shortfall in available housing units,” said Miles Wuller, president and CEO of Ryan Specialty Underwriting Managers.

“We see long term secular growth opportunities for residential construction, as well as renovation and small commercial projects, that will fuel an expanded need for builder’s risk insurance.”

Dowling Hales served as financial adviser to US Assure, and Ardea Partners served as finan-

cial adviser to Ryan Specialty on the deal.

In a separate announcement, Ryan Specialty also reported its second-quarter earnings, with revenue rising 18.8% to $695.44 million from the year-earlier period. Earnings per share came in at 38 cents, up from 27 cents in the second quarter of 2023. Ryan’s stock dropped 0.8% to $62 in after-hours trading after the deal was announced and the company’s quarterly earnings were released. The stock hit an all-time high of $62.68 earlier this month.

UNSPLASH

You should be safeguarding your innovations

Look around, and you’ll see intellectual property — or IP — everywhere.

The hardware and software of your computer are protected by patents. The logo on your device is a trademark. Software like your web browser is copyrighted. Even your cup of coffee from Starbucks is tied to several types of IP protection. Intellectual property surrounds us, yet we often overlook its presence.

IP rights create a protective wrapper around intangible assets, locking in value and making them tradeable. Without IP rights, investments in developing new products and processes are at risk, akin to cultivating a beautiful garden without a fence to keep out rabbits.

Here’s a practical guide to IP for entrepreneurs:

Understanding intellectual property

IP is an intangible asset protecting the creation of the intellect. Without IP protection, your innovations can be copied, eroding your competitive edge. There are four main types of IP protection: patents, trademarks, copy -

rights and trade secrets.

Patents: These protect technical inventions involving science or engineering. Patents, which typically last 20 years from the earliest filing date, are country-specific. They prevent others from copying your invention, but require renewal after their term ends.

Trademarks: Trademarks can be words, names, symbols, logos, phrases, designs, fragrances, colors, sounds or shapes. They hold brand value, allowing you to charge a premium for your product. An example is Usain Bolt’s trademarked “lightning bolt” victory move.

Copyrights: These protect creative works in tangible form, such as music, images, videos, computer codes and literature. Copyright lasts for the author’s life plus 70 years.

Trade secrets: Unlike other IP forms, trade secrets don’t require formal registration. Protection hinges on reasonable efforts to keep the information secret, such as confidentiality agreements

and internal protocols.

Common IP challenges for small businesses

Illinois has 1.2 million small businesses employing 2.5 million people, yet many neglect IP protection. A 2021 study found less than 9% of small and mediumsize enterprises owned any major IP rights, compared with nearly 60% for larger firms. The common reasons for this disparity are lack of awareness and perceived high costs.

Here’s the value of IP protection for small businesses:

Demonstrates innovation: A robust IP portfolio, particularly patents, signals innovation and uniqueness to investors.

Creates barriers to entry: Protecting IP deters competitors, making the business more attractive to investors.

Increases company valuation: IP assets enhance business value and future revenue potential.

Offers collateral for financing: IP can be used as collateral for loans, expanding financing options.

Shows business acumen: Protecting IP demonstrates stra -

tegic management and foresight.

Steps small businesses can take to protect IP

Small businesses can balance the cost of IP protection with other business expenses by taking a strategic and prioritized approach:

Categorize your business:

Determine if your business is service-oriented, product-based or a mix, and identify its unique strengths.

Identify key IP assets: Protect crucial assets like secret recipes, brand names or key innovations.

Start small: Begin with basic protections and expand as the business grows.

Lock down domain names early: Secure domain names for your brand and potential future products.

Utilize automatic protection: Works in tangible form, like music or literature, are automatically protected by copyright.

Seek professional advice selectively: Use IP attorneys for complex issues and manage simpler tasks internally.

Budget for IP protection: Treat IP protection as an essen-

Narayan Subramanian,

who holds a Ph.D. in mechanical engineering from Washington University in St. Louis, leads the Office of Front-End Innovation at the Polsky Center for Entrepreneurship & Innovation at the University of Chicago.

tial business investment, not an optional expense.

Failing to protect your IP risks losing your innovations to competitors, leading to substantial revenue losses. Protecting IP not only safeguards your creations, but also enhances business value and future revenue potential.

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

EDITORIAL

CTU contract negotiations reveal true power players

The juxtaposition was stark: On Aug. 14, the respected education industry newsletter Chalkbeat Chicago reported that Chicago Public Schools administrators estimate a chunk of the Chicago Teachers Union’s asks in current contract negotiations will create a $4 billion deficit for the district by the 2029-30 school year.

That same day, the Chicago Sun-Times and WBEZ reported Mayor Brandon Johnson’s administration is laying the groundwork to push out the school district’s CEO, Pedro Martinez.

As the Sun-Times/WBEZ story put it, Martinez’s departure, which is not yet a fait accompli, would come after he clashed with the mayor’s office over how to address a massive budget deficit and historical underfunding of the school system — a standoff that’s led to increasingly tense negotiations with the teachers union over a new, four-year contract, and which has made Martinez the focus of the union’s wrath. On Aug. 16, the CTU filed a formal request for a mediator to resolve the impasse.

The relationship between the mayor and his CPS chief appears to have reached a breaking point in early July, after the Board of Education refused to cover a pension payment the mayor had insisted the school district should pay and also rejected the mayor’s request that the board take out a loan to cover the payment as well as the cost of a new CTU contract.

PERSONAL VIEW

A month later, Team Johnson let it be known the mayor is giving serious thought to dismissing Martinez — that is, if he can get school board appointees to support the move.

Jettisoning a CPS chief executive in the middle of contract negotiations with the CTU would be an unprecedented move, at least since the mayor’s office took control of the school system in 1995. And if

the ouster happens — which remains to be seen — it will be further evidence of what many City Hall observers have already noted: that the mayor’s sympathies are more aligned with his former employer, the CTU, and its president, Stacy Davis Gates, than with Martinez and a board doing its fiduciary duty on behalf of the residents of Chicago.

One source close to CPS tells Chalkbeat

that word is City Hall has drafted a list of potential replacements for Martinez, but that source was not aware of the mayor’s team conducting interviews. And another source said that while the board has been ideologically sympathetic with the mayor’s office, it does not seem to have the appetite to fire Martinez right now.

Chicago taxpayers must hope the board doesn’t develop that appetite, because right now, those board members and the CEO are all that’s standing between the city and a teachers union contract that would push CPS into a $2.9 billion deficit starting next year, by Martinez’s reckoning. Concern about budget challenges has hovered over this year’s contract negotiations, as the district grapples with budget deficits as federal COVID relief dollars dry up.

Davis Gates credits previous union demands for delivering the post-pandemic student achievement gains the district touts. She plans to end the fight for funding with this contract, as Chalkbeat reports, “come hell or high water, and I don’t give a damn who pays.”

When asked about CPS officials appearing to publicly disagree with the mayor during a bargaining session that was open to the public — itself a weird arrangement taking place for the first time at the union’s insistence — Davis Gates called Martinez “insubordinate.” Given the look of things, one has to wonder whether she felt Martinez was insubordinate to Johnson — or to her.

Can University of Chicago learn from past mistakes?

In a paper first circulated for public discussion last October, I drew attention to the precarious financial condition of the University of Chicago. The extraordinary expansion in the size and range of its endeavors over the last 20 years had been achieved via a number of risky calculations. Simply put, the university borrowed enormous sums in order to move rapidly (and with excellence) into new fields; it greatly increased the size of its undergraduate population; it added few new classrooms, faculty offices or, indeed, research faculty; it vastly increased the percentage of classes taught by non-research faculty who teach more for less; and it began to use the so-called Common Application.

ment in applied science would produce programs that would “pay for themselves” via external funding, even as varied forms of partnerships, spinoffs, startups, etc. — what one collectively used to call “technology transfer” — would pay back the original investment and then some. And there would be no loss of excellence in our core function: undergraduate education.

In seeking rapidly to become something it had not previously been — an engineering school, a global university, a computing powerhouse, a school with “big science,” a tech incubator, what have you — the University of Chicago accumulated debt in proportion to its assets on a scope wildly greater than any of its peers.

And because a great deal of the assets and income of modern universities are restricted in how they can be used, the university’s need for cash is vastly greater than a simple gross measure of revenue and expenses would suggest. In its own public statements about the current crisis, the university has elected to focus on its structural deficit, which hovers around $240 million. By contrast, in 2022, the university used $355.8 million more cash in operating expenses than it took in; in 2023, that figure was an astounding $486.7 million.

The deficit is a problem. The liquidity crisis is driving policy.

The bet was that a certain kind of luster would attract more applications and enhance selectivity, the university would rise in the rankings and a virtuous circle would result. Lather, rinse, repeat. Not only would more students mean more tuition, a greater pool of alumni — a larger pool of happy alumni — would result in greater annual giving. Selective invest-

The simplest way to tell the story of its current woes is that none of its dreams of revenue came true at a speed, and on a scale, that could match the extraordinary cost of servicing its debt in the world of higher interest rates that it did not foresee. On my calculation, in 2022 the University of Chicago spent about 85% of net undergraduate tuition revenue servicing its debt.

No wonder, as Crain’s reported in May, Fitch lowered the university’s financial outlook to negative.

versities are enormous drivers of local and regional economies; the University of Chicago is one of the area’s largest private employers. Does it have a plan?

Wide-ranging cuts

To begin with, the university has announced that it will cut back on janitorial service: Trash will be removed from offices and floors in public spaces will be mopped weekly rather than daily. (Bathrooms and kitchens will continue to be serviced daily.) The Family Resource Cen-

In seeking rapidly to become something it had not previously been, the University of Chicago accumulated debt in proportion to its assets on a scope wildly greater than any of its peers.

On July 1, the university officially started a new academic and financial year. Will the university weather this storm with its excellence intact and its ambitions undimmed? What actions has the leadership taken to reduce expenses, and at what cost? Where is it spending? What plans does it have to raise revenue? Uni-

ter, which provided programming, information and resources to graduate student families and also postdocs, is being shuttered. The Institute on the Formation of Knowledge has been closed. Some aca-

Clifford Ando is a professor in the Classics and History departments at the University of Chicago.

Stacy Davis Gates, left, and Brandon Johnson | NEWSCOM

From Page 8

demic programs are being eliminated, even at the Laboratory Schools, which presumably did not contribute meaningfully to the crisis: German will no longer be taught there, and the sports program for middle students is being much reduced. Wages and salaries throughout the university are falling in real terms — but that’s been true for several years, although unionized employees have done far better than most. Maintenance is being deferred, with the result, among others, that historic buildings that were never made meaningfully ADA compliant will remain less accessible than one would like. (One result is that some departments — meaning, some majors — present significantly greater challenges to access than others, but this is a problem the university has long chosen to neglect.)

Finally, staff are being fired and an informal hiring freeze persists: In addition to the well-publicized layoffs at UChicago Medicine, I have heard from individuals about layoffs in the Humanities, Physical Sciences and Social Sciences divisions; at the Booth School of Business, UChicago Creative, the Logan Center for the Arts and the Smart Museum; and in the provost’s office.

Of course, we also continue to spend. The university’s leadership has generously held steady in nominal terms the budget of some units that did not contribute meaningfully to the deficit. Given that the value of the endowment and revenue from tuition have increased, this amounts both to a reduction in real terms and a decline in percentage contribution from the university’s unrestricted funds, but presumably this is required by the mess we’re in. It is required because the university must service its debt, and it is required because the university continues to invest.

Outside UChicago Medicine, by my calculation (in a situation in which virtually all information is closely guarded) at least 95% of announced new capital expenditures by the university will focus on molecular engineering, energy science and quantum computing. (These happen to be the areas where university President Paul Alivisatos conducts his research.) How this will pan out is not clear.

Shift in leaders’ vision

I have argued elsewhere that the broad asymmetries in the university’s allocation of resources — the pattern, over years, in its cuts and investment — reflect a profound shift in its leadership’s vision for the university in the world. To my mind, past neglect and present cuts are striking at core functions of the university as I would define them.

the problem. It proposes over the next few years to eliminate 25% of the structural deficit via technology transfer and 25% via increased revenue from posttertiary education (meaning MA programs, professional certification and the like). The problem with these plans is that these are exactly the same mechanisms that all other institutions seek to mobilize, including ourselves in the past. In this landscape of path-dependent, imitative competition, are there reasons to think Chicago will succeed where others have not?

Among their other functions, universities are in the information

business. They generate and retain huge amounts of data in the course of operations. Comparative and historical data on technology transfer and professional education suggests overwhelmingly that salvation does not lie that way. When I cited such information in a budget town hall, I was told afterward by someone in a leadership position that the University of Chicago had never made any meaningful money from patents that it owns or co-owns. And yet we imagine that “innovation and entrepreneurship” will suddenly reliably raise $60 million per year in the very near future?

The university has one more

MY BENESCH

card to play: more undergraduate tuition. That well has apparently not run dry. I was recently told that the university is scouring applications from this past season, seeking 200 further international and transfer students to matriculate this autumn whose applications suggest their families can pay full tuition. We want international and transfer students because we don’t want publicly to compromise our commitment to need-blind admissions. We also don’t want to screw up the data on first-year admissions that we report to U.S. News & World Report.

So, where do things stand?

UChicago’s ranking is down; we are compromising on our commitment to need-blind admissions; our debt is soaring; ratings agencies are losing confidence; we did not land a major federal grant despite the upfront investment of hundreds of millions of dollars. Our plan to raise new revenue is to do what everyone else is already doing and hope to do better than they have.

Is the university on a sustainable path to continued excellence, consistent with its values? The answer may boil down to how its leadership responds to another question: Can it learn from past mistakes?

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How do we get out of this mess?

In a sequence of budget town halls, the university has suggested that a combination of cuts and revenue enhancement will solve

Featured team (left to right)

ERIK CONNOLLY

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CHRISTOPHER J. LETKEWICZ

KATE WATSON MOSS

JAMES R. BEDELL

JAMES J. WALSH

JACOB H. MARSHALL

ERIC BROXTERMAN Vice President and General Counsel of Intellectual Property Vertiv

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VENTURE-CAPITAL FIRMS IN THE CHICAGO AREA CRAIN’S LIST

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ResearchbySophieRodgers(sophie.rodgers@crain.com).|Thislistisnotcomprehensive.Includesprivate-equityfirmswithofficesinCook,DuPage,Kane,Lake,McHenryandWillcountiesinIllinoisand LakeinIndiana. 1. HNWImeanshigh-net-worthindividual. 2. SaaSmeanssoftwareasaservice. 3. SynetroGroupisaprivateinvestmentfirmwithbothventure-capitalandprivate-equitybusinesses. Data includes all activities. 4. IrishAngels Angel Network and VitalizeVC share a common platform, Vitalize Venture Group, that encompasses

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PRIVATE-EQUITY FIRMS IN THE CHICAGO AREA

Wintrust wants to become ‘formidable competitor’ across west Michigan

By Mark Sanchez, Crain's Grand Rapids Business

Wintrust Financial Corp. brings Macatawa Bank added “horsepower” to fuel additional growth across West Michigan.

The Rosemont-based Wintrust plans to add new financing options to Macatawa Bank for firms transitioning to employee stock ownership plans (ESOPs) and for capital equipment leasing. Wintrust also plans to add peer-topeer Zelle services that will allow consumers and businesses to make digital payments to Macatawa’s suite of offerings.

“We’ll bring some technology and some tools that smaller banks just typically can’t afford,” Wintrust Financial President and CEO Tim Crane told Crain’s Grand Rapids Business after closing on the $510.3 million acquisition earlier this month.

“Our intention is to provide the Macatawa team the resources and the horsepower to not only compete in the market but to win in the market,” Crane said. “I think together we’ll be a formidable competitor to the regional banks.”

Under the terms of the deal that closed Aug. 1, Macatawa now oper-

ates as a separately chartered bank under the ownership of the Wintrust Financial (Nasdaq: WTFC), the parent corporation for 15 community banks in Illinois and Wisconsin that operate as wholly owned subsidiaries. Macatawa, which will keep its name in the deal, became Wintrust Financial’s 16th community bank subsidiary.

Wintrust Financial has “a lot of business” with clients in West Michigan but lacked a physical presence in the market, Crane said. Through the acquisition, Wintrust Financial got a 26-office branch network in Ottawa, Kent and Allegan counties.

The deal ushers Wintrust Financial into the West Michigan market with a solid footprint from which the bank intends to grow and expand, Crane said.

“At some point, the ability to continue to expand effectively requires a physical presence. Not only do we get that here with Macatawa’s 26 branches, but we get a terrific group of people that we think will help us continue to grow,” Crane said. “It was logical sense and a high-quality bank, which was important to us.”

In 2023, Macatawa Bank ranked third in the $5.8 billion Ottawa County market with a 20.17% market share and stood sixth in the

$22 billion deposit market in neighboring Kent County, where it had a 4.64% share.

In buying Macatawa in an allstock transaction, Wintrust Financial was drawn by attractive demographics in the West Michigan market and its growing population and diverse economy.

“We think West Michigan is a nice, continued expansion for us,” Crane said. “It’s a nice market (with) lots of very successful entrepreneurs running companies in West Michigan.”

Wintrust Financial wants to expand further into Michigan, led by the management team at Macatawa Bank “that would help us devise the rest of this plan,” Crane said.

That management team now includes Christopher Woelffer, who previously served as CEO at Wintrust Financial’s Schaumburg Bank & Trust in Illinois since January 2020. He is now the market head in Michigan. A commercial banker who helped to organize and lead St. Charles, Ill.-based STC Capital Bank in the mid 2000s, Woelffer will work alongside Macatawa Bank President and CEO Jon Swets “to build and execute an expansion plan,” Crane said.

Macatawa was what Crane called

the “right size” bank for Wintrust Financial to buy in the latest in a series of acquisitions over the years.

Further expansion in West Michigan could come through another transaction, buying bank branches, or developing new offices within the existing footprint or in new markets, he said.

Macatawa Bank “is on the verge of being able to expand very nicely,” Crane said.

“We would like to grow in West Michigan, and that probably means more locations, more communities, more bankers,” he said. “We think their brand has a lot of value.”

The largest commercial bank headquartered in the Chicago area, Wintrust Financial had nearly $57.8 billion in total assets and $48 billion in deposits, with $44.6 billion in loans. Last month, Wintrust Financial reported second quarter net income of $152.4 million, or $2.32 per diluted share.

Asked if another acquisition in Michigan was possible, Crane said: “You never say never, but we want to

get this one under our belt first.”

As Wintrust Financial works to integrate Macatawa Bank and targets a spring 2025 information technology systems integration, Crane said one of the leadership team’s key goals is to avoid or minimize any customer disruption.

As a separately chartered community bank that operates as a subsidiary of Wintrust, Macatawa retains local decision-making and a local board of directors that will guide the bank, although some back-office administrative functions such as compliance and I.T. will get centralized.

“What we want to do is to take the best of Macatawa and the best of the Grand Rapids community and we just want to build on it,” he said. “I don’t think a model that works in Chicago always works elsewhere, so we’ll be very sensitive to the important attributes in the market.

“They are a West Michigan bank.”

Mark Sanchez writes for Crain’s sister brand Crain’s Grand Rapids Business.

Bluhm makes $56 million bet on Mag Mile vertical mall

By Danny Ecker

Neil Bluhm's real estate firm has put up more than $56 million to keep control of its Mag Mile skyscraper at 900 N. Michigan Ave., betting on brighter days ahead for the famed shopping strip as it recovers from the COVID-19 pandemic.

In a transaction that shows the lost value of the 66-story vertical mall and office building over the past decade, a venture of the Chicago billionaire's JMB Realty has refinanced the property with a new $180 million loan, according to a report on the new debt from credit ratings agency KBRA. The loan was used to pay off the nearly $207 million balance of a recently matured mortgage that JMB borrowed against the property in 2014, the report said, forcing the property's ownership to chip in tens of millions of dollars in new equity to cover the difference.

The $56.4 million that JMB contributed was used to pay off the gap between the loans, fund $13.6 million in reserves and outstanding landlord obligations and add $5 million to reserves for new leasing efforts, among other costs outlined in the report.

The new debt puts 900 N. Michigan Ave. on stable financial footing, but at a hefty cost to JMB. Commercial property owners with maturing loans over the past couple of years have been stung by higher interest rates making it difficult to pay them off without committing lots of new capital. Many have faced foreclosure or tried to

surrender buildings to their lenders, figuring that a massive contribution of new equity into a property might mean putting good money after bad.

On the Mag Mile alone — where retail vacancy stands at a record high of 30% — the previous owner of Water Tower Place handed the keys to the property to its lender in 2022. That came after the owner of another vertical mall on the strip, the Shops at North Bridge, took a massive loss by handing its stake in the property to its joint venture partner.

But Bluhm — a casino and real estate tycoon who is one of the

million on renovations and various additions to the property, the report said. The debt is tied to the 831,350-square-foot retail and office portion of the tower and not a Four Seasons hotel and luxury condominiums that are also part of the property.

A portion of the loan is being packaged with other loans and sold off to commercial mortgagebacked securities investors, making much of the property's financial data publicly available. The KBRA report projected 900 N. Michigan will generate $21.2 million in net operating income this year.

richest people in Illinois — and his JMB partners are recommitting to 900 N. Michigan with the new equity rather than throwing in the towel.

They're doing so despite a substantial drop in the building's value since 2014. JMB at the time took out the recently matured loan, which had an initial balance of $250 million. KBRA's financial analysis of the property pegged its value today at just $226 million, projecting a first-year return, or capitalization rate on the property, of 8.61%.

The new 10-year loan includes a 6.85% interest rate, the report said,

likely far higher than the rate tied to JMB's previous loan.

JMB has good reason to wager on the future of the mixed-use tower, which was developed in the late 1980s. The property has outperformed its Mag Mile mall rivals in recent years, in part, because it has lured a mix of tenants that has helped it maintain local foot traffic despite more people shopping online. A food hall, Bubbles Academy preschool and Equinox Fitness location are among the occupants in a property that is almost 89% leased today, according to the KBRA report.

Since 2013, JMB has spent $57.3

The property's largest tenant is retailer Bloomingdale's, whose lease for more than 265,000 square feet is due to expire in 2028, according to the report. The building includes roughly 349,000 square feet of office space. Grosvenor Capital Management is the largest office tenant, with a lease for 72,738 square feet that expires in 2037, the report said.

A JMB spokesman did not respond to a request for comment. Bluhm co-founded JMB in the 1960s with childhood friends Judd Malkin and Robert Judelson. The group became one of the city's most prominent real estate firms in the 1980s and 1990s, but has since had a much lower profile. Bluhm is better known today for his ownership of gambling company Rush Street Gaming and private-equity firm Walton Street Capital.

CoStar News first reported the 900 N. Michigan refinancing.

900 N. Michigan Ave. COstAR gROuP

Family with Chicago roots that ‘stumbled upon’

Mackinac Island keeps buying more pieces of it

By Rachel Watson, Crain's Grand Rapids Business

A well-heeled family with Chicago roots — which recently bought Oberweis Dairy out of bankruptcy — is making waves in another regional industry.

The Hoffmann Family of Cos. since 2022 has been acquiring ferry services that run between the Michigan mainland and Mackinac Island — and recently has been picking up additional assets there, including a significant chunk of Mackinac-area real estate, media properties and more.

The Hoffmanns started their Michigan buying spree in 2022 with the acquisition of Shepler’s Ferry. In May, they acquired Mackinac Island-based Sip N’ Sail Cruises and its two boats. And in July the company finalized its acquisition of Mackinac Island Ferry Co. and a move to consolidate ownership of all of the passenger ferries traveling between the island and nearby Mackinaw City and St. Ignace. Following the three Michigan deals, the company’s marine division now has 46 vessels across seven states.

Greg Hoffmann, the secondgeneration co-CEO with his brother, Geoff Hoffmann, told Crain’s Grand Rapids Business the Shepler’s deal was purely “opportunistic-based,” a typical pattern for the family conglomerate.

However, the family’s business

pursuits led to a more cultural interest in Michigan.

“With Shepler’s Ferry, we found that opportunity and really fell in love with the business, and then subsequently fell in love with the area that they operate in,” Hoffmann said. “We really enjoy everything — the community, the natural beauty of Mackinac Island and its surrounding area — and we wanted to invest more. And that’s typically what we do when we buy something: We always look to scale.”

The scaling has already begun. In addition to about 20 vessels that the Hoffmanns added to its fleet across the three marine deals, the deals included more than 116 parcels of land in the Straits of Mackinac area, including docks in Mackinaw City, Mackinac Island and St. Ignace. They also acquired 51 buildings and 6,500 parking spaces as part of those deals.

The Hoffmann family is now the largest real estate holder in the Mackinac area and employs 500 people, according to the company.

Meanwhile, the family’s interests in Michigan have expanded beyond marine transportation. Three separate deals have involved: Hoffmann Media Group’s acquisition of St. Ignace, Mich.-based newspaper publisher Maurer Publishing in March 2023.

The acquisition of Besse Forest Products Group of Gladstone, Mich., a wood products manufacturer, in March.

The addition in July of Lowell, Mich.-based Envision Engineering, a metal forming manufacturer, to its manufacturing portfolio.

“Our ears are always to the floor, looking for any and all opportunities,” he said. “When the planets align, and they jump off the page as a great business, it could be in anything, and we’re going to take a serious look at it.”

Oberweis connection

When Oberweis Dairy of North Aurora entered Chapter 11 bankruptcy protection, the Hoffmanns swooped in, bidding $21.25 million for the company via Osprey Capital, the Hoffmanns' Winnetkabased family office. A judge approved the sale of the century-old business in June.

The sale included Oberweis Dairy's North Aurora production facility and the equipment inside; 32 leased ice cream shops along with eight company-owned shops; Oberweis' home deliver services in Illinois, Missouri, Indiana, Michigan and Wisconsin; sale and distribution of dairy products to groceries; franchising of ice cream stores and pizzerias, as well as Oberweis' trademarks and other intellectual property.

When the deal was announced, the Hoffmanns said they were committed to open more ice cream stores in the Chicago area and "other key markets," and to retain the Oberweis Dairy name and

recipes. Much of the management team was also expected to remain.

Greg and Geoff Hoffmann’s father, David Hoffmann, made his early fortune in the 1980s after founding the Chicago-based executive search firm now known as DHR Global, which is still the conglomerate’s cornerstone business.

From there, David Hoffmann branched out into private equity through Osprey Capital and into real estate via Hoffmann Commercial Real Estate, which today manages properties cumulatively valued at more than $1 billion, according to the firm.

Under the second generation, the Hoffmann Family of Cos., headquartered in Naples, Fla., now owns about 200 businesses based in 13 U.S. states, Canada and the UK. Together, the companies have 11,000 employees with operations across more than 250 locations in 30 countries, according to the company website.

The family has thus far acquired businesses in eight sectors: agriculture, aviation and transportation, financial and professional services, hospitality and entertainment, manufacturing, marine, media and marketing, and real estate.

Northern Michigan isn’t the first time they’ve doubled down on a specific location. Three years ago, the family announced plans to invest $150 million in the historic wine region around Augusta, Mo., about 50 miles west of St. Louis.

Their portfolio in that area includes six vineyards and wineries, a golf club, a pair of plant nurseries and other hospitality and entertainment properties.

‘Unique’ investing approach

Jeff Helminski, co-founder and managing partner of Grand Rapids-based private equity firm Auxo Investment Partners, said the Hoffmanns’ investment approach in Northern Michigan appears “rather unique” compared to other wealthy families.

“If it’s your home geography, we often see families investing in a lot of different things in the place they’re from and the place they know,” he said. “(When) they’re making an investment in something that’s not in their hometown, so to speak, it’s often about the business or about the industry that’s attractive to them, and they tend not to necessarily be local businesses.”

Helminski added that it’s also unusual that the Hoffmanns picked Michigan businesses — local ferry services and two small newspapers — that serve very specific geographies and are unlikely to scale.

“That’s a unique dynamic, not one that I’ve seen a lot of other families replicate,” he said. “I’d say it’s maybe a little more typical to see more of a theme across the things that (families) feel like they have expertise in.”

Take a look inside this Naperville family’s at-home resort, priced at almost $10 million

Owners Rocco and Diana Salviola undertook extensive renovations at the 20,000-square-foot mansion before deciding to decamp for a 20-acre horse farm elsewhere in Naperville I

By Dennis Rodkin

When Rocco and Diana Salviola bought a substantial Naperville mansion four years ago, “we expected to be there a very long time,” says Rocco Salviola, a health care entrepreneur, “so we did everything to it.”

The list of changes they made includes lightening an interior that was full of dark wood, finishing about 3,000 square feet of unused basement space for a home gym and other uses, and creating a separate two-story living space for an adult daughter out of excess garage space.

That’s all inside. Outside, they created an at-home recreation complex, complete with pool, spas, outdoor kitchen and several other amenities, filling much of what had been a flat expanse of lawn. The result is an attraction-packed backyard, sort of an at-home resort.

Not too long after all the work was done, the Salviolas had a new plan. Elsewhere in Naperville, they’ve bought a 20-acre former horse farm where they plan to build four homes for themselves and adult daughters.

“We have this opportunity to have my daughters live with us again,” Rocco Salviola says.

The Salviolas have put their present home, a house of over 20,000 square feet on almost 3 acres on Perkins Court, up for sale at $9.85 million. Represented by Katherine Karvelas of @properties Christie’s International Real Estate, it’s on an agents-only site, not seen publicly on the multiple listing service.

The mansion, a modern take on Tudor with a stone and stucco facade capped by multiple peaks, was built in 2008 about 5 miles south of Naperville’s vibrant downtown.

When the Salviolas bought it in June 2020 for $4.75 million, “it was dark and heavy inside,” Rocco Salviola says.

The purchase was the latest of several multimillion-dollar home transactions they’d been through, including the sale of one Burr Ridge home for $4.9 million and another for $8.3 million. The buyer of the latter was Carmela Wallace, the mother of late rapper Juice WRLD.

The original owners of the house “had a lot of grass out back,” Salviola says, but his family wanted a more active space.

Working with Burdi Custom Builders and Rapid Landscaping, they added several amenities, including not only the pool and others mentioned above but a putting green, soccer field, basketball half-court and a child’s playground.

“It was a major undertaking” that dramatically enhanced the draw of the outdoors, Salviola says.

The expansive outdoor space is a significant difference between this property and the Naperville home that sold for a record-setting $8 million in November. That house, on Van Buren Street near the center of town, is on a relatively tight urban site.

In the living room and others, a Salviola daughter, Katherine, went about lightening the color palette and finishes of the spaces, Rocco Salviola says.

Some of what’s in the living room is original, including the two-story stone fireplace mantel flanked by bookcases and high windows. The room has a second wall of windows.

The dining room got a similar treatment. The home “feels more modern now,” he says. The old

look was “more conservative,” he says, relying on drapes and dark colors.

Unseen changes

Many of the changes the Salviolas made are unseen. They added smart-home automation for lights, alarms and television, and upgraded the water filtration system.

The kitchen’s stately look is largely unchanged from the original, though all the appliances and lighting have been replaced. What looks like a mirrored wall is actually a door that opens to a large walk-in pantry.

A casual space off the kitchen includes a breakfast area and a fireplace. The Perkins Court house has been home to eight people in all, Salviola says, some

of whom will have their own separate houses on the new 20-acre family compound.

A physician, Rocco Salviola started a company, RSA Medical Services, that assessed patients’ risks for insurers. He sold it to Xerox Healthcare in 2015 for an undisclosed sum and since then has launched at least two more health care firms, including Naperville-based Harmony Healthcare.

An enclosed porch with a fireplace looks out onto the landscaped setting.

Beyond this private semi-resort, Naperville has plenty of pretty outdoor places, including the 1,800-acre Springbrook Prairie Forest Preserve and the city’s beloved Centennial Beach, made from an old stone quarry.

Also in the basement are a bar, a movie theater, game rooms and other spaces, all refreshed in the light, contemporary style that runs through the house.

As built, the house had garage space for nine cars, two of them in a separate structure. The Salviolas knocked out one to make it the first floor of a two-story, 1,800-squarefoot coach house where an adult daughter now lives.

There was no net loss of garage space. A small addition includes one space, so the total is still nine.   With the built-out basement and the coach house, the living space now totals more than 20,000 square feet.

“We did a ton of work here,” Rocco says. “We didn’t plan to leave.”

PEOPLE ON THE MOVE

ARCHITECTURE / DESIGN

FGM Architects, Oak Brook

Raymond Lee, AIA, LEED AP, CPTED, has been promoted to Executive Vice President at FGM Architects, an employee-owned firm offering architecture, planning and interior design services in 8 offices across 5 states. With 40 years of experience, Lee is a national expert in the planning, programming and design of public safety (law enforcement, emergency communications and fire), municipal and recreation facilities. He received his Bachelor of Architecture from the University of Illinois Chicago.

BANKING

First Bank Chicago, Northbrook

First Bank Chicago, one of the five largest privately held banks in Chicago, is pleased to announce Angela Santello has been promoted to Commercial Banking Officer. In this new role, Angela is responsible for portfolio management and client services for deposit relationships within the Middle Market and Public Funds divisions. Angela joined the Bank in 2011.

ARCHITECTURE / DESIGN

FGM Architects, Oak Brook

John Peters has been promoted to Executive Vice President at FGM Architects (FGMA), an employee-owned firm offering architecture, planning and interior design services nationally in 8 offices across 5 states. Peters joined FGMA in 2019 to lead firmwide business development and client relations strategy. He is a certified Counselor Salesperson facilitator, holds his MBA from Elon University and completed the Executive Education Program at Northwestern University’s Kellogg School of Management.

ARCHITECTURE / DESIGN

FGM Architects, Oak Brook

FGM Architects (FGMA)

welcomes Tony Lo Bello to lead business development for its Higher Education practice and contribute to firmwide strategic growth initiatives. With 30 years of experience as a business developer, planner, programmer, project manager and principal in charge, Lo Bello is an industry thought leader. He is the North Central Regional Chair of the Society of College and University Planners and the Corporate Trustee/Advancement Committee Chair for Associated Colleges of Illinois.

FINANCIAL SERVICES

CAFCU, Elgin

CAFCU’s board of directors is pleased to announce that Stefanie Rupert will lead the Elgin-headquartered credit union. Rupert brings more than three decades of financial industry experience to the role, most recently serving as interim president and CEO of Town and Country Credit Union. She holds a bachelor’s in business administration from Michigan State University and a master’s from Aquinas College. She is also a Certified Credit Union Executive (CCUE).

FINANCIAL SERVICES

LAW FIRM

Croke Fairchild Duarte & Beres LLC, Chicago

Croke Fairchild Duarte & Beres is pleased to welcome John Sabl to the firm as senior counsel. Joining CFDB’s Corporate M&A practice group, Sabl is a broadbased and businessoriented transactional attorney with a wide range of experience as a private firm attorney and general counsel. Through his work as a general counsel and outside counsel, he has handled a variety of litigation supervision, crisis and risk management, employment and other issues. The firm also welcomes Sean Connolly as an associate in the Litigation & Investigations practice group. Sean focuses his practice on complex commercial litigation. Prior to joining CFDB, he served as a law clerk to the Honorable Celia Gamrath in the Cook County Circuit Court Chancery Division.

Connolly

NON-PROFIT

CAN TV, Chicago

Monique B. Jones and Tiffany Hamel Johnson have been elected to the CAN TV Board of Directors. Jones is the President & CEO of Forefront, where she connects philanthropy, operating nonprofits and their allies to improve the lives of all people in Illinois. She received the 2020 Nonprofit Person of the Year award from the Evanston Chamber of Commerce and the 2018 NAACP North Shore Chapter Community Service Award. Johnson is the visionary President & CEO of Chicago United, where she advances diversity, equity and inclusion within Chicago’s business community and works to make Chicago the most inclusive business ecosystem in the nation. In 2023, CAN TV programming was watched by more than 34.4 million viewers.

NON-PROFIT

UCAN, Chicago

Wintrust Financial Corporation, Rosemont

Wintrust Financial Corp., a financial services holding company based in Rosemont, Illinois, with more than 170 locations across Illinois, Indiana, Wisconsin, and Florida is pleased to announce two promotions. Chad Steinke was promoted to Head of Retail Banking at Wintrust Financial Corporation. Chad joined Wintrust in 2010. Gina Fridberg was promoted to SVP, Group Leader, Commercial Real Estate at Village Bank & Trust, N.A. Gina joined Wintrust in 2018.

INFO / DATA TECHNOLOGY

Circana, Chicago

Circana, a leading advisor on the complexity of consumer behavior, announced that Holly Knightly, formerly executive vice president of Global Finance, Performance, and Transformation at Circana, has been promoted to chief financial officer (CFO). Already a member of Circana’s Executive Leadership Team, Knightly leads the global finance and strategy organization, including planning, strategy, accounting, treasury, tax, reporting, and investor relations.

NON-PROFIT

CAN TV, Chicago

LAW FIRM

Riley Safer Holmes & Cancila LLP, Chicago

Riley Safer Holmes & Cancila is pleased to welcome Shaun Zhang and Olivia Luk Bedi as partners in the firm’s Chicago office. An experienced litigator and former in-house counsel for a leading technology company, Shaun focuses his practice on intellectual property and complex commercial litigation, with a particular concentration on cases that involve deep scientific and technical subject matter. Bringing a depth of experience as a litigator and former patent examiner for the U.S. Patent and Trademark Office, Olivia also focuses her practice on intellectual property litigation and advises clients on business and legal issues related to their trade secrets, patents, trademarks, and copyrights.

The UCAN Governing Board has elected Philip Brides, senior managing director and head of equity portfolio at Allstate Investment LLC, and Ricardo H. Jenkins global chief financial officer at Avison Young, to the Board. Allstate Investments operates as a privately held asset management firm, assuming the role of investment manager and consultant for esteemed clients. Avison Young creates economic, social and environmental value as a global real estate advisor. The UCAN Governing Board oversees the agency’s operations and services and is financially responsible for the 155-year-old youth services agency as its steward. Headquartered in North Lawndale, UCAN is one of Chicago’s oldest, yet most innovative youth services organizations.

PARTNERSHIPS

Zhang Bedi

Clarence Booth and Matthew Johanson have been elected to the CAN TV Board of Directors. Booth is a mission-driven leader at West Monroe Partners. He is a manager in the Customer Solutions practice and founded the firm’s Small Minority-Owned Business Initiative.

Johanson, Co-Founder & Senior Partner, Just Act Partners, specializes in leveraging business development for the advancement of equitable economic opportunity. He spent more than 25 years at Discover Financial Services as the Chief ESG Officer and SVP of Social Impact, and is a Leadership Greater Chicago 2022 Daniel Burnham Fellow. CAN TV gives every Chicagoan a voice on cable television by providing training, facilities, equipment, and airtime for residents and nonprofits.

NELSON Worldwide nelsonworldwide.com

NELSON Worldwide, an awardwinning architecture design and strategy firm, has combined operations with Cornerstone Architects, based in Itasca, IL. Cornerstone specializes in industrial architecture, including distribution, manufacturing, storage, cleanrooms, and cold storage, and offers land planning, interior design, and LEED design services in various markets. The new entity will initially be called Cornerstone Architects, a NELSON Company, and will aid in the firm’s expansion goals.

Jones Johnson

Johanson

Steinke Fridberg

Los Angeles investor pays $69M for apartments in Bolingbrook the

Chicago suburbs are continuing to draw interest from investors

By Rachel Herzog

A Los Angeles investment firm paid about $69.3 million for an apartment complex in southwest suburban Bolingbrook, expanding its Chicago-area footprint as investors look to capitalize on the region’s rent growth.

JRK Property Holdings acquired Brook on Janes, a 288-unit apartment property at 401 Janes Ave. from a venture of Charlotte, N.C.based Quarterra, according to an announcement from the buyer and Will County property records.

The deal expands JRK’s footprint in suburban Chicago, which also includes the 838-unit Residences at Arlington Heights and the 504-unit Residences at Lakeside in Lombard. It also comes as activity is picking up in the apartment-building investment sector after elevated interest rates slowed deals and dampened sale prices. Nationally, transaction volume was up 20% year over year in the second quarter of 2024, though prices were down 7.5%, according to data from research firm MSCI Real Assets.

“We’re finally seeing seller capitulation on pricing expectations, which has allowed us to significantly ramp up our acquisition activity,” JRK President Daniel Lippman said in a statement. “We remain confident in the strong fundamentals and long-term outlook of the multifamily sector and plan to invest $1.5 to $2 billion over the next 12-18 months to capitalize on similar opportunities.”

Strong rent growth

Suburban Chicago has also drawn attention from investors as the market sees strong rent growth relative to other metro areas in the country, with minimal new supply coming online. Median net rent was up 1.5% year over year in the Will County submarket in the first quarter of 2024, rising to $1.99 per square foot, according to appraisal and consulting firm Integra Realty Resources.

Quarterra built the three-story complex in 2017 and financed the development with a $29.7 million construction loan, according to MSCI data.

Quarterra is the multifamily in-

vestment and development arm of national homebuilder Lennar, which has been reported to be exploring selling its apartment holdings. Recently, Quarterra sold 18 properties totaling more than 5,200 units in coastal and Sun Belt markets to global investment firm KKR, CoStar News reported. The firm also sold the 270-unit Emerson apartments in Oak Park for more than $60 million in July. Lennar and Quarterra did not respond to requests for comment on the Bolingbrook deal. Brook on Janes is about 97% occupied, with an average effective rent of $2,126 per month, or $2.40 per square foot, according to real estate information company CoStar Group.

Jones Lang LaSalle brokers Kevin Girard, Roberto Casas and Matt Lawton represented Quarterra in the transaction, according to JRK’s announcement. JLL’s lending arm also handled financing for JRK, with the brokerage’s Annie Rice and Brandon Smith arranging a fixed-rate $48.5 million Freddie Mac loan that matures in September 2034.

By Crain's Staff

The owners of popular Chicago steakhouse Maple & Ash first teased a move to Miami in 2021, but those plans emerged way back when David Pisor and Etta were still part of the collective. They planned to open in November 2022, but by that point, Pisor and partner Jim Lasky's relationship had deteriorated and the two were battling out ownership in court.

The Miami expansion appeared to be paused.

Two years later, Lasky — who, along with chef-partner Danny Grant, emerged as Maple & Ash's co-owner — is getting serious in

the way he talks about making it to Miami. The two owners joined an episode of "The Dining Table" earlier this month to talk about those plans, and an early 2025 Florida debut seems all but official.

"The whole project — it's a big one — it's about 22,000 square feet," Lasky said of the new space, which is located at the Miami Worldcenter, a new mixed-use development just north of the city's downtown. "It's literally across the street from the Miami Heat arena."

The duo plan to offer three separate experiences — or "three basic revenue centers," as Lasky put it — at the Miami spot. The first floor

will feature 8Bar and the second will house the new Maple & Ash, both similar to the Chicago versions. The third floor will be a lounge and event space. Opening in Miami is not the first Maple & Ash venture outside of Illinois. A second restaurant in Scottsdale, Ariz., opened just before the pandemic.

Etta was originally part of the Miami plans when the owners of Maple & Ash first flirted with the idea. However, Pisor took full control of the sister brand in January 2023 and it ultimately landed in bankruptcy. A Texas fintech entrepreneur bought Etta in April and is pursuing its revival.

Brook on Janes JRK PROPERtY HOLDINGS

HOMEBUYING

gave them a five-month runway, “we are feeling prepared, not paralyzed,” said Kamini Lane, president and CEO of Coldwell Banker Realty. Most brokerages report their agents have trained extensively on how to talk their clients — and themselves — through the change. Lane and other brokerage executives said agents have been training on the new model for weeks, in Zoom calls, town halls, conference calls and other media.

There are also explanatory blogs and social media posts, but “we really feel like the changes are best communicated personally, from agent to client,” said Amy Corr, chief brokerage officer at @properties Christie’s International Real Estate.

A buyer broker “will have the same kind of conversation with buyers that we’ve always had with sellers,” Pasquesi said. Sellers have long understood that broker compensation comes out of their proceeds on the sale.

Signing a broker’s agreement might feel intimidating, particularly to first-time buyers who are eager to look at all the exciting possibilities they might buy, but it’s a relatively brief, eminently practical step. “Upfront conversations between agents and their clients,

SUN BELT

From Page 3

from cold places to hot places in recent decades.

It is, they write, a reversal in the pattern of the 20th century, which “strongly favored hotter climates” after air conditioning made those places more bearable. Their data indicate that in-migration to hot places has slowed to about the pace of the days before air conditioning.

“In the not-so-distant past,” the economists write, “Americans generally moved toward warmer climates.” But their data show that, particularly among two groups, highly educated people and people in their 60s, moving to warmer climates has dramatically declined in the 21st century.

Both groups are more likely than the general population to have the leeway to choose what locations they move to, the authors write.

PRIVATE EQUITY

From Page 3

sitting on a record $2.62 trillion of total uncommitted capital as of July 10, according to S&P Global Market Intelligence and Preqin data. The funds added $49.44 billion of so-called dry powder to their reserves in the first half of the year as they waited for market conditions to improve.

Chicago’s GTCR,  which is holding onto $15.423 billion, made S&P Global Market Intelligence’s and Preqin’s list of the top 25 firms with the most amount of unused capital.

The first interest rate cut, which market watchers have forecast will

where expectations are set about how a transaction might unfold, are really important,” Corr said.

For example, some buyers might have the cash on hand to pay their broker out of their own pocket, just as they do the down payment. “If they don’t,” Ellis said, when writing up an offer on a property, “we’ll have to structure the buyer’s offer where they get from the seller a closing credit they can use to pay their agent.”

Move-up buyers are the most likely to have cash on hand to pay their broker outright. As they often put the built-up equity from their previous address into the new one, bringing down the mortgage amount they’ll need, they might opt to pay their broker directly out of the equity, rather than have it boomerang out through the seller and back to the buying agent as it has in the past.

This, too, would be something the buyer broker would spell out in an offer on a house: The price being offered the seller is X dollars less than it would otherwise be, because it includes no commission to the buyer broker.

“These details are all going to have to be explained in the offer now,” Ellis said.

Earlier this month, Gov. J.B. Pritzker signed into law SB 3740, adjusting the state’s real estate licensing rules to include buyer

“Given climate change projections for the coming decades of extreme heat in the hottest U.S. counties and decreasing extreme cold in the coldest counties,” the economists write, “our findings suggest the ‘pivoting’ in the U.S. climate-migration is likely to continue.”

The economists’ analysis is based on county-level data on average daily temperatures and county-level migration figures over a half-century ending in 2020. A spokesperson for the Federal Reserve of San Francisco said the authors were not available for comment on the paper.

Population drought

There’s no sign hot places are suffering a population drought, at least not yet. Texas and Florida were the fastest-growing states in the nation between 2000 and 2022, the U.S. Census reported in March 2023. Most of the growth in Florida was from people moving in, while in Texas, 29% was U.S. move-ins and

come as soon as September, will likely be viewed as a starting gun for firms waiting to join the race.

“I think once we start seeing interest rates come down, I think that a lot of firms will take that as a trend,” said Theodore Koenig, chairman and chief executive officer at Chicago’s Monroe Capital, which specializes in putting together financing deals for companies with annual revenue between $10 million and $1 billion.

One sign of improvement so far:

Between Jan. 1 and May 31, the total value of announced privateequity deals was $189.05 billion, a 9% increase over the same fivemonth period in 2023, according to the S&P Global report.

broker agreements. It allows for either an exclusive or a nonexclusive agreement.

A non-exclusive agreement would be more open-ended, allowing the future buyer to gad around with multiple brokers in the house hunt. But both Corr and Ellis said their brokerages will offer only exclusive buyer broker agreements.

“We don’t want an agent wasting their time and energy working with” a client who then moves on “to someone else,” Ellis said. “It’s not fair to the agent.”

Pasquesi said Berkshire is leav-

the rest was from the birth rate and migration from outside the U.S.

But as climate change advances and more people are “exposed to the impact of hotter and more frequent extreme heat days,” the Fed economists wrote, the 20th century’s “migration pattern from the Snow Belt to the Sun Belt is likely to ultimately be reversed.”

Climate change has delivered higher temperatures both in Chicago and worldwide.

Winter in Illinois has gotten warmer, on average, by a little more than half a degree in each decade since 1980, The Washington Post’s Climate Lab reported in March. “In 86% of the contiguous United States, winters are trending warmer,” the Post’s Harry Stevens wrote.

In the past year, the average person experienced 26 more days of abnormally high temperatures than they would have without climate change, The New York Times reported in May.

Every month from June 2023 to June 2024 was the hottest on record

The U.S. Federal Reserve’s reticence to cut interest rates during the past two years will prove beneficial in the long run, Koenig said in an interview with Crain’s, even as it stymied dealmaking.

“They did not want to reduce interest rates too early,” he said. “They have been slow to do it, which I think I give them credit for. You know, to do it too early would have maybe overheated things and kept inflation on the higher level.”

Focused on technology

Investments in popular sectors have been stronger from Chicago firms than the private-equity market as a whole. According to BDO’s survey, 65% of the Chicago

now countermanded commissionsharing principle born in Chicago in the 1930s, is not forbidden under the NAR’s settlement, it’s just not to be discussed on the MLS.

Some brokerages plan to keep it alive by posting sellers’ offers of buyer compensation on their websites. Coldwell Banker is one of them, according to Lane.

“We believe voluntary offers of buyer broker compensation help sellers secure the best offer for their home and the highest certainty in their transaction,” Lane said.

Others, including Baird & Warner and @properties Christie’s International Real Estate, are closing the door on the practice that, rightly or wrongly, led to scrutiny from the U.S. Department of Justice as well as a spate of lawsuits.

ing it up to the agent, “but I predict most agents will enter exclusive agreements. It’s consistent with how we’ve done listings,” which are generally exclusive to one agent or agent team.

Ellis noted that an exclusive agreement isn’t necessarily a long-term commitment to work with one agent. It can be canceled at any time, she said, and some agents may offer them on a limited-time basis. “Let’s work together for a few weeks and see if we both like it,” Ellis said. Cooperative compensation, the

for its month, the European Union’s Copernicus Climate Change Service reported in July.

Reduced migration to hotweather locales would not only boost the economic well-being of cold-weather locales but, according to the authors, “mitigate the effects of climate change, as a smaller fraction of the U.S. population would be directly exposed to the impact” of a warming climate.

Climate-resilient spot

As a capital city of the Great Lakes region, Chicago stands in a climate-resilient spot next to a vast resource, 90% of the nation’s fresh surface water. On Aug. 5, an Arizona expert on water theorized in The New York Times that the time may come when dry western states clamor for access to Great Lakes water to meet agricultural needs.

But in 2008, President George W. Bush signed into law the Great Lakes Compact, which prohibits diverting the lakes’ water to places outside their basin.

private-equity market had funds focused on technology, well above the 50% in the overall survey. Health care-focused funds also outpaced the national average, at 45% compared with 36%. Those industries, which produce a more reliable stream of repeating revenue, were seen as more attractive investments than other industries because uncertainty about the economy remains high even with expectations for a friendlier interest rate environment.

Thoma Bravo, the largest Chicago-based private-equity firm by assets under management, bought Everbridge in a $1.8 billion allcash deal that closed in July. Everbridge is a provider of software for

“We are leaning into the changes per the NAR settlement,” Corr said, “and what we believe the DOJ is ultimately looking for in how brokerages conduct business.” In documents filed in some lawsuits, the DOJ has strongly signaled that it wants to see the industry move toward buyers paying their own brokers.

“We also believe that buyer broker compensation will become a normal part of the contract negotiations between buyer and seller,” Corr said.

That and other parts of the new real estate landscape “will evolve in the next few years,” Pasquesi said.

With fewer harsh winter days and a boundless supply of increasingly precious water, Chicago could stand to benefit from the slowdown or reversal of migration to warmer parts of the country.

It would be a welcome change to years of population loss, which at least slowed last year. That is, if climate considerations grab more people’s attention than high taxes and other factors that have contributed to the loss of population.

The Fed authors note a few factors that could interfere with their projection of a reversed migration pattern. They include government subsidies in the insurance market in the wake of insurers’ reluctance to provide policies in places prone to wildfires and other heat disasters, plus increased investment in climate resiliency in those areas.

A third, they write, is the “inertia” caused by “the uncertainty and imperfect information” about how climate change is affecting different places, or will in the foreseeable future.

national public warning and critical event management.

“Maybe more of the asset flows are going into those sectors because they tend to be resistant to the economic changes,” BDO’s Schulte said.

Although traditional mergers and acquisitions have been slow, the private credit market has remained active as companies have sought alternative sources of financing to keep businesses operating as they wait for relief on interest rates.

Monroe Capital, which specializes in private financing, is on pace for its typical 100 deals this year. “We are probably the most active in the business,” Koenig said.

Initiatives, a not-for-profit real estate developer that works in nearby Pullman. “They’ve stayed while others have left.”

Chicago is rarely mentioned as an automaking hub, and the Ford plant often is overlooked, even by those who live here, because it’s tucked along the Calumet River in the South Deering neighborhood, just a few miles from the Indiana state line. Political leaders, however, are acutely aware of the high-paying, bluecollar jobs the plant provides. Chicago Mayor Brandon Johnson attended a 100th anniversary open house on Aug. 4 at the plant for workers and their families.

between 1924 and now, when things got slow,” says Ted Stalnos, CEO of the Calumet Area Industrial Commission, an economic development and training organization on the Southeast Side that counts the Ford plant as a member.

“I thank God it wasn’t affected like so many others in the automotive industry. The question is, what’s going to be its future?”

The question has gnawed at a succession of Chicago mayors and Illinois governors, who have worked with Ford over decades, scraping together a variety of tax breaks and incentives to keep the plant going.

Mayor Richard M. Daley and Gov. George Ryan came up with more than $100 million in incentives in 2002 to enable a supplier park near the factory. In 2009, with automak-

“Just because you have an EV product doesn’t mean your plant is guaranteed a certain future or the ramp-up to that future isn’t going to be kind of rocky.”

Kristen Dziczek, a veteran auto industry researcher and policy adviser to the Federal Reserve Bank of Chicago

“I grew up three blocks away,” says Peter Chico, the Chicago City Council member who represents the 10th Ward, which includes the plant. “I know dozens and dozens of families, people whose parents worked here and they came here. It contributes to the vibrancy not only of this ward but the entire city of Chicago.”

Shifting priorities

The auto industry is notoriously cyclical. Fortunes can change fast, and longevity is no protection, as workers and residents of Janesville, Wis., found out during the early days of the Great Recession, when General Motors closed its oldest factory there.

Torrence Avenue “had its runs

WINE

From Page 1

half. The half-liter is three and a half glasses for $30. It feels like a value to consumers, who are used to paying $15 for a single glass. The flexibility also allows the restaurant to save money.

“We’re able to offer things that are really spontaneous,” Psaltis said, standing in front of the restaurant’s wine rack, apron on. “That helps keep the price down.”

Mano a Mano — where the average check is $56 — is among a slew of Chicago neighborhood restaurants that are working to keep prices down for consumers by targeting their wine lists. While inflation has slowed since the pandemic days of supply chain issues and labor shortages, it has also compounded. The cost of eating out is up 30% since 2019, according to an analysis of consumer price index data. Diners are ready for a break, and restaurant owners see their wine costs as a place to give it to them.

Experts say it’s a smart idea. Most restaurants that increased drink menu prices in the past two years did so on wine, said Donna Hood Crecca, principal at market

them: ‘What do you need?’ ”

The developer of Ford’s supplier park is currently seeking a $14 million property tax break from the city. Torrence Avenue is as enigmatic as it is iconic. It’s said to be one of Ford’s most profitable and most productive factories, a point starkly underlined a year ago, when the United Auto Workers chose the plant to participate in a strike that ultimately resulted in one of the most lucrative contracts for the union in recent memory.

The South Side factory also has among the highest property tax bills of any Ford site, but also some of the company’s lowest energy costs, sources familiar with the operation say. Ford officials have expressed concern in recent years about break-ins and thefts from vehicles coming off the assembly line, as well as those belonging to employees.

Ford declined to discuss the profitability of the plant or its products or confirm how the plant’s property taxes compare to other facilities.

he’s seen it down to one shift and just 800 employees. Ferguson is one of a handful of active employees who have worked at Torrence Avenue 50 years or more.

“It’s a good place to work,” he says, but a half-century in the automobile industry has taught him to take nothing for granted. “They’d close it tomorrow if they wanted to.”

The Torrence Avenue plant has proved to be remarkably resilient. In 1931, when the Depression forced Ford to close 25 of its 36 plants, the Chicago factory was among 11 that remained open, according to a 75th anniversary history. The plant survived the energy crisis of the late ’70s and early ’80s, and the onslaught by foreign competition that followed.

It took nearly 30 years for the factory to produce 2 million vehicles and almost 20 more years to hit 5 million. Today, the number of vehicles that have come off its assembly lines tops 16 million.

model began rolling off the assembly line in June. The plant also started making a hybrid of the Police Interceptor version of the Explorer. Plant’s drawbacks

Longer term, the bigger question is how Torrence Avenue fits into the broader transition to electric vehicles. There were concerns as Ford, which previously predicted half its vehicles would be electric by 2030, began announcing which sites would transition to EVs and Chicago wasn’t among them.

ers struggling to survive the Great Recession and headcount down to 1,200, Gov. Pat Quinn reworked the state’s income tax incentives to rebate payroll taxes, as well.

“What you’ve got to remember is they look at their portfolio every five or so years and ask: ‘Should we continue to invest?’ ” says Jack Lavin, CEO of the Chicagoland Chamber of Commerce, who worked with Ford when he led the state’s Department of Commerce & Economic Opportunity two decades ago.

“We need to make sure we’re doing everything to make it possible for them to say, ‘Yes, we’re going to reinvest in the plant.’ You can’t take them for granted. What companies want are mayors and governors asking

research firm Technomic. As such, wine has seen the highest price increases. Red wine menu prices are up 19.4% year over year, putting it at the top of Technomic’s list of alcoholic beverage price hikes. Champagne and sparkling wine is close behind with an 11.1% increase. Spirits and beer, in comparison, are respectively up 5.8% and 4%.

Customers will notice if a restaurant starts making behind-thescenes tweaks that result in lower menu prices on wine, Crecca said.

“Wine is an alcohol category where operators believe they have room to take price, but the consumer is now pushing back,” Crecca wrote in an email. “Wine sales are softening (or falling) in many establishments.”

Putting a house wine on the menu is becoming more popular around the country as restaurants look to keep costs in check for customers. House wines are on 10% more new wine menus this year than last year, according to data from market research firm Datassential. That’s telling, said Claire Conaghan, associate director at Datassential.

“Seeing 10% growth with something as established as house wine is fairly surprising,” she said.

Lavin says the relationship with Ford has been on the upswing. “There was a period of time when I think people were taking them for granted. Conversations with the company are happening. They’re continuing to invest.”

As part of the most recent UAW contract signed last year, Ford said it would invest $400 million over four years. The company declined to address its plans beyond that.

“We need to be a good partner to them to keep it open,” says Chico. “It’s always a little worry. But I’m confident with the workforce here, what they’re doing here, they’ll continue on for decades.”

Hugh Ferguson has worked at the Torrence Avenue plant for 55 of its 100 years, starting out on an assembly line that made LTDs. His favorite product is the Taurus SHO made about a decade ago.

Today, the plant operates three shifts a day making Explorers, but

House wines give restaurants flexibility. They can serve a wine they got a good deal on or a blend from a winemaker they like. Younger customers also like house wines because they can confidently order something off the menu while discovering something new, Conaghan said.

The house wine the server was pouring recently at Mano a Mano was a verdicchio, a white Italian wine from a grape grown primarily in the Marche region of central Italy. Bright with soft fruity aromas, it was a wine worth craving on a muggy July evening.

“At Mano a Mano, there are ways to spend money,” Psaltis said. If you want a fancy Barolo, the restaurant has it in its cellar. “But we really want you to come in twice a week and have a quarter-liter of red that’s very seasonal and going along with some of the pastas.”

Retail plus corkage fee

Over at Bar Parisette, a Logan Square bistro and wine bar that opened in late June, the alchemy is in the wine pricing. Rather than taking the typical restaurant markup, which can reach several multiples, Bar Parisette’s bottles are priced at retail plus corkage fee.

This math is not spelled out on

Along the way, the plant has roughly quadrupled in size to 2.8 million square feet and has become highly automated, although headcount is more than 50% higher than it was 25 years ago.

The plant’s first robots — affectionately known as Larry, Moe and Curly — arrived in 1973. A decade later, there were 140. In 2019, more than 600 robots were installed. It also has 65 cameras coupled with proprietary machine-vision software that are used to help workers spot manufacturing defects.

Investment in a plant is just one factor. Its products also have to sell. Explorer sales fell 10% last year to 186,799 units, the lowest level since 2012, according to the Automotive News Research & Data Center. However, sales have picked up slightly in the first half of 2024, which could lead to the first yearover-year growth since 2020.

Historically, it’s the best-selling SUV in the U.S., and a redesigned

the menu. The servers do not explain how wine pricing typically works, or point out that the value really comes in with the higherpriced bottles. The hope is that customers leave the restaurant without the bad taste of an overpriced meal, and tell all their friends.

“We are kind of acknowledging that restaurants are getting out of reach for a lot of folks. Even people who like to dine out, they’re scratching their head at how much they’re paying for what they’re getting,” said partner Matt Sussman. “Our hope is we can offer . . . such a compelling value that we kind of overcome it.”

It’s not easy. Restaurants operate on razor-thin margins, and many fail. In Chicago, restaurant owners are also contending with changing minimum wage and paid time off rules that they say increase their labor costs. Some of the restaurants taking these approaches with their wine lists don’t know yet if they will work. They’re too new.

Sussman looks at Bar Parisette’s pricing model almost as a marketing tool. The idea is lowering the wine margins will drive customer volume. The experiment’s success depends on a lot of people coming to the restaurant.

“We need people to tell friends to come back and spend money,”

To many, that news highlighted one of the plant’s drawbacks when it comes to EVs, which generally require more space because automakers tend to favor having batteryproduction facilities close by. The 113-acre site is landlocked because Ford located the Torrence Avenue plant along the Calumet River in an effort to provide easy access to lumber shipments from northern Michigan, which was a strategic advantage when cars were made largely of wood.

But the pace of the EV transition has slowed at Ford, as well as other automakers, amid signs buyers aren’t as enthusiastic about such vehicles as they once seemed. Detroit’s rethinking of its EV priorities could, in the end, prove to be an advantage for plants like Torrence Avenue.

Auto industry expert Dziczek says third-party research firms predict Ford will continue making products at Torrence Avenue for at least another 11 years, which is the limit of such forecasts. “Forecasters seem to think there is a future for that plant beyond being 100 years old.” She also notes, “Just because you have an EV product doesn’t mean your plant is guaranteed a certain future or the ramp-up to that future isn’t going to be kind of rocky. The market acceptance is uncertain. If you switch to EVs, there could be a long period where they’re not fully utilizing the plant.”

he said. “Even if our margin is much lower, if we have people spending hundreds of dollars on bottles of wine on a Monday, that’s still to our benefit.”

Restaurants in neighborhoods with lower rent might have more wiggle room to make these tweaks. Some spots, such as the Fulton Market District, demand prices per square foot that are more threatening to margins and drive menu prices higher. Restaurant operators want to make sure that their menu prices don’t relegate them to a special occasion joint, meaning customers only come once or twice a year. They want to cater to folks who live nearby.

“I don’t want to be thought of like the expensive hotel restaurant,” said Amanda Kipp, director of food and beverage at Laurel, which opened in the Gold Coast’s Talbott Hotel in May. “I want to be thought of as, ‘We’ve got to go back there again because it was fairly priced (and) delicious.’ “ Laurel marks up its bottles of wine three times retail price. Kipp said the standard is four or five times. People notice the price difference.

“We do all want a second glass,” she said, “and we don’t want to feel guilty.”

Chicago investor buys Mag Mile building at a steep discount

the four-story property at 605 N. Michigan Ave. sold for 66% less than it traded for in 2016

By Danny Ecker

A local investor that recently bought buildings on State Street and Michigan Avenue off the discount rack has picked up another on the cheap along the Magnificent Mile, raising its wager on a comeback for the city's high-profile retail corridors.

North American Real Estate earlier this month purchased the four-story building at 605 N. Michigan Ave., NARE Principal Savas Er confirmed. Er declined to comment on the purchase price, but a person familiar with the deal said NARE paid $47 million for the 85,000-square-foot retail and office building at the northeast corner of Michigan Avenue and Ohio Street.

The sale price pales in comparison to the $140 million that former mall owner GGP paid for the property in 2016. New Yorkbased Brookfield Properties took control of the building in 2018 through its buyout of GGP.

NARE's purchase price was also far less than the $80 million loan that Brookfield borrowed against the property from New York-based MetLife in late 2018,

according to Cook County property records. That means the sale completed financial haircuts for both Brookfield and MetLife.

The deal adds to a run of transactions showing the dramatic loss of value of properties along North Michigan Avenue in the wake of the COVID-19 pandemic. Record-high retail vacancy on the street, a drop-off in regular foot traffic and a couple years of interest rate hikes have beat down what investors will pay for Mag Mile properties.

Painful blows

Brookfield has endured several painful blows along the famed shopping strip: Acknowledging that its equity in the vacancyplagued Water Tower Place mall had been wiped out, the real estate firm surrendered the property to its lender, MetLife, in 2022. Late last year, Brookfield sold the 117,400-square-foot retail building at 830 N. Michigan Ave. for just $40 million, a fraction of the $166 million that GGP paid for it in 2013.

The value loss has spelled opportunity for investors ready to buy low and revive buildings.

NARE made a couple such bets in recent months with its $15 million purchase in December of a five-story retail building at 100-112 S. State St. and a $4 million acquisition of a vacant retail and office building at 174 N. Michigan Ave.

On the Mag Mile, the real estate firm is betting it can find new users for a property that is 50% leased today to retail tenants, including Chase and Sephora, and an office of architecture firm KTGY.

"We believe in Chicago. It's one of the best cities in the world," Er said. "There are not many high streets in the world, and one of

them is (the Mag Mile)."

Er said his firm is eyeing an "entertainment or restaurant" use to fill empty space in the building, where shared office provider Regus recently vacated a location.

NARE took out a new loan to finance its purchase of the vintage property, according to Er, who declined to provide details but said it was not a high amount of debt relative to the purchase price.

Spokesmen for Brookfield and MetLife did not respond to requests for comment.

CoStar News first reported the sale to NARE.

Northwestern Medicine plans another expansion

the new $96.3 million outpatient center in Huntley will span nearly 80,000 square feet

By Katherine Davis

In its latest expansion project in the Chicago area, Northwestern Medicine plans to build a new outpatient center on its hospital campus in the far northwest suburb of Huntley.

The $96.3 million project will span nearly 80,000 square feet, housing cancer care, infusion services, radiation oncology treatment and cardiac diagnostics, according to an application filed with the Illinois Health Facilities & Services Review Board, which must approve the project before construction.

The two-story building will be on Northwestern Medicine’s Huntley Hospital campus at 10400 Haligus Road, where it operates a 128-bed full-service hospital and two existing medical office buildings. A pedestrian walkway will be constructed from the new outpatient center to the hospital, which reported more than $346 million in 2023 net patient revenue.

Construction on the building is expected to begin in October and it is slated to open in 2027. A

Northwestern spokesman declined to comment on the application because it is under review by the board.

Northwestern, the area’s second-largest hospital system by revenue, outlines in the application that the new outpatient center is necessary to meet rising demand of cancer and cardiovascular services at the campus’ main hospital. For example, cardio diagnostics volume at Huntley Hospital rose 13% to nearly 30,000 visits a year from 2021 to 2023.

The Huntley project is just the latest from Northwestern, which has been building new care buildings throughout the Chicago area. Northwestern recently opened an immediate care facilities in suburban Oak Brook and Chicago's Old Irving Park neighborhood.

Construction is also underway on a $100 million outpatient care center in Chicago’s Bronzeville neighborhood as well as the $389 million expansion of Northwestern's Lake Forest Hospital.

Northwestern’s expansion spree is funded, in part, by a $1.1 billion

surplus on $8.72 billion in 2023 revenue.

The system’s latest financial report, filed with the Municipal Securities Rulemaking Board, shows continuing growth. Northwestern reported a $1.29 billion surplus on $7.1 billion in revenue during the nine months end

ed May 31, up from a $725 million surplus and $6.4 billion in revenue in the same time period

the year before.

Outside of medicine, Northwestern recently struck a deal with its affiliated university for the naming rights on Northwestern University’s temporary football stadium along the lakefront. Named Northwestern Medicine Field at Martin Stadium, the field will hold the health system's name exclusively for at least two years.

605 N. Michigan Ave. | COstAR gROuP

Northwestern Medicine Huntley Hospital | NORtHWEstERN MEDICINE