CONVERSATION: Robert Kraemer on design and redevelopment. PAGE 22
A new look at giving The Songs aren’t the typical philanthropists. PAGE 8
CRAINSDETROIT.COM I MARCH 7, 2022
Michigan mine aims to fill fertilizer need Russian potash supply endangered by war BY DUSTIN WALSH
A polar bear swims over Detroit Zoo guests at the Arctic Ring of Life exhibit. | DETROIT ZOOLOGICAL SOCIETY
NEW ZOO REVIEW
Nearly 5,000 miles away, the lingering humanitarian crisis in Belarus and Russia’s unprovoked war against the Ukraine are battering farmers in rural Michigan. Russia and its neighboring ally Belarus account for 40 percent of the global market for potash — one of three critical macronutrients required to sustain plant life found in fertilizers — and prices are on the rise. A short ton of potash cost $300 a year ago and is nearly $800 today. With those countries increasingly cut off from the rest of the world via economic sanctions, experts predict prices to continue to rise. Roughly 96 percent of potash comes into the U.S. from foreign producers, and by removing Rus-
Refined potash. | BLOOMBERG
sia and Belarus from the Western market that effectively gives Canadian producers, including the world’s second largest producer Nutrien, uncontested control of the market here. See POTASH on Page 21
IT’S BEEN FOUR YEARS since the Detroit Zoo announced its intention to build a nature center in Macomb County. And it’s likely to be a while longer before there’s any forward movement on the plan, despite pressure from local officials to select a location they offered at no cost just before the COVID-19 pandemic began two years ago. This is just one of many things the zoo’s new executive director and CEO Hayley Murphy has been working to get her arms around during the four months she has been on the job. Among other things, she is tackling the zoo’s operations and budget, renovations of the Belle Isle Nature
Center launched during the pandemic and the strategic planning the zoo has entered as it reassesses how it will serve the community coming out of the pandemic. Development of Oh deer: Belle Isle’s the Great Lakes Cenbeloved fallow deer ter for Nature was get new home. halted during the Page 22 pandemic, she said. The center in Macomb County is “still on the radar,” Murphy said, but she wants to understand the projected economic impact, funding, proposed design and proposed locations. See ZOO on Page 20
NEWSPAPER
VOL. 38, NO. 9 l COPYRIGHT 2022 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED
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“OUR SOCIETY HAS CHANGED; PEOPLE WANT DIFFERENT THINGS NOW.” — Hayley Murphy, executive director and CEO
GETTY IMAGES
Macomb County nature site for Detroit Zoo still on tap; new CEO takes aim at future | BY SHERRI WELCH
RIP retail? Not so fast The death of brick-and-mortar retail has been in the crystal ball for decades now. But if you look at the real numbers, there’s more occupied retail space in metro Detroit for each resident than ever. In this week’s commercial real estate Focus, we look at why the demise of retail has been greatly exaggerated — and how it’s evolving. Page 10
UKRAINE FALLOUT Anti-Russian sentiment hits small businesses PAGE 3
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NEED TO KNOW
THE UNDERGROUND
THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT FORD TO SPLIT EVS INTO SEPARATE BUSINESS UNIT
OUR NEXT ENERGY RAISES $65 MILLION
THE NEWS: Ford Motor Co. on Wednesday said it’s separating its internal combustion and electric vehicle businesses with a goal of increasing profit margins and getting engineers, designers and developers more focused on the unique needs of each powertrain. EVs will be part of a unit called Ford Model e, while the combustion unit will be called Ford Blue. The two units, along with the recently created Ford Pro commercial unit, will collaborate in some areas but largely operate independently.
THE NEWS: Novi-based energy storage developer Our Next Energy Inc. said it raised $65 million in a new round of funding to help boost its plans to build a battery plant in the United States.
WHY IT MATTERS: The automaker now expects electric vehicles to account for 30 percent of its global volume within five years and half by 2030.
WHY IT MATTERS: The factory will be used to produce its Aries battery pack for four customers, including a tier-one automotive supplier in Southeast Michigan.
LEGISLATURE OKS TAX CUTS; WHITMER OPPOSES THE NEWS: The Republican-led Legislature on Thursday gave final approval to a veto-destined bill that would cut Michigan’s income tax, expand tax exemptions for older people and largely restore a per-child tax credit that was eliminated a decade ago. WHY IT MATTERS: Gov. Gretchen Whitmer says the $2.5 billion package of tax cuts is “unsustainable” and would lead to spending cuts while the next budget is negotiated in coming months.
HUNTINGTON TO BUY CAPSTONE THE NEWS: Huntington Bancshares Inc. agreed to acquire Capstone Partners, an advisory firm serving middle-market companies. Capstone focuses on mergers and acquisitions, capital advisory, financial advisory and restructuring, and its primary offices are in Boston and Denver. The deal is expected to close in the second quarter of 2022. WHY IT MATTERS: It’s the latest merger in the banking world as firms face a
challenging lending environment and want to better compete against Wall Street giants as well as financial-technology upstarts.
TRIMAS BUYS INTERTECH PLASTICS THE NEWS: Bloomfield Hills-based TriMas Corp. is buying Intertech Plastics Inc., a Denver-based injection molder with significant medical and packaging customers. TriMas serves consumer, aerospace and industrial markets, with about 3,300 employees in 11 countries, and the Intertech deal will expand its portfolio and capabilities in the medical end market. WHY IT MATTERS: The acquisition is TriMas’ sixth acquisition in the packaging market since early 2019, and its second with products, injection molding manufacturing capability and customer approvals in the medical market.
Secret bunker will be showpiece for Princeton Enterprises Just a few hundred feet from one of the busiest freeway interchanges in the region sits a bucolic retreat dug into a hillside overlooking the Rouge River in Southfield. The small building at 26500 Telegraph Road was designed by architect Gunnar Birkerts and built in the midto-late 1980s for the Holtzman & Silverman real estate firm. At ground level, it appears to be more of a bunker than an office building, with nothing inside except an elevator going down. But that’s where you find the retro office that its new owner, Bloomfield Township-based Princeton Enterprises, plans to convert into event space with floor-to-ceiling windows, views out into a wooded area and a handful of art installations. Princeton also bought the four-story office building immediately to the north at 26600 Telegraph with plans to move the multifamily ownership and management company with thousands of apartment units in its portfolio into a new headquarters, potentially doubling its footprint from about 20,000 square feet.
HEAD OF UAW’S GM DEPARTMENT TO RETIRE THE NEWS: After 23 years with the union, Terry Dittes, the General Motors-UAW vice president, plans to retire July 31 after the UAW Constitutional Convention. WHY IT MATTERS: Dittes became a UAW vice president in January 2018, and the following year he guided GM through successful negotiations that included a 40-day walkout.
Inside the small bunker at 26500 Telegraph Road is an office that is a nod to a bygone era. | KIRK PINHO/ CRAIN’S DETROIT BUSINESS
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WORKFORCE
SMALL BUSINESS
New CEO at Domino’s has high bar to clear Staffing challenges after historic stock run BY ANNALISE FRANK
Domino’s Pizza Inc. is “laser-focused” on resolving staffing challenges it has faced during the 2-yearold COVID-19 pandemic, which have challenged the Ann Arbor-based franchisor after a multiyear streak of rising sales and stock prices. Domino’s U.S. sales have been crimped in recent quarters by the ongoing labor shortage. On Tuesday, the Allison company (NYSE: DPZ) reported weaker-than-exp e c t e d four t h-quar ter earnings. Staffing issues, particularly in its delivery business, hit Domino’s especially Weiner hard in the fourth quarter as the omicron surge felled workers. That was felt more in cities than in rural areas, Domino’s CEO Ritch Allison said Tuesday during an earnings call. That same day, the pizza franchisor announced that Allison would retire from the company and be replaced by Russell Weiner, 53, who in addition to his COO role has been president of Domino’s U.S. operations, will succeed Allison as CEO. He has been with Domino’s since 2008, when he joined as executive vice president and chief marketing officer. Allison, 55, will retire as CEO April 30 and stay on in an advisory capacity through July 15. He has served as CEO since July 2018. The company noted that during See DOMINO’S on Page 20
Jenny Feterovich is worried about the survival of Ferndale-based Parliament Studios, the film production business she started 12 years ago that is being disrupted by the Russia-Ukraine conflict. | NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS
‘FOR US, IT’S COMPLETELY SAD’ Anti-Russia sentiment, sanctions hurt metro Detroit businesses BY KURT NAGL
Maria Petrenko, owner of Hadrout Advertising & Technologies in Ferndale, said she has already lost one client and likely several others to follow because of her connection to Russia.
Maria Petrenko and Jenny Feterovich left Russia decades ago and landed in metro Detroit where they have built successful businesses now threatened by the war of their home country against Ukraine. A war they are staunchly against, to be clear. But Petrenko, who runs a web development company, and Feterovich, a film producer whose credits include “The Russian Five” and “Start Up” on PBS, fear people have already made up their minds about those with Russian ties in the wake of Vladimir Putin’s invasion of Ukraine.
Petrenko, 46, said she has already lost one client and likely several others to follow because of her connection to Russia, and she has lost the ability to pay her employees in Russia due to trade sanctions. Feterovich, 46, risks losing her contractors in Ukraine and Russia, and she’s had to delay timelines for projects set to be filmed in Eastern Europe, including a potential feature film adaptation of “The Russian Five,” released in 2018 as a documentary about the famed Soviet Union players on the Detroit Red Wings. What’s more troubling, Feterovich said, is the threat of film houses pulling the movie because
it is about Russians. “I think it’s extremely important that people understand how to separate nationalities of people from what is actually happening,” she said. “I just want people to understand that every Russian person or anything that has the word ‘Russian’ in it does not mean that they’re supporting this war or they want to have any part of it.” The worries of the small business owners in metro Detroit come during a wave of anti-Russia sentiment and sanctions from the West that has made doing business with Russia toxic, if not impossible. See RUSSIA on Page ?
REAL ESTATE
Metro Detroit rents up 10 percent as units remain hard to find BY ARIELLE KASS
The one-bedroom apartments Derrell Grant has on Schaefer Highway in Detroit typically rent for about $700 a month. But recently, demand for rentals has been so high, he’s been able to raise the rates a whopping 20 percent. The units are now going for $840 monthly. “I definitely want to capitalize,” Grant, owner of JPA Holdings, said of the rental units. “I was looking at Dearborn rents and thought, let’s see what happens. It really worked out.”
Two recent reINSIDE ports show metro Where rents Detroit January rents are up 10 rose the percent on avermost in age, less than they are nationalmetro ly, but still a subDetroit stantial increase. The average rent PAGE 18 in the metro area is now up to $1,580 a month, according to data from the Seattle-based real estate brokerage Redfin, while Realtor.com shows the median rent for the
region is $1,350 monthly. More than half of Detroit residents are renters, according to Census data. Even with the increase, Detroit still remains one of the most affordable metro areas in the country. Grant said he rehabbed the six units in the Schaefer Highway apartment building before raising the rents, and the increase covers those costs, as well as rising tax bills. But he also wanted to make sure to keep up with what was happening on the ground. See RENTS on Page 18
Average rent for largest metros, January
Change from 1/21 $3,743 32.5%
New York Los Angeles
$3,349
Chicago Dallas Houston
$2,332 $2,073
24.0% 12.6%
$2,564
15.9% $2,973
Miami $2,033 $2,158
Detroit Seattle
16.1% 26.4%
$3,564
San Francisco $2,665
Riverside, Calif.
30.9% 19.2%
$3,508
Boston Phoenix
13.7%
$2,297
Philadelphia Atlanta
6.1%
$1,836
Washington
9.9%
$1,580
18.8% 18.5% 9.8%
$2,774
28.7%
SOURCE: REDFIN
MARCH 7, 2022 | CRAIN’S DETROIT BUSINESS | 3
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REAL ESTATE INSIDER A F e e - O n l y We a l t h M a n a g e m e n t G r o u p
Michigan’s #1 Financial Advisor by both Barron’s* and Forbes** Charles C. Zhang CFP®, MBA, MSFS, ChFC, CLU CEO and Founder
Charles is the highest ranked Fee-Only Advisor on Forbes’ list of America’s Top Wealth Advisors** The Rochester Hills Amazon Fresh grocery store on South Rochester Road. Construction has stalled. | KIRK PINHO/CRAIN’S DETROIT BUSINESS
www.zhangfinancial.com 101 West Big Beaver Road, 14th Floor Troy, MI 48084 (248) 687-1258
Why it’s taking so long for Amazon Fresh grocery stores to open
Minimum Investment Requirement: $1,000,000 in Michigan $2,000,000 outside of Michigan. Assets under custody of LPL Financial, TD Ameritrade, and Charles Schwab *As reported in Barron’s March 12, 2021. Rankings based on assets under management, revenue generated for the advisors’ firms, quality of practices, and other factors. **As reported in Forbes February 11, 2021 and August 16, 2021. The rankings, developed by Shook Research, are based on in-person and telephone due diligence meetings and a ranking algorithm for advisors who have a minimum of seven years of experience. Other factors include client retention, industry experience, compliance records, firm nominations, assets under management, revenue generated for their firms, and other factors. See zhangfinancial.com/disclosure for full ranking criteria.
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e are pleased to welcome Dominic DiMarco as an Independent Director for our affiliated Cayman based entity. Mr. DiMarco comes to us following his service from 2012 to 2021 as President of the Cranbrook Educational Community, where he previously served as COO and Treasurer starting in 2008.
After a distinguished 35-year career, Mr. DiMarco retired from Ford Motor Co. in 2008 having served in many operational and finance roles. His last position was President of Ford in South America and Executive Director of the automotive business units in Canada and Mexico. Mr. DiMarco’s vast experience in governance complements our Cayman based entity’s existing team of three Directors who have a strong focus on best practices; Dr. David J. Brophy, Chairman of the Board of Directors - Professor, U of M Ross School of Business, Mr. Paras Malde - Waystone Cayman Islands and Mr. William K. M. Goldsmith - Manager of Nantucket Multi Managers. NANTUCKET MULTI MANAGERS, LLC Investment Adviser Specializing in Alternative Investments 40950 Woodward Ave. Ste 307 | Bloomfield Hills, MI 48304-5128
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Kirk
PINHO
We know Amazon Fresh is building at least four grocery stores in the region. Yet work at three of them has come to an absolute standstill, with just a facade without a sign completed and no interior
work taking place. That’s the case at the stores planned for Shelby Township, Rochester Hills and Troy, while construction at a location in Livonia appears to be moving along. To be clear, Seattle-based Amazon has never confirmed to me it is opening its own branded grocery stores anywhere in the region. I’ve merely deduced Amazon Fresh locations based on source tips pointing me to site plans submitted to those four communities over the last year or so. And those site plans and permits show something being built in shuttered box retailers that looks exactly like an Amazon Fresh, minus the signage. So, if Amazon can effectively bring you whatever book you want within a day, why can’t it retrofit some vacated suburban junior anchor stores with some shelves and other equipment for a grocery store within a year? It might just be a matter of timing. A source familiar with the matter told me that Amazon is waiting until early 2023 to open the stores at once — call it a market inundation — and that there are at least three or four more that are in the works, but locations are not yet known. Whether there are any other issues at play — construction materials, supply chain problems or labor costs, for example — is not known. A spokesperson for Amazon declined comment. Building officials and others in three of those four communities where we know Amazon Fresh stores are going didn’t return requests for comment. But one Livonia official said it’s pretty clear who is opening in his inner ring suburb, even though the two words won’t pass the lips of those working on the project. “It’s the worst kept secret still to this day,” said Mark Taormina, planning and economic development director for Livonia. “The developer won’t say
The Metro Parent building on Woodward Avenue.| GOOGLE MAPS
the name nor will anyone else. While it hasn’t been confirmed, it is well under construction.” This isn’t to say all has been sunshine and rainbows. Amazon Fresh — and Amazon’s online grocery ordering business and Whole Foods — accounts for just 2.4 percent of grocery sales, leading the head of one of Amazon’s shareholders to declare it “an expensive hobby” in a recent CNBC article that details the inner-circle politics and dialogue of the food business within the e-commerce giant. “Expensive hobby,” perhaps, but one that Amazon still believes in. “What’s clear to people inside the grocery business is that the investment and talent focus is on Fresh,” reporters Annie Palmer and Nate Rattner wrote. “However, the strategy remains convoluted. Whole Foods has more than 500 stores nationwide. Amazon Fresh has opened 38 stores in the U.S. and U.K. in less than two years. And there are two dozen Go convenience stores.” The stores currently in the works in the Detroit area are as follows: Shelby Township, 36,500 square feet in the former Gander Outdoors store at 13975 Hall Road. Status: Stalled. Rochester Hills, 40,600 square feet in the former Best Buy store at 2651 S. Rochester Road. Status: Stalled. Troy, 39,500 square feet in the former AirTime indoor trampoline park at 662 E. Big Beaver Road. Status: Stalled. Livonia, 40,000 square feet in a property that included an Office Depot at Plymouth and Middlebelt roads: Status: Under construction.
Metro Parent building for sale The former home of Metro Parent, the parenting magazine based in Ferndale, is up for sale. The property at 22041 Woodward Ave. at Marshall Street between Eight
and Nine Mile roads is owned by Beanstalk LLC, which is registered to Alexia Bourkoulas, the CEO of Zoe Communications Group, the parent company of Metro Parent. Zoe Communications also bought Chicago Parent in 2019. “Working remotely during the pandemic demonstrated how well we can work together without being in the same building,” Bourkoulas said in an emailed statement. “We already suspected this was the case because our staff at Chicago Parent work from home and we all communicate and collaborate through Slack and Zoom and all the tools we’ve all grown so accustomed to over the past two years.” The statement continued: “Many of our Detroit-based staff still work 100 percent from home because it offers them more family flexibility and worklife balance. A few like working in the office, and come in every day or select days, depending on what works best for them. Most days we have just 4-5 employees in our big building on Woodward in Ferndale. We realized that this much space just didn’t make sense. We love our location, but it just doesn’t fit how we are working with remote staff in other states and workfrom-home flexibility. So, we made the tough decision to sell our building and we will be looking for a smaller space so we still have a place for in-person collaboration.” An email was sent and a voicemail was left with the broker for Southfield-based Signature Associates Inc. who is marketing the property for sale. The building is 4,100 square feet, according to the listing, and Beanstalk bought the building in 2005 for an unknown price, according to Oakland County land records. The listing is for a little over $1.1 million. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB
3/4/2022 12:59:12 PM
CRAIN’S EVENT
BHSH takes on challenge of integrating amid pandemic Crain’s Biggest Deals webcast discusses merger of Spectrum and Beaumont health systems BY DUSTIN WALSH
Executives from the newly formed BHSH System, the parent company to the merged Spectrum Health and Beaumont Health, discussed creating the state’s largest employer and what promises the new system has to deliver for success during the Crain’s Biggest Deals webcast. The temporarily named BHSH Health passed regulatory merger approval in January and began operations on Feb. 1 as a $12 billion, 22-hospital health system with its own health insurer in Priority Health. It’s also now the largest employer in the state with roughly 64,000 employees, ahead of General Motors Co.’s approximately 48,000 Michigan employees and Ford Motor Co.’s 47,000 local employees Crain’s reporter Dustin Walsh interviewed Tina Freese Decker, president and CEO of the integrated system; Julie Fream, chair of the system and Bob Roth, a member of the system’s board, about how the deal transpired and next steps in combining the health systems. Crain’s subscribers can watch a replay of the webcast at crainsdetroit. com/biggestdealswebcast. “We’re just beginning, taking the time to meet everybody, learn from each other,” Freese Decker said.
Clockwise from top left: Crain’s senior reporter Dustin Walsh; BHSH board Chair Julie Fream, BHSH President and CEO Tina Freese Decker, and BHSH board member Robert Roth.
“There is general excitement. When I’ve been walking around with many of our sites ... (the employees) ask really good questions about what does this mean and what we’re working on. There have been lots of conversations.” The merger represents a sea change in Spectrum’s growth trajectory in recent years, as it’s spent the past decade integrating smaller, more rural hospitals and expanding its insurer Priority Health. The merger also differs in that it’s been done during a pandemic.
“Every integration has different elements,” Freese Decker said. “We want to make sure we’re learning from past integrations and applying best practices as we move forward. But what I also want to say that is not different is the focus on our missions to improve the health of the communities we serve. The other element with this integration is we’ve been completely virtual for almost all of it. You can’t underestimate the challenge of getting the integration completed during a pandemic ...” The move marks the entry of Spec-
trum into the competitive market of Southeast Michigan. For Beaumont, it’s a method to recover from infighting during a tumultuous period under former CEO John Fox. The merger with Spectrum was the exclamation point after two failed merger attempts that created a public rift between Beaumont leadership and staff. “We’re very aligned ... the value we’re looking to create, the organization we’re working to create and putting together the kind of organization that can best serve Michigan,” Fream, the chair of the combined health system and former chair of Beaumont, said. “What I expect to see on the Beaumont side is that we will better understand what we can do together as an organization. We will identify opportunities for us. And in particular for Beaumont, we’ll identify opportunities for us to progress with Priority Health and to better understand how that can be integrated.” The worry for patients and benefits providers, such as businesses, is the rising costs of health care. Spectrum, historically, has been a more expensive system than Beaumont. Freese Decker addressed those worries directly by noting that the combined entity will provide pathways to lower costs through efficiency gains. “When you have a health plan,
BIGGEST DEALS | WEBCAST Crain’s subscribers can watch a replay of the webcast at crainsdetroit. com/biggestdealswebcast. physicians and hospitals working together, we can implement innovative programs that increase access, that improve quality and that lower the total cost of care,” Freese Decker said. “What this means is that we’re focused on utilization, on readmissions, on duplications and other areas where we may not need to use that type of health care service or a different level of service. So when we address these, we will decrease the cost and we will also increase the quality.” The other segments of the webcast feature interviews with a pair of the area’s most active merger and acquisition advisors and Crain’s discusses what it took to acquire businesses in the pandemic with Ryan LaFontaine, CEO of Highland-based LaFontaine Automotive Group, and Paul Glantz, chair of Emagine Entertainment Inc. Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh
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COMMENTARY
Get Michigan back in the game on film, ad production
Kelley Miller, 54, has been a quadriplegic since her traffic accident 10 years ago.
COMMENTARY
As drivers await refunds, ‘there’s human suffering happening’
L
ANSING — Six weeks ago, a quadriplegic Eaton County woman entered a Sparrow Hospital bed in a bid to get her auto insurance company to resume paying for the at-home care she’s had for more than a decade. Six weeks later, she’s still there and still waiting. The insurer, Lansing-based Auto-Owners Insurance Co., doesn’t appear to be budging, rejecting proposed hourly rates for skilled nurses for Kelley Miller — who relies on a ventilator to breathe — that they paid for just a couple of months ago. Miller, 54, who was paralyzed from the neck down in a 2011 car accident, also isn’t budging, refusing to go on Medicaid and be transferred to a nursing home. “I sure did,” Miller said in a recent phone interview when asked if she refused to apply for Medicaid. “Because Auto-Owners is responsible for this mess.” Her case — and others like it — are starting to get the attention of state lawmakers, whose changes to Michinew auto insurINSURERS HAVE gan’s ance law have saved THE DISCRETION drivers money but upended a long-term TO PAY MORE care business model THAN 55 CENTS long regarded as the best in the nation, not ON THE DOLLAR to mention the lives FOR WHAT THEY of people like Kelley Miller. PAID BEFORE At the same time, the insurance indusTHE LAW try-run fund that pays CHANGED JULY 1. for Miller’s care is preparing to disburse $3 billion in refunds to insurance carriers by March 9, which will have two months to pass along $400-per-vehicle refund checks to 7.5 million vehicle owners. Those refunds are being paid for by a surplus in the Michigan Catastrophic Claims Association’s $27 billion fund through a reduction in care for some 18,000 critically injured motorists like Miller.
Chad
LIVENGOOD
Michigan’s 2019 auto insurance law is a one-size-fits-all approach to the immensely complicated care of people who have suffered horrific injuries in car crashes, giving insurers like Auto-Owners the option to impose a 45 percent cut on at-home nurses and caregivers. The key word there is option: Insurers have the discretion to pay more than 55 cents on the dollar for what they paid before the law changed July 1 — and in many cases insurers are in order to sustain the care and lives of crash survivors. In this case, though, Auto-Owners is insisting on cuts that the current labor market for skilled nursing won’t likely support. The central issue in Miller’s case is the insurance company wants to pay registered nurses $40 an hour, a 40 percent cut in the $67 per hour that Miller’s longtime nurses were charging last fall under a temporary payment agreement with Auto-Owners that ended Jan. 15. One of Auto-Owners’ own lawyers said it has made a take-it-or-leave offer to Miller — and she has refused to go anywhere but her home in Mulliken, 20 miles west of Lansing. Meanwhile, Sparrow Hospital is left with a medically stable patient who arrived in an ambulance on Jan. 16 after Auto-Owners cut off her home care through RN Plus Staffing Inc., a company formed by Miller’s longtime nurses, Stacey Krause and Shara Curry. “If a patient is not willing to go to a (nursing) facility and not sign themselves in, you can’t really force them to do that,” said Dennis Jones, case management supervisor at Sparrow Specialty Hospital.
I
n early 2006, I was approached by some members of the Michigan Film Advisory Commission, inquiring if I would join them on the film commission to assist in getting film and digital media tax incentives passed in Michigan, just Howard Hertz is an entertainment as New Mexico and Louisiana, the front runners at lawyer and the time, had done previmember of the board of directors ously, among numerous other states. of the Michigan I had been practicing Film Industry entertainment law for 30 Association. years at that point, primarily in the music industry, and welcomed the chance to help Michigan expand its entertainment base in an effort to bring jobs and some excitement to our state as well as an opportunity to keep our young creative graduates in Michigan. I was appointed to the film commission in May 2006. Following a lot of hard work by the film commission, legislators, unions and many others, as well as support from Michigan notables such as Mitch Albom, Jeff Daniels and Mike Binder, a film and digital media tax incentive program was passed by Michigan legislators, nearly unanimously, and signed into law effective April 2008. The incentives didn’t just work, but their success was beyond expectations. Filmmakers, directors, and actors of considerable note including Clint Eastwood, George Clooney, Sam Raimi and Hugh Jackman (among many others) filmed in Michigan and talked about what a great experience it was. From approximately $2 million in filmmaking expenditures in Michigan in 2007, the numbers leaped to $322 million by 2010. It looked as if the industry could become a billion-dollar-a-year industry as long as the state would continue to provide incentives, even in a reduced amount, and promote the great locations and opportunities Michigan holds. But in early 2011, state government started to slash the budget for the incentives. Although Ernst and Young’s “Economic & Fiscal Impacts of the Michigan Film Tax Credit” reported that for every dollar spent on the film incentives six dollars were created in economic activity in the state, Michigan was in a financial crunch. The positive impact of creating jobs, reducing the “brain drain” of our young creative graduates from its previous out-of-control exo-
See LIVENGOOD on Page 17
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dus, not to mention the spiritual and morale boost that having major motion pictures filmed in our state had reaped (which can’t be measured in dollars and cents) came to a grinding halt when the Legislature continued to reduce the incentives until they were eliminated in 2015. They ended, not because they weren’t successful at bringing projects to Michigan, but mainly because of the cost of the incentives to Michigan and the perception that the funds spent were largely leaving the state. It’s time to revisit incentives and bring more commercials and films back to Michigan. On Feb. 17, bicameral, bipartisan legislation was introduced in the state Legislature that would be an important investment in Michigan workers and the economy. The criticisms of the prior incentive package have been addressed to satisfy the legislators and the public that this legislation will be a win-win for Michigan. The legislation would create a two-tiered tax credit that provides incentives for film, television and streaming productions as well as Michigan-produced commercials. The bills give preference to state-based companies that hire Michigan residents. Participants would be able to use the tax credits against their own state of Michigan tax liabilities, or the tax credit could be sold to an assignee that has a state of Michigan tax liability. This helps both Michigan companies and the applicant/copyright holder that produces projects in our state. Additionally, the new legislation starts out with modest tax credits, increasing as time goes by. The cap grows from $2 million for each of the first three years of the program, then $5 million for the next three years and $10 million in the remaining four years of the program. The proposed legislation in Michigan has the potential to elevate our state, once again, as a leader in film production and not stand idly by while film production and Michigan’s robust advertising and corporate video industry loses out to more competitive states like Illinois, Minnesota, Ohio and Pennsylvania. I was recently elected to the board of directors for the Michigan Film Industry Association. I’m proud to work with the organization, unions and legislators toward bringing new life to our film, digital and commercial industries in our wonderful state. Notify your legislators that you are in favor of supporting the film, digital media and commercial industries in Michigan. Learn more and become a supporter of the Michigan Film Industry Association by going to https://mifia. org/.
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DALE G. YOUNG FOR CRAIN’S DETROIT BUSINESS
BY HOWARD HERTZ
Sound off: Crain’s considers longer opinion pieces from guest writers on issues of interest to business readers. Email ideas to Managing Editor Michael Lee at malee@crain.com.
6 | CRAIN’S DETROIT BUSINESS | MARCH 7, 2022
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OTHER VOICES
Tax cut plans would put state priorities on chopping block BY MITCH BEAN
Michigan needs to invest in human capital and critical infrastructure — investments that could move the state economy forward for years to come. Mitch Bean is a Unfortunateformer director ly, the Michigan of the Legislature nonpartisan seems deterHouse Fiscal Agency and mined to squanprincipal of der this opportuGreat Lakes nity. Economic Instead of usConsulting LLC ing an unprecein Eaton Rapids. dented one-time surplus for onetime investments and sustainable tax cuts, they seem determined to cut taxes in such a way as to blow a future hole in the budget, cut critical services and move the state backwards. What do I mean by that? Michigan has an unprecedented surplus because there was so much COVID-19 spending. COVID spending along with enhanced unemployment insurance payments and one-time stimulus payments to individuals pumped billions into people’s pockets, stimulated spending and dramatically increased state tax revenue. It’s important to understand that current surpluses have nothing to do with any state government fiscal discipline or state policy decisions. All of this extra money is a “onetime” windfall. The Senate plan cuts the income tax rate for individuals and corporations to 3.9 percent and reforms the pension exemption — costing an estimated $2.5 billion in the first year and billions thereafter. The House plan expands the pension exemption even more and cuts the rate to 3.9 percent as well — costing an estimated $1.7 billion the first year and billions thereafter. All the while, the House and Senate have failed to take advantage of about $5.9 billion in federal monies available that could benefit the state economy at a critical time. Both tax-cutting plans also put billions of federal monies at risk. The federal monies were meant to stimulate the economy — not for state tax cuts; and the funds came with a stipulation that states must maintain baseline revenues or forfeit some of that money. The current estimate of lost monies is at least funds is $1.8 billion in 2023 and $1.1 billion in 2024 from either plan. The history of the so called “pension tax” (which is really an exemption) is in order. In 2011, then-Gov. Rick Snyder proposed, and the Legislature adopted, a plan that included an 83 percent, $1.094 billion tax cut for business. Business tax changes included replacing the Michigan Business Tax with a 6 percent Corporate Income tax. In order to pay for the lost revenue, the plan included a $559.1 million tax increase on individuals which included changes to the pension exemption.
In addition, about $460 million of they could say it was an appropriageneral fund dollars for community tions bill, and therefore referencolleges and public universities dum-proof. Now the Senate wants to reduce was shifted to the School Aid Fund. So, a $1 billion tax cut for busiIT’S IMPORTANT TO UNDERSTAND THAT ness was paid for by tax in- CURRENT SURPLUSES HAVE NOTHING TO creases on individuals and rev- DO WITH ANY STATE GOVERNMENT FISCAL enue from the DISCIPLINE OR STATE POLICY DECISIONS. School Aid the corporate income tax rate from 6 Fund. Something I’ve always found in- percent to 3.9 percent, which would teresting is that, in order to avoid a be a 35 percent rate cut, and reduce citizen initiative to repeal it, they the individual income tax rate from used the gimmick of including a 4.25 percent to 3.9 percent, which small appropriation in a tax bill so would be a 8.9 percent rate cut. That
means the rate cut for corporations is about four times greater than the tax rate cut for individuals. The shift of general fund dollars to the School Aid Fund to pay for community colleges and four-year universities to ease a general fund shortfall is important to remember. Both of the current proposals create a substantial general fund shortfall. And even though they may not directly affect the School Aid Fund, more money intended for K-12 schools could be shifted to higher education and away from K-12. Since both House and Senate proclaim they will solve any future
budget shortfalls with budget cuts, it’s important to remember that education, health care and public safety could be on the chopping block because that’s where the money is. I’m of the opinion, state government leaders of all stripes need to get together and come up with a reasonable plan to use this once-in-alifetime windfall to invest in such a way as to move the state forward. That can include tax cuts that are done in such a way that federal funds are not put at risk. Why not spend the billions of available federal monies first, and then do sustainable tax cuts?
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MARCH 7, 2022 | CRAIN’S DETROIT BUSINESS | 7
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NONPROFITS
Dug and Linh Song aren’t your typical philanthropists And their foundation won’t be typical either, as they look at spurring systemic change BY SHERRI WELCH
Duo Security co-founder Dug Song and his wife, Linh, aren’t your typical philanthropists. The couple is first-generation Americans in their 40s and young to be setting up a family foundation. They also come from very modest means rather than generational wealth. She grew up in Dearborn as the daughter of Vietnam refugees and a “WIC baby.” He is the son of Korean immigrants who owned a liquor store in west Baltimore and later moved the business near the state penitentiary. Both watched their parents hold down multiple jobs to support their families. And both worked several jobs themselves while attending the University of Michigan. Those experiences are ever-present as they think about the best ways to use their wealth to invest in innovative people who are working to improve quality of life. They want to create a more just and equitable world, while also balancing the power between their foundation and the nonprofits it supports. After quietly granting more than $2 million since 2020, half of it to provide COVID relief for hundreds of small health care, small business and community service organizations in Washtenaw County, the Songs have hired nonprofit veteran Khalilah Burt Gaston, former head of Vanguard Community Development and a past program officer at the W.K. Kellogg Foundation, to help corral their passions and formalize the foundation. With the same earnestness they put into earning degrees and founding multiple tech companies, the Songs have studied philanthropic approaches, worked with other family, private and community foundations in the region and in Dug Song’s native Maryland to learn everything they can about need, power structures in philanthropy and the causes other foundations are supporting. Through it all, one thing became very clear, said Dug Song, 46, the co-founder and former chairman and CEO of Duo Security, which sold for $2.35 billion in 2018 to California-based Cisco Systems Inc., where he now serves as chief strategy officer. “It’s real work to give away money.”
Where they came from The couple met while working at the same Chinese bakery — which they later saw close when rents went up — after he graduated from the University of Michigan and she was finishing up her master’s degree in social work there and working with local community groups. “I would take Dug to Detroit and make him and his geeky friends volunteer and set up wireless networks in public schools,” said Linh Song, 44. “I did my fieldwork, and then I kind of dragged them along with… promises of tacos in southwest Detroit.” Added Dug: “Bridging the digital divide was our courtship.” While he was busy founding tech companies, she was leading online community organizing and advocacy in the international adoption
Dug and Linh Song | DUG SONG
Khalilah Burt Gaston
community, focusing on anti-trafficking and anti-corruption with government authorities and international non-governmental organizations. She also directed an IT support services program using open source technologies for nonprofits in the region at Nonprofit Enterprise and served as director at the Ann Arbor Entrepreneurs Foundation and executive director of the Ann Arbor Public Schools Educational Foundation. In addition to her role on city council, she is serving her second term as chair of the Ann Arbor District Library Board of Trustees. Coming from the “community of struggle” and not forgetting the past is essential for how they are raising their two children and approaching philanthropy, she said. “We just don’t forget where we come from.” The Songs and Gaston — who attended UM at the same time but didn’t know it then — are in the midst of formalizing funding areas for the foundation. Its grants, made separately from the Ann Arbor Entrepreneurs Fund
the couple created in 2019 and their donor-advised fund at the Ann Arbor Community Foundation, were initially focused in Washtenaw County, for the most part. The couple is now looking to expand it throughout the region, said Dug Song, who joined the Detroit Regional Chamber’s board a couple of years ago and has been active in its racial justice and economic equity work. Knowing that some people struggle all day, every day, in economically stratified Washtenaw County and other parts of the region has been top of mind as the couple thinks about their charitable support, Linh Song said. “A lot of solutions that we find interest in here...are things that are already being done by folks who already are here and have been here, (but) just haven’t had sort of the empowerment to do the work at another level,” Dug Song said.
Foundation approach The couple is also interested in spurring system change. The pandemic really highlighted the need in the community and disparities, like the 14-year life expectancy difference between ZIP codes bordering Ann Arbor, she said. “Whatever the systems were that were able to make sure our parents were OK in this country, we’d like to...preserve them,” she said. “We worry about access for our children’s peers. We worry about making sure people are safe and
well cared for. And it’s a privilege to be in a position to be able to give back.” While the funding areas are still being decided, the Songs are clear on the approach the foundation will take. They will employ a “trust-based philanthropy” approach that seeks to balance the power between the foundation and nonprofits it grants and to build mutually accountable relationships between them. “We’re here to serve as much as any of the organizations...we would fund,” said Dug Song. “We exist on behalf of supporting...(those) organizations and folks that are actually doing all this work... we should be held accountable in the way that I think a business is to the needs of its customers.” There’s been no decision made, yet, on whether the foundation, which could grow, if needed, will be a spend-down or permanently endowed, Gaston said. Either way, she says, “Linh and Dug want to be aggressive as far as their support of your local nonprofits, so probably we’ll be investing a little bit more than the required payout amount each year,” which is typically an average of about 5 percent of assets each year. The Songs’ passion areas include emergency relief, criminal justice reform and small business development, Gaston said. Over the next six to nine months, she and the couple will do strategic planning to refine focus areas for the foundation and transition their hyper-local giving to
a more regional approach. At the same time, Gaston said she will work to streamline the grant application and reporting processes for grantees to take much of the onus off them. She’ll also be working to develop a flexible payment process that moves funds to nonprofits when they need it, rather than on a quarterly or annual payout schedule. It sounds very simple, but even that flexible payment approach in response to honest, transparent conversations with nonprofits about when they need funding is innovative, Gaston said. “That doesn’t really happen a lot of times in big philanthropy,” Gaston said. The Songs are also looking to provide support beyond the check, she said. “We have founders who...have built, you know, very successful organizations and companies and so, really strengthening our partnerships with our grantees to see how we can be available to them just beyond that financial support will be important.” Now that they understand how decisions and policies are made, Linh Song said the couple is always considering who is missing from conversations on key issues. “We keep looking around to see who can we bring up alongside us, and how can we make room for more voices at the table,” she said. “It isn’t our table.” Contact: swelch@crain.com; (313) 446-1694; @SherriWelch
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WORKFORCE
Amazon offering employees college tuition assistance Offer includes Eastern, Grand Rapids Community College, Grand Valley, Henry Ford College BY KURT NAGL
Amazon Inc. is offering its employees college tuition assistance at four schools in Michigan as the retail giant faces stiff competition for workers in a tight labor market and schools throughout the state struggle with enrollment declines. The program, announced last Thursday, offers employees up to $5,250 annually for credits taken at Eastern Michigan University, Grand Rapids Community College, Grand Valley State University and Henry Ford College, as well as 140 other online providers. The program is available to any employee who has been with the company at least 90 days, including part-time workers who are eligible for $2,625 per year to take courses, Amazon spokeswoman Jessica Pawl said. Amazon has 26,000 full- and part-time employees in Michigan. “The onboarding of education partners is ongoing, so while this is the launch, there will certainly be more universities and colleges to come on board,” Pawl said. Amazon’s new employee perk comes as others in the retail and service sectors raise wages and beef up benefits packages to attract and keep workers. Target announced last week it would boost starting pay up to $24 per hour for some positions in certain markets. Amazon said it pays employees a starting wage of $18 per hour. It launched its Career Choice program, which offers employees education assistance, in 2012, but Thursday’s announcement marks the first time Michigan schools are participating.
Workers retrieve boxes at an Amazon fulfillment center. |BLOOMBERG
“We’re committed to empowering our employees with easy access to the education and training they need to grow their careers, whether that’s with us or elsewhere,” Alicia Boler Davis, senior vice president of global customer fulfillment, said in a news release. “Whether someone is looking to build their English proficiency skills, prepare for GED test-
ing, or earn their bachelor’s degree, we’re working to meet our employees wherever they are on their educational journey.” Michigan colleges and universities have seized on tuition assistance programs, including those offered by the state, as opportunities to generate more revenue during a general enrollment decline.
Pawl said the Amazon program is geared primarily toward adult learners pursuing part-time, online classes. At GVSU, for example, an eligible employee could take up to three online undergraduate classes per year, according to the university. “Our commitment to Amazon employees, as to all students, is to help
them discover their passions in a supportive environment, guiding them to achieve their goals, regardless of where they are in their professional and educational journeys,” GVSU President Philomena Mantella said in the release. Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl
OBITUARY
Gilbert Hudson, former Hudson-Webber Foundation CEO, dies at 87 BY SHERRI WELCH
Gilbert Hudson, founding president and CEO of Hudson-Webber Foundation, has died at the age of 87. Hudson died peacefully at his Florida home on Feb. 24, the foundation announced Wednesday. He was the brother of Joseph Hudson Jr., who died in December 2020, and the great-nephew of J.L. Hudson, the founder and namesake of the J.L. Hudson department store company. “Gil was quietly one of the most influential philanthropic leaders in Southeast Michigan,” said David Egner, who succeeded Hudson as executive director of the Hudson-Webber Foundation and worked with him for 19 years before departing to lead the Ralph C. Wilson Jr. Foundation. “It speaks to the humility of the Hudsons that Gil was not more recognized. Their influence was so amazing and yet so quiet.” “With Joe’s passing and now Gil’s, it’s the end of an era,” Egner added, but the humility and the thoughtfulness lives on with Jennifer Hudson-Parke and the rest of the family now serving on the board. “While my father will be dearly missed, our family is comforted by the legacy he leaves behind,” said Hudson-Parke, chair of the founda-
Gilbert Hudson
tion’s board of trustees. “Gil’s lifetime of service was characterized by humility, intellectual rigor, and an enduring commitment to the revitalization of the city of Detroit. He left an indelible mark on the many leaders and organizations that he supported, brought together and worked alongside.” Throughout his life, Gil Hudson was committed to inclusive revitalization, economic recovery and qual-
ity of life for the residents of Detroit, the foundation said in a news release. The Buffalo, N.Y., native graduated from Yale University in 1956 before serving in the U.S. Air Force for two years. In 1957, Hudson married Anne Rouse Hudson, who preceded him in death. He moved to Detroit to work at the department store that bore his family’s name, and in 1973 took on oversight of the three family foundations that merged in 1984 to create the Hudson-Webber Foundation. Hudson led the foundation until his retirement in 1999 and continued to serve as chairman until 2005 and as a trustee until his death. Egner, who worked under Hudson as a member of the board, said he made so many quiet, impactful contributions to Detroit. He built out the programming and formalized all of the infrastructure for the merged Hudson-Webber Foundation, Egner said, before creating a structure that has strengthened relationships between public officials and foundations. Michigan’s office of foundation liaison, which launched 19 years ago and is now a national model, was based on the model Hudson built for the city of Detroit when Dennis Archer was mayor.
Through the foundation, Hudson also funded the first video arraignment programs to improve officer safety and expedite the hearings. That, too, was a national model, Egner said. Hudson conceived and funded the first micro-developer lending program for small-scale developments including the first lofts built in Midtown through an Invest Detroit fund and funded the strategic planning for the city’s major arts and cultural organizations in the 1980s and 1990s, Egner said, “because he knew there was a lack of planning and a lack of strategy.” “This guy just found gaps and filled them quietly and humbly. He was a wonderful role model for me and mentor,” Egner said. Respected for his philanthropic leadership, Hudson provided wise counsel to numerous community organizations, including the Council of Michigan Foundations, Children’s Hospital of Michigan, Detroit Local Initiatives Support Corp. and United Way for Southeastern Michigan, among others, the foundation said. “Gil was deeply involved in the philanthropic life of Detroit and throughout Michigan,” Mariam Noland, outgoing president of the Community Foundation for Southeast Michigan,
said in an emailed statement. He was a founder of the Council of Michigan Foundations and helped develop the Community Foundation for Southeast Michigan, she said. “His leadership of the Hudson-Webber Foundation will have a lasting impact on our community for many years to come,” Noland said. Melanca Clark, president and CEO of Hudson-Webber Foundation, said: “Gil not only shaped the trajectory of the Foundation, but through his extraordinary service and civic engagement, helped shape modern philanthropy in the state of Michigan. I’ll be forever grateful to have had the benefit of his kind and wise counsel during my leadership of the Foundation.” Hudson is survived by three children, Jennifer Hudson-Parke, Elizabeth Griffith and Susan Laffrey; seven grandchildren; two great-grandchildren, and his partner of 12 years, Anne LaSalle. A memorial service is planned for 11 a.m. May 14 at Grosse Pointe Memorial Church in Grosse Pointe Farms. Memorial gifts be made to Children’s Hospital of Michigan Foundation and Grosse Pointe Memorial Church. Contact: swelch@crain.com; (313) 446-1694; @SherriWelch MARCH 7, 2022 | CRAIN’S DETROIT BUSINESS | 9
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WILL IT LAST? Commercial foreclosures remain low in metro Detroit. PAGE 11
REAL ESTATE
RETAIL
ISN’T DEAD. IT’S
ADAPTING
Metro Detroit sees increase and new uses
BY KIRK PINHO These
See RETAIL on Page 12 10 | CRAIN’S DETROIT BUSINESS | MARCH 7, 2022
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GETTY IMAGE
days, consumers actually have more places to shop, not fewer. Contrary to the common refrain about the death of retail, there has been an increase of nearly 11 percent in the amount of retail space in the five-county area the last 16 years. Large, but aged and dying, shopping centers like Summit Place Mall in Waterford Township and Eastland Center in Harper Woods have been or are about to be wiped from the regional map, replaced with new uses. Neiman Marcus, JCPenney, Sears, Toys “R” Us, Circuit City, Guitar Center, Tailored Brands — all went bankrupt in the last two years, to name just a few, according to CNBC. Amazon.com Inc. has built or is building more than 10 million square feet of distribution center space in metro Detroit alone, cementing its physical presence and dominance here and throughout the country as it continues to revolutionize how, when and where people shop. And still, despite a global pandemic and so many other headwinds — including an extremely modest population growth since 2006 — the region has added 25.5 million square feet of retail space, according to data from CoStar Group Inc., a Washington, D.C.based real estate information service.
3/3/2022 11:15:35 AM
FOCUS | REAL ESTATE
Commercial foreclosures remain low in Detroit, but will that last? Nearly two years into pandemic there have been an average of only 2.4 foreclosure filings per month since March 2020 BY KIRK PINHO
The pandemic has not caused commercial landlords to lose their properties to foreclosure en masse like they did during the Great Recession. At least not yet. In spite of concerns about tenant rent payment early in the pandemic — including from restaurants, bars, gyms, apartment renters, office users and others — as government restrictions to stop the COVID-19 spread were implemented, nearly two years into the public health crisis there have been an average of only 2.4 commercial property foreclosure filings per month since March 2020 when the first cases of the coronavirus were reported in Michigan. That’s according to historical data dating back to August 2005 provided by Irvine, Calif.-based ATTOM Data Solutions. During that 16 1/2-year window, the Detroit Metropolitan Statistical Area averaged about 27 commercial foreclosures per month, skewed substantially upward as the region was ravaged by economic woes. Foreclosure filings were in the single digits in August 2005 and remained at those levels until July 2006, when they surged to 28, and remained at 10 or more per month until October 2014 — more than eight years. There were 250 alone in just February and March 2012 combined. But in the nearly 24 months since the first Michigan cases, there have been just 51 total. What the next 24 months have in store, though, will be a byproduct of a lot of factors, including how C-suites decide to use — or in some cases, not use — the space they had prior to the pandemic. “Office for sure has some headwind that they are going to have to deal with eventually, but that is so closely tied to the decision makers and what the hell they are going to do with their space,” said Mark Woods, COO of Southfield-based brokerage firm Signature Associates Inc. “It sure feels like you can get an opinion that represents the full spectrum if you read the Wall Street Journal or New York Times and CoStar.” Crain’s reported earlier this month that the state and region led the nation in the year-over-year increase in combined residential and commercial foreclosure filings, based on data from ATTOM, with 1,013, almost five times the number in the Chicago area, which had 210. Michigan’s filings represented a 622 percent increase year-over-year. Yet those were almost exclusively residential foreclosures, and the big increases were the result of moratoriums expiring and a backlog becoming unjammed, Rick Sharga, executive vice president of RealtyTrac, an ATTOM company, said at the time. Jared Friedman, managing director in charge of the Capital Markets, Acquisitions and Institutional Advisory Group for Farmington Hillsbased Friedman Real Estate, also said at the time that his company, which handles receiverships all over the country, is seeing very few in Michigan. “The state of the commercial foreclosure market in Michigan specifically is almost nonexistent,” he said.
Partridge Creek, also owned by Starwood, secures $725 million in CMBS debt along with three other malls. Starwood owes $681.6 million on that loan. It is also in receivership and under new management.
A recovery
Westin Book Cadillac building | COSTAR INC.
“All the receiverships we have right now are in Illinois, Wisconsin, Ohio, Texas. Michigan is our quietest state in terms of foreclosure.” He attributed that to the health of the automotive market and its ripple effects, as well as Michigan landlords in general not being over leveraged. “We have probably have 3 million square feet of receiverships we have taken over, and almost none of it is in Michigan,” Friedman said earlier this month.
venture plans to spend $16.5 million renovating the tower at 1114 Washington Blvd. and Michigan Avenue. And the owner of a pair of malls, Fairlane Town Center in Dearborn and The Mall at Partridge Creek in Clinton Township, has been struggling with CMBS debt payments, as well. Fairlane, the 1.4 million-squarefoot enclosed mall at 18900 Michigan Ave. built in 1976, is expected to be
sold next month to an unknown buyer, according to New York City-based Trepp LLC, which tracks CMBS loans. Fairlane and two other malls secure a $161 million CMBS loan on which Miami Beach, Fla.-based Starwood Capital Group defaulted, prompting a receivership and new management. The current balance is about $120.7 million, according to Trepp data.
On average between August 2005 and January, the Detroit MSA accounted for 1.16 percent of the national commercial foreclosure filings, according to ATTOM data: 5,157 out of 443,460. On average, Detroit commercial foreclosures account for less than one percent of all monthly filings nationwide. But during the Great Recession, there were months when the region accounted for more than 3 percent of the commercial mortgage foreclosure filings in the U.S.: In May 2007, the Detroit MSA accounted for 3.67 percent, or 73 of the 1,989 filed; in February 2012, it was 3.26 percent, or 133 of the 4,083 filed. Commercial foreclosures peaked nationwide in July 2010, when there were 5,245, according to ATTOM data, and in general embarked on a downward trend thereafter. In the two years leading up to the pandemic, the U.S. generally had between 1,100 and 1,600 commercial foreclosures a month. But in the two years since it started, there have been only two months when there have been more than 1,000: March 2020, when there were 1,442, and June 2020, when there were 1,160. See FORECLOSURES on Page 13
Not all rosy In spite of the small number of commercial foreclosures, a couple prominent properties are going through the process and plenty of others have flirted with foreclosure but still — so far at least — have managed to avoid it. For instance, the 30-story Jeffersonian Houze apartment tower on the east Detroit riverfront is heading to auction in March after lender Fannie Mae foreclosed on the property as part of an ongoing legal battle with existing ownership that started a year ago. The auction, which was originally scheduled for Feb. 17, has been bumped back to March 17. And not far away, the James Burgess Book Jr. Mansion at east Jefferson and Burns Street is on the market for $3.5 million after its owner fell behind on a $1.245 million mortgage from Birmingham-based Soaring Pine Capital Real Estate and Debt Fund II. The fund foreclosed on the property and was the highest bidder at a July sheriff’s auction for $937,006. Some have narrowly skirted foreclosure, like the Westin Book Cadillac hotel downtown, which avoided it when a joint venture between Chicago-based hotel developer Oxford Capital Group LLC and New York City-based hedge fund Taconic Capital Advisors LP assumed $77 million in delinquent commercial mortgage-backed securities debt owed by previous owner Cleveland-based Ferchill Group. The joint
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FOCUS | REAL ESTATE
RETAIL
From Page 10
The strong thrive It’s not just the growth in space that illustrates the current complex retail ecosystem. While there has been an uptick in vacant retail space during the COVID-19 pandemic, notching as high as 5.7 percent in the fourth quarter 2020, according to CoStar data, that is still historically lower than it’s been over much of the last 16 years. And in the fourth quarter 2021, the vacancy rate was just 4.8 percent — matching lows seen in three of the four quarters in 2019 immediately before the onset of the global health crisis, CoStar data shows. In short: Millions of square feet are being added to the market, and it is getting leased up. That, in part, accounts for the first quarter to date having the highest rents since the beginning of 2006, according to CoStar. In the region, overall rents are $15.84 per square foot per year, while triple-net rents are $16.23 per square foot per year, both of which are more than $2 per square foot per year more than they were 16 years ago. New construction, decreasing vacancy rates and increasing rents all point to a market that, while still
Downtown Detroit retailers like Under Armour and John Varvatos have closed their physical locations. | CRAIN’S DETROIT BUSINESS
AARON ECKLES
“Retail hasn’t gone away; it’s morphed into a service world where brick-and-mortar stores are now fulfillment centers, food-related or experience-related establishments,” said Angela Thomas, an associate broker who is a retail expert for Southfield-based Signature Associates Inc. “When people do shop or dine, it’s all about the experience, which has driven new developments and redevelopments to create firstclass shopping experiences. The (Class) B and C centers are suffering, but the A markets and centers are thriving.” In short, it’s becoming smarter retail driven by consumer demands. According to the Southeast Michigan Council of Governments, the five-county region had a little over 4.49 million people as of the first quarter 2006. It is now at about 4.51 million, representing just a 0.48 percent growth in that time. Yet for each of those 21,585 new residents of the region, we have added 1,182 square feet of retail. That brings the region’s per capita retail footprint up from about 53 square feet in the first quarter 2006 to about 59 square feet in the first quarter 2022. And while the economic recovery during the pandemic has been uneven, to say the least, overall spending is increasing. According to data from Affinity Solutions, as of Nov. 14, consumer spending in metro Detroit is up 16.9 percent since the beginning of 2020. Retail spending is up 38.3 percent and restaurant/hotel spending is up 27.4 percent. “We had all these bankruptcies and everyone was saying, ‘Oh, no, retail’s dying,’” said Cindy Ciura, principal of Bloomfield Hills-based CC Consulting, which does retail consulting work in Birmingham and elsewhere. “What happened was, it has made the strong stronger and it made the weak — which probably weren’t going to make it anyway — go away.”
Total retail inventory The amount of retail space in the five-county metro Detroit region has grown by 10.7 percent to nearly 265 million square feet since the beginning of 2006. 280 million 270 260
264.88 million square feet
250 240 230 220
’06
’07
’08
’09
’10
’11
’12
’13
’14
’15
’16
’17
’18
’19
’20
’21
SOURCE: COSTAR GROUP INC.
Per capita retail space Even though the region’s population has remained relatively flat the last 16 years, the amount of retail space per person has increased from about 53 square feet to about 59 square feet. 62 60 58
59 square feet
56 54 52 50
’06
’07
’08
’09
’10
’11
’12
’13
’14
’15
’16
’17
’18
’19
’20
’21
SOURCES: COSTAR GROUP INC. AND SOUTHEAST MICHIGAN COUNCIL OF GOVERNMENTS
Vacancy rate, by quarter The region’s retail vacancy rate has fallen sharply since 2006 even though some legacy retailers have faced challenges and bankruptcies. It spent several years near or above 9 percent, while today it’s below or near 5 percent. 10% 9 8 7
5.0%
6 5 4
’06
’07
’08
SOURCE: COSTAR GROUP INC.
’09
’10
’11
’12
’13
’14
’15
’16
’17
’18
’19
’20
’21
grappling with challenges, is generally performing well. One local real estate investment trust, Bloomfield Hills-based Agree Realty Corp., has had so much success the last several years that it has needed to double its headquarters size. “COVID-19 has reaffirmed our belief that the strongest retailers with the largest balance sheets are going to get even stronger,” President and CEO Joey Agree said in an interview in January. “Their omni-channel, including buy-online, pick-up in-store, click-and-collect and fulfillment initiatives, helped get consumers essential goods and services during the early days of the lockdown. Now as we emerge from this pandemic, hopefully sooner rather than later, retailers’ focus today is truly on omni-channel execution.”
Filling the space
we see over town,” Ciotti said. There have been plenty of them. The number of retail buildings in the region has increased from 25,464 in the first quarter of 2006 to 26,948, a nearly 6 percent increase, according to CoStar data. And the overall building size is increasing as well, rising from an average of 9,401 square feet 16 years ago to 9,829 square feet, a 4.5 percent bump.
Still a battle That’s not to say the market hasn’t taken its knocks. Department stores across the region have shuttered. Malls have fallen prey to various trends, whether population shifts, online shopping or other factors altogether. Kmart and Sears stores have closed. The Mall at Partridge Creek has lost department stores like Nordstrom and Carson’s. The Lord & Taylor at Fairlane Town Center closed, to be turned into office space for Ford Motor Co. Both malls are now in receivership, and Fairlane is due to be sold this month. Downtown Detroit retailers like Under Armour, John Varvatos and Détroit is the New Black have closed their physical locations here. Restaurants like Andiamo in Dearborn and Library Sports Pub and Grill in Novi have all called it a day. But for Ciura, those that remain have fallen into several emerging categories. Brilliant Earth, Warby Parker and Altar’d State are eco-friendly and give back to the community, she said. Allbirds, ThirdLove and Glossier all are digitally native and “have learned the value of having brick and mortar locations and are actively scouting,” Ciura said. Third, fashion brands like
The story is more complex than just struggling retailers being replaced by stronger ones. One element is the use of space overall. Louis Ciotti, managing director for Farmington Hills-based retail brokerage firm Landmark Commercial Real Estate Services, said he has seen shifts in the types of tenants taking space traditionally reserved for more conventional retailers. Think: Dentists. Physical therapists. Other types of medical and health professionals. Title compa- “WHAT HAPPENED WAS, IT HAS MADE THE nies, hair transplant clinics, STRONG STRONGER AND IT MADE THE certified public WEAK — WHICH PROBABLY WEREN’T accountants. All finding value in GOING TO MAKE IT ANYWAY — GO AWAY.” strip centers and — Cindy Ciura, principal, CC Consulting power centers around the region, including in Ma- Faherty, Aritzia and State & Liberty comb County, where Ciotti focuses Clothing are all making inroads, she his work. said. “Medical has played a role, moving Couple that with home goods reout of maybe medical or office build- tailers like RH (formerly Restoration ings into a more desirable retail Hardware) and Crate & Barrel comstorefront,” Ciotti said. ing to places like downtown Birming“Those were probably 100 percent ham, and the retail market isn’t dyin office buildings and they can now ing. eat up some of those other (retail cenIt’s just adapting. ters), and then graduated tenants move up to either freestanding (build- Contact: kpinho@crain.com; ings) or the newer developments that (313) 446-0412; @kirkpinhoCDB
12 | CRAIN’S DETROIT BUSINESS | MARCH 7, 2022
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HEALTH CARE
HEALTH CARE
BCBS losses in 2021 offset by investments, subsidiary performance BY DUSTIN WALSH
McLaren Lansing Hospital has 240 inpatient beds and a Level 3 trauma center | MCLAREN
McLaren opens $600M hospital in Lansing, promotes new COO to McLaren Macomb BY DUSTIN WALSH
McLaren Health Care last week began the staggered opening of its $600 million McLaren Greater Lansing Hospital that will bring 240 new inpatient beds, a Level 3 trauma center and a primary stroke center to the area. The seven-story nearly 900,000square-foot hospital at 2900 Collins Road is a replacement hospital for its former Greater Lansing hospital and its Lansing Orthopedic Hospital. Both aging hospitals remain open as services are being transferred over to the new Greater Lansing Hospital. Outpatient services, including those at the on-site Karmanos Cancer Institute, began on Feb. 28 with the broader opening expected early this week. The cancer center accounts for 46,000 square feet of the new hospital and will operate as a partnership between McLaren, Karmanos Cancer Institute and MSU Health Care, the university’s physician network. Karmanos Cancer Institute is headquartered in Detroit, with 15 locations throughout Michigan. “Today marks the beginning of a new chapter in McLaren and Michigan State University’s history of collaborating on caring for the communities we serve, advancing medical research, and training the next gen-
eration of caregivers to serve our patients in mid-Michigan and beyond,” Phil Incarnati, president and CEO of the McLaren Health Care, said in a Williams press release. “With nearly 900,000 square feet of new inpatient and ambulatory care space, this project is the largest capital project in our system’s history and one of the largest single investments in the health of the greater Lansing community ever.” Separately, McLaren Health Care promoted Jim Williams to vice president and COO of McLaren Macomb Hospital in Mount Clemens. Williams, 59, replaces Tim Vargas in the role, who was promoted to president and CEO of McLaren Lapeer in September last year. Williams previously served as chief nursing officer for McLaren Flint. “Nursing is vital to any hospital’s overall operation, and it’s unique in how it interacts with so many different departments,” Williams said in a press release. “This has provided an invaluable perspective and a wealth of experience for me. I’m excited to
join this organization and grow in my career, and to bring this perspective to the hospital, my new role and our overall operations.” Williams earned a nursing degree from the College of Central Florida, master’s in nursing from Excelsior College in New York and a doctorate in health care administration from Capella University in Minnesota. The 288-bed hospital is currently undergoing a $25 million expansion with the construction of the 62,000-square-foot Harrington Medical Center and Ambulatory Surgery Center across the street in Clinton Township. The new center, which is expected to include four operating rooms, diagnostic and imaging services with a mobile MRI, primary care, pain management, orthopedics, electrophysiology, vascular surgery, neurology, urology, endocrinology, physical therapy and a pharmacy, will be completed in June. McLaren Macomb last year completed a $68 million expansion of its emergency department and trauma center, the Wayne and Joan Webber Emergency and Trauma Center, in Mount Clemens. That project included the construction of a six-story Northwest Tower. Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh
FORECLOSURES
“I’m probably as surprised as you are that we haven’t seen at least a little more commercial foreclosure activity,” Sharga said in an interview Friday. “But the commercial market since we exited the Great Recession has continued to be remarkably strong. We’ve continued to see sort of a decade-long trend in commercial foreclosure activity getting smaller and smaller across the country.” Sharga said other types of workouts on commercial debt have been more prominent rather than the lender simply taking the property back. In addition, there is a lot of liquidity in the market and buyers ready to scoop distressed assets up at below-market value, Sharga said.
Blue Cross Blue Shield of Michigan lost money providing health insurance to its members in 2021 due to the COVID-19 pandemic. The Detroit nonprofit insurer reported a $374 million operating loss thanks to $860 million in costs from COVID-19 treatments and testing, BCBSM reported during an earnings call last week. However, the Blues were able to record $360 million in income on its $32.5 billion revenue for the year after the health insurance losses were offset by the performances of its non-health insurance subsidiaries and investment portfolio, which generated $907 million in positive returns. In total, the insurer was able to record a 1 percent margin on the year. In 2020, BCBSM recorded income of $646 million in revenue of $30.1 billion and its health insurance business reported an income of $120 million. “In 2021, Blue Cross put our financial strength behind our members and customers in a time of crisis, providing $860 million in pandemic-related benefits while shielding our members from direct impacts to their premiums,” Daniel Loepp, BCBSM president and CEO, said in a press release. “The strong performance of our subsidiaries and investments enabled us to support our members, while also managing a small positive margin to advance our business.” Of the $860 million BCBSM spent in response to COVID-19 last year, $600 million was spent on treatments, $185 million on testing and
What is to come?
Jeffersonian Houze | KIRK PINHO/ CRAIN’S DETROIT BUSINESS
Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh
Blue Cross Blue Shield | CRAIN’S DETROIT BUSINESS
“Property values have gone up so much over the last few years and investors will take a look at that as an opportunity to buy below market value with the notion that we’re through the worst of the pandemic and things will only get better from here,” Sharga said.
From Page 11
$75 million in administrative costs. Total cost of the pandemic for BCBSM is now $2.1 billion. None of the COVID costs resulted into rising premiums for members, the company noted. However, premiums rates could rise in coming years due to ongoing COVID-19 mitigations, Paul Mozak, executive vice president and CFO, said in the conference call with reporters. BCBSM is currently evaluating its rate cycles to determine future premiums, but those evaluations are confidential until rates are determined, Mozak said. The subsidiaries that help offset elevated pandemic costs in 2021 were Lansing-based worker’s compensation insurance provider AF Group, life insurance company LifeSecure Insurance Co., health maintenance organization Blue Care Network of Michigan, Glen Allen, Va.-based information technology company Advantsure and its health management service organization Triarq Health. BCBSM acquired Royal Oak-based Triarq Health in April 2021 for an undisclosed sum. Despite a challenging year on the company’s health insurance side, BCBSM’s top executive Loepp received a total compensation in 2021 at $15.7 million, which includes a $12.5 million cash bonus for the company’s performance in 2020. Loepp’s compensation increased nearly 36 percent in 2021 from $11.54 million in 2020.
Perhaps the biggest unanswered question remains the fate of the region’s office market — and the commercial debt that finances it. With a wave of office leases — generally 10 years — inked in 2012-2015 as the region’s economy improved, those leases expiring in the next couple years will test the market: Will those tenants, after years of hybrid working or working from home during the pandemic, reduce their footprints? Will the impact of COVID-19
on company work habits have largely dissipated, with firms going back to some semblance of normalcy? “I don’t believe we’ve seen the final fallout of the pandemic in the office market because of ... the long term leases that are in effect,” Sharga said. “Tenants (are currently) continuing to make those payments, even if they’re not fully utilizing the office space. The other way of looking at that, though, is if there is another two to three years, four to five years on that lease, very likely we will have gone through this cycle and be back to something approaching more normal activity.” In addition, maturing loans that come due next year through 2026 may be of concern in some asset classes that have been slower to recover, such as hospitality and office space, some experts have said. MARCH 7, 2022 | CRAIN’S DETROIT BUSINESS | 13
CRAIN'S LIST | LARGEST SOUTHEAST MICHIGAN LAW FIRMS Ranked by number of attorneys in Southeast Michigan as of January 2022 COMPANY ADDRESS PHONE; WEBSITE
TOP LOCAL EXECUTIVE(S)
TOTAL LOCAL ATTORNEYS JAN. 2022/ 2021
PARTNERS
ASSOCIATES
STAFF ATTORNEYS
SENIOR ATTORNEYS
OTHER FULL-TIME ATTORNEYS
MICHIGAN JAN. 2022
WORLDWIDE JAN. 2022
REPRESENTATIVE CLIENTS
1
HONIGMAN LLP
David Foltyn chairman and CEO
236
158
52
21
5
0
288
353
Agree Realty Corp., City Club Apartments LLC, Center Rock Capital Partners, General Motors LLC, Huron Capital Partners LLC, Kellogg Co., O2 Investment Partners, Rockbridge Growth Equity LLC, Rocket Companies Inc., Taubman Centers Inc.
2
DICKINSON WRIGHT PLLC
Michael Hammer CEO
162
128
34
0
0
0
203
477
NA
3
MILLER, CANFIELD, PADDOCK AND STONE PLC
Megan Norris CEO
145
70
36
21
6
12
177
201
FCA US, Comerica, Consumers Energy, University of Michigan, City of Detroit, Barton Malow, Siemens, Olympia Development, Wells Fargo Bank NA, Comerica, Consumers Energy, University of Michigan
4
BUTZEL LONG PC
Justin Klimko president and CEO
129
77
23
3
4
22
129
146
NA
4
BODMAN PLC
Carrie Leahy chair
129
90
35
3
1
0
145
145
Comerica Bank; Lear Corp., Ford Family members, The Huntington National Bank, Blue Cross Blue Shield of Michigan, Freudenberg North America, Flagstar Bank, The Detroit Lions, Cerberus Capital Management, Eli Lilly and Co.
6
JAFFE RAITT HEUER & WEISS, P.C.
Jeffrey Weiss CEO
121
88
32
0
0
1
121
121
Sun Communities, Strength Capital Partners, Feldman Automotive, Redico, Benzinga, Dembs Development, BELFOR Property Restoration and ARCH Global Precision
7
DYKEMA GOSSETT PLLC
Leonard Wolfe chair and CEO
119
74
25
3
6
11
145
384
General Motors LLC, Ford Motor Co., KIA America Inc., Auto Owners Insurance Co., Honeywell International Inc., Rialto Capital Advisors LLC, CIBC Bank USA, USAA, Lasalle Investment Management Inc., Henry Ford Village Inc.
8
CLARK HILL PLC
John Hensien CEO
107
61
17
0
28
1
136
627
N/A
9
NOVARA TESIJA CATENACCI MCDONALD & BAAS PLLC
Michael Novara managing member, CEO
98
21
59
0
18
0
98
98
MRCC Fringe Benefit Funds, Operating Engineers Local 324 Fringe Benefit Funds, Plumbers & Pipefitters Fringe Benefit Funds, BAC Fringe Benefit Funds, Insulators Fringe Benefit Funds, Auto Owners Insurance, Farm Bureau Insurance, All State Insurance, Acuity Insurance, Progressive Insurance
10
KITCH DRUTCHAS WAGNER VALITUTTI & SHERBROOK PC
Mark Wisniewski chair and CEO
97
48
23
0
26
0
103
113
Ascension, Beaumont Health, HCR Manorcare, Farm Bureau, Henry Ford Health Systems, Meemic, Michigan Professional Insurance Exchange, National Indemnity, and Tenet Health Systems
11
PLUNKETT COONEY
Thomas Vincent president and CEO
85
51
24
0
10
0
114
126
NA
12
ZAUSMER PC
Mark Zausmer managing shareholder
83
24
59
0
0
0
83
83
NA
13
GIARMARCO, MULLINS & HORTON PC
Executive committee
66
35
31
0
0
0
66
66
NA
14
GARAN LUCOW MILLER PC
Timothy Jordan executive committee chairman
63
43
20
0
0
0
65
69
NA
15
HOWARD & HOWARD ATTORNEYS PLLC
Jon Kreucher president and CEO
62
48
13
0
1
0
62
128
BMO Harris Bank N.A., Konami Gaming Inc., Martinrea International Inc., Stryker Corp., ThyssenKrupp, BorgWarner Inc., SigmaTron
16
KERR, RUSSELL AND WEBER
Executive committee
59
43
15
0
1
0
59
59
NA
17
BROOKS KUSHMAN PC
Sangeeta Shah CEO Frank Angileri president
63
56 e
NA
NA
NA
NA
NA
56 e
NA
NA
18
SECREST, WARDLE, LYNCH, HAMPTON, TRUEX AND MORLEY PC
Bruce Truex 54 president, senior partner 53 and co-managing partner Nathan Edmonds senior partner and comanaging partner
42
17
0
NA
0
61
66
NA
19
COLLINS EINHORN FARRELL PC
Theresa Asoklis CEO and co-managing shareholder Daniel Collins president and comanaging shareholder
53
33
20
0
0
0
53
57
NA
20
WARNER NORCROSS + JUDD LLP
Matthew Casey Michael Brady executive partners
50
28
15
1
2
4
229
229
Amway, Consumers Energy, Dow Chemical, Fifth Third Bank, Johnson Electric North America, Robert Bosch, Tenneco, United Wholesale Mortgage
2290 First National Building, 660 Woodward Ave., Detroit 48226-3506 313-465-7000; honigman.com
500 Woodward Ave., Suite 4000, Detroit 48226 313-223-3500; dickinsonwright.com 150 W. Jefferson, Suite 2500, Detroit 48226 313-963-6420; millercanfield.com
150 W. Jefferson Ave., Suite 100, Detroit 48226 313-225-7000; butzel.com 1901 St. Antoine St., 6th Floor at Ford Field, Detroit 48226 313-393-7564; www.bodmanlaw.com
27777 Franklin Road, Suite 2500, Southfield 48034 248-727-1472; www.jaffelaw.com
400 Renaissance Center, Detroit 48243 313-568-6800; dykema.com
500 Woodward Ave., Suite 3500, Detroit 48226 313-965-8300; clarkhill.com
888 W. Big Beaver Road, Suite 600, Troy 48084 248-354-0380; www.novaralaw.com
1 Woodward Ave., Suite 2400, Detroit 48226-5485 313-965-7900; www.kitch.com
38505 Woodward Ave., Suite 100, Bloomfield Hills 48304 248-901-4000; www.plunkettcooney.com 32255 Northwestern Highway, Suite #225, Farmington Hills 48334 248-851-4111; zausmer.com 101 W. Big Beaver Road, 10th Floor Columbia Center, Troy 48084-5280 248-457-7000; www.gmhlaw.com
1155 Brewery Park Blvd., Suite 200, Detroit 48207 313-446-1530; garanlucow.com 450 W 4th St, Royal Oak 48067 248-645-1483; howardandhoward.com
500 Woodward Ave., Suite 2500, Detroit 48226 313-961-0200; www.kerr-russell.com 1000 Town Center, 22nd Floor 222, Southfield 48075 248-358-4400; BrooksKushman.com
2600 Troy Center Drive, P.O. Box 5025, Troy 48007-5025 248-851-9500; secrestwardle.com
4000 Town Center, Ninth Floor, Southfield 48075 248-355-4141; www.ceflawyers.com
2715 Woodward Ave. Suite 300, Detroit 48201-3030 313-546-6000; wnj.com
233
170
120
134
124
169
125
106
90
87
94
73
66
66
79
62
53
46
Researched by Sonya D. Hill: shill@crain.com | This list is an approximate compilation of the largest law firms in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. Total number of attorneys does not include of counsel. It is not a complete listing but the most comprehensive available. Unless otherwise noted, information was provided by the law firms. Firms with headquarters elsewhere are listed with the address and top executive of their main Detroit-area office. NA = not available. NOTES: e. Crain's estimate.
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14 | CRAIN’S DETROIT BUSINESS | MARCH 7, 2022
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CRAIN'S LIST | LARGEST MICHIGAN LAW FIRMS Ranked by number of attorneys in Michigan as of January 2022 COMPANY ADDRESS PHONE; WEBSITE
TOP MICHIGAN EXECUTIVE
MICHIGAN ATTORNEYS JANUARY 2022/2021
WORLDWIDE ATTORNEYS JANUARY 2022/2021
MICHIGAN OFFICE LOCATIONS
REPRESENTATIVE CLIENTS
1
HONIGMAN LLP
David Foltyn chairman and CEO
288
353
Ann Arbor, Bloomfield Hills, Detroit, Grand Rapids, Kalamazoo, Lansing
Agree Realty Corp., City Club Apartments LLC, Center Rock Capital Partners, General Motors LLC, Huron Capital Partners LLC, Kellogg Co., O2 Investment Partners, Rockbridge Growth Equity LLC, Rocket Companies Inc., Taubman Centers Inc.
2
WARNER NORCROSS + JUDD LLP
Mark Wassink managing partner
229
229
Grand Rapids, Detroit, Midland, Macomb County, Kalamazoo, Muskegon, Lansing, Holland, Bloomfield Hills
Amway, Consumers Energy, Dow Chemical, Fifth Third Bank, Johnson Electric North America, Robert Bosch, Tenneco, United Wholesale Mortgage
3
DICKINSON WRIGHT PLLC
Michael Hammer CEO
203
477
Ann Arbor, Troy, Detroit, Grand Rapids, Lansing, Saginaw
NA
4
VARNUM LLP
Scott Hill executive partner Ronald DeWaard chair, managing partner
183
187
Grand Rapids, Grand Haven, Kalamazoo, Detroit, Novi, Ann Arbor, Birmingham
NA
5
MILLER, CANFIELD, PADDOCK AND STONE PLC
Megan Norris CEO
177
201
Detroit, Ann Arbor, Grand Rapids, Kalamazoo, Lansing, Troy
FCA US, Comerica, Consumers Energy, University of Michigan, City of Detroit, Barton Malow, Siemens, Olympia Development, Wells Fargo Bank NA, Comerica, Consumers Energy, University of Michigan
6
DYKEMA GOSSETT PLLC
Leonard Wolfe chair and CEO
145
384
Ann Arbor, Bloomfield Hills, Detroit, Lansing
General Motors LLC, Ford Motor Co., KIA America Inc., Auto Owners Insurance Co., Honeywell International Inc., Rialto Capital Advisors LLC, CIBC Bank USA, USAA, Lasalle Investment Management Inc., Henry Ford Village Inc.
6
BODMAN PLC
Carrie Leahy chair
145
145
Ann Arbor, Cheboygan, Detroit, Grand Rapids, Troy
Comerica Bank; Lear Corp., Ford Family members, The Huntington National Bank, Blue Cross Blue Shield of Michigan, Freudenberg North America, Flagstar Bank, The Detroit Lions, Cerberus Capital Management, Eli Lilly and Co.
8
CLARK HILL PLC
John Hensien CEO John Hern chairman
136
627
Birmingham, Detroit, Grand Rapids, Lansing
N/A
9
MILLER JOHNSON
David Buday Robert Wolford managing members
130
131
Detroit, Grand Rapids, Kalamazoo
Spectrum Health, Bronson Health, Washtenaw County, Meijer, Gordon Food Service, Kellogg Company, Steelcase, Stryker, Samaritas, Mary Free Bed Rehabilitation Hospital
10
BUTZEL LONG PC
Justin Klimko president and CEO
129
146
Detroit, Ann Arbor, Troy, Lansing (Okemos)
NA
11
JAFFE RAITT HEUER & WEISS, P.C.
Jeffrey Weiss CEO
121
121
Southfield, Detroit
Sun Communities, Strength Capital Partners, Feldman Automotive, Redico, Benzinga, Dembs Development, BELFOR Property Restoration and ARCH Global Precision
12
PLUNKETT COONEY
Thomas Vincent president and CEO
114
126
Bloomfield Hills, Detroit, Lansing, Flint, Grand Rapids, Marquette, Petoskey
NA
13
KITCH DRUTCHAS WAGNER VALITUTTI & SHERBROOK PC
103
113
Detroit, Lansing, Mt. Clemens, Marquette
1 Woodward Ave., Suite 2400, Detroit 48226-5485 313-965-7900; www.kitch.com
Gabe Sybesma Jenna Wright Greenman Mark Sesi Executive committee
Ascension, Beaumont Health, HCR Manorcare, Farm Bureau, Henry Ford Health Systems, Meemic, Michigan Professional Insurance Exchange, National Indemnity, and Tenet Health Systems
14
NOVARA TESIJA CATENACCI MCDONALD & BAAS PLLC
Michael Novara managing member, CEO
98
98
Troy, Southfield
MRCC Fringe Benefit Funds, Operating Engineers Local 324 Fringe Benefit Funds, Plumbers & Pipefitters Fringe Benefit Funds, BAC Fringe Benefit Funds, Insulators Fringe Benefit Funds, Auto Owners Insurance, Farm Bureau Insurance, All State Insurance, Acuity Insurance, Progressive Insurance
15
FOSTER SWIFT COLLINS & SMITH PC
Anne Seurynck president
90
90
Lansing, Southfield, Grand Rapids, Detroit, Holland, St. Joseph
NA
16
ZAUSMER PC
Mark Zausmer managing shareholder
83
83
Farmington Hills
NA
17
GIARMARCO, MULLINS & HORTON PC
William Heritage president
66
66
Troy
NA
18
GARAN LUCOW MILLER PC
Timothy Jordan executive committee chairman
65
69
Grand Blanc, Port Huron, Grand Rapids, Ann Arbor, Traverse City, Detroit, Troy
NA
19
HOWARD & HOWARD ATTORNEYS PLLC
Jon Kreucher president & CEO
62
128
Royal Oak, Michigan
BMO Harris Bank N.A., Konami Gaming Inc., Martinrea International Inc., Stryker Corp., ThyssenKrupp, BorgWarner Inc., SigmaTron
20
SECREST, WARDLE, LYNCH, HAMPTON, TRUEX AND Bruce Truex president, senior partner and MORLEY PC
61
66
Troy, Grand Rapids
NA
2290 First National Building, 660 Woodward Ave., Detroit 48226-3506 313-465-7000; honigman.com
2715 Woodward Ave. Suite 300, Detroit 48201-3030 313-546-6000; wnj.com
500 Woodward Ave., Suite 4000, Detroit 48226 313-223-3500; dickinsonwright.com
160 West Fort St., Detroit 48226 313-481-7300; www.varnumlaw.com
150 W. Jefferson, Suite 2500, Detroit 48226 313-963-6420; millercanfield.com
400 Renaissance Center, Detroit 48243 313-568-6800; dykema.com
1901 St. Antoine St., 6th Floor at Ford Field, Detroit 48226 313-393-7564; www.bodmanlaw.com
500 Woodward Ave., Suite 3500, Detroit 48226 313-965-8300; clarkhill.com
409 East Jefferson Ave., Fifth Floor, Detroit 48226 248,258.2850; www.millerjohnson.com
150 W. Jefferson Ave., Suite 100, Detroit 48226 313-225-7000; butzel.com
27777 Franklin Road, Suite 2500, Southfield 48034 248-727-1472; www.jaffelaw.com
38505 Woodward Ave., Suite 100, Bloomfield Hills 48304 248-901-4000; www.plunkettcooney.com
888 W. Big Beaver Road, Suite 600, Troy 48084 248-354-0380; www.novaralaw.com
28411 Northwestern Highway, Suite 500, Southfield 48034 248-539-9900; www.fosterswift.com
32255 Northwestern Highway, Suite #225, Farmington Hills 48334 248-851-4111; zausmer.com
101 W. Big Beaver Road, 10th Floor Columbia Center, Troy 48084-5280 248-457-7000; www.gmhlaw.com
1155 Brewery Park Blvd., Suite 200, Detroit 48207 313-446-1530; garanlucow.com
450 W 4th St, Royal Oak 48067 248-645-1483; howardandhoward.com
2600 Troy Center Drive, P.O. Box 5025, Troy 48007-5025 248-851-9500; secrestwardle.com
co-managing partner Nathan Edmonds senior partner and comanaging partner
279
216
209
180
156
151
137
131
106
134
169
122
88
90
93
73
66
66
79
61
Researched by Sonya D. Hill: shill@crain.com | This list is an approximate compilation of the largest law firms in Michigan. Total number of attorneys does not include "of counsel." It is not a complete listing but the most comprehensive available. Information was provided by the law firms or gathered from their websites. Firms with headquarters elsewhere are listed with the address and top executive of their main Michigan office. NA = not available.
Want the full Excel version of this list — and every list? Become a Data Member: CrainsDetroit.com/data MARCH 7, 2022 | CRAIN’S DETROIT BUSINESS | 15
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PEOPLE ON THE MOVE
Advertising Section
NONPROFITS
To place your listing, visit www.crainsdetroit.com/people-on-the-move or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com ACCOUNTING
ACCOUNTING
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UHY Advisors
UHY Advisors
UHY Advisors
UHY, the fifth largest professional services firm in Southeast Michigan, has promoted John Gallo and Loni Winkler to Gallo managing director. John Gallo has been with the firm for 25+ years and is the leader of the national construction practice, a top 25 construction accounting firm as ranked by Construction Executive. He enjoys attending rock concerts and lives in Sterling Heights with his wife Cassandra and daughter Skylar. Loni Winkler has been a Winkler leader in the tax department for 15+ years, and steps in to the Great Lakes tax leader role, succeeding a 45-year firm veteran. She enjoys spending time outside with her kids, plays on three separate soccer teams, and resides in Wixom with her husband Darrin and their daughters Kinsley and Brynn.
UHY, the fifth largest professional services firm in Southeast Michigan, has promoted Jeremy Falendysz and Jenna Falendysz Lamb to managing director. Jeremy Falendysz is a leader of UHY Corporate Finance with 20+ years of investment banking experience and over $60 billion in total transaction value. He lives in Birmingham and enjoys traveling and staying active playing basketball and running. Jenna Lamb has been with the firm 15+ years Lamb and is a leader of the audit and assurance practice and the firm’s Women Investing in Success and Excellence group. She lives in Macomb with her husband Chris and their three sons Jared, Logan and Lucas, and enjoys staying active, travelling, and reading.
UHY, the fifth largest professional services firm in Southeast Michigan, has promoted Matt Munn and Jeff Solis to Munn managing director. Matt Munn has been with the firm for 30+ years, is a leader in the tax practice, and an active voice within the national PEO practice. He lives in Washington Twp. with his wife Julie and enjoys spending time up north, going to concerts and competing in cornhole tournaments. Solis Jeff Solis brings 15+ years of experience to the audit and assurance practice and heads the national PEO practice. Solis specializes in providing audit, tax, and advisory services for a wide range of national clients in the middle market. He lives in Birmingham with his wife Melissa and their daughter Siana.
FINANCIAL SERVICES
MANUFACTURING
STAFFING / SERVICES
Bank of America
LIFT
Sigred Solutions LLC
Tiffany Douglas moves to Bank of America’s Enterprise Diversity and Inclusion (D&I) team leading the Global Women’s Initiative & Under-represented Talent Strategy. In this role, she will be responsible for the bank’s strategy to support the advancement, development and exposure opportunities for women and under-represented talent including employee summits, internal initiatives and executive councils and external partnerships that aim to do the same. Tiffany has been with the company more than 15 years and previously served as the bank’s Market Executive for Detroit.
LIFT Names Phaedra Wainaina Director of Education & Workforce Development. LIFT, the Detroit-based national manufacturing innovation institute, announced Phaedra Wainaina will lead and expand talent programming aimed at training the advanced manufacturing talent pipeline in Detroit and nationwide including in smarter manufacturing. She earned a BA in Political Science/AfroAmerican and African studies from the University of MichiganAnn Arbor and a JD from Wayne State University Law School.
Sigred Solutions, LLC management recruiters and leadership advisory is pleased to announce that Lee E. Meadows, PhD has joined the firm as a Senior Client Advisor. Lee brings over 40 years of experience in teaching, coaching and organizational development. He is also the President of the Michigan Chapter of the National Association of African Americans in Human Resources. Lee’s focus is on helping managers become leaders and coaching teams reach their full potential.
NEW GIG?
Preserve your career change for years to come. C O NTACT
Plaques • Crystal Keepsakes • Frames • Other Promotional Items
Laura Picariello, Reprints Sales Manager lpicariello@crain.com (732) 723-0569
The Michigan Opera Theatre change in name to Detroit Opera marks a new era in the company, as it works to become more accessible to the masses. | CRAIN’S DETROIT BUSINESS
Michigan Opera Theatre changes to Detroit Opera New name comes as shows return on April 2 BY SHERRI WELCH
But Detroit Opera is “already who we are,” Sharon said. “This company is of Detroit, and its home since 1996 is the Detroit Opera House. David DiChiera took a chance on Detroit in challenging times for the city, and we want to make it clear we intend to stay rooted right here,” Sharon said in the release. “The fact that we are celebrating ‘The Next 50’ of the organization, renovating the hall to make it more accessible for the audience, and signaling a change in artistic direction — all of this says now is the time to adapt and align ourselves even more with our community.” The name change comes after significant investment to update and improve the Detroit Opera House. During the two-year closure due to the COVID-19 pandemic, the opera company added a seven-story elevator tower and new accessible restrooms. New seating and updates to the heating, ventilation and air conditioning under the seats are planned over the next three years, all aimed at increasing accessibility, Brown said. Operating on a $14 million budget for fiscal 2022, the cultural anchor in the heart of downtown hosted outdoor programs while work on the opera house was underway.
After more than 50 years, Michigan Opera Theatre is changing its name as it prepares for shows to return to the Detroit Opera House on April 2. When the company takes the stage for the premiere of “Le Bohème,” it will be known as Detroit Opera. The name change marks a new era in the company, as it works to become more accessible to the masses. Two years ago, President and CEO Wayne Brown and Gary L. Wasserman Artistic Director Yuval Sharon created “a new and ambitious standard for American opera that emphasizes community, accessibility, artistic risk-taking, and collaboration,” the opera company said in a news release. “As we enter our second half-century, and with all the unique new productions emerging, our Board and Trustees decided that it was time for a change,” Brown said in the statement. “We are a Detroit-based company operating in Detroit, a city with a growing national and international recognition as an arts-focused city. We want to take advantage of that recognition and add to it.” While the name change may seem small, board Chairman Ethan Davidson said it’s actually a “huge” ad- “WE ARE A DETROIT-BASED COMPANY justment. “Over just the OPERATING IN DETROIT, A CITY WITH A next year we’re GROWING NATIONAL AND INTERNATIONAL partnering with seven other opera RECOGNITION AS AN ARTS-FOCUSED CITY.” companies, in- — Wayne Brown, president and CEO, Detroit Opera cluding the MetIn recent months, Detroit Opera has ropolitan Opera,” Davidson said in the release. “Featuring Detroit Opera in attracted millions to support the capithe promotion of all those productions tal projects and innovative programwill help us launch our new name on a ming Sharon is bringing to Detroit. national stage, and with the incredibly In November, the William Davidson innovative approach our new Artistic Foundation gave the company a $5 Director Yuval Sharon is taking in these million grant to go toward its $15 milproductions we’ll send a message that lion capital campaign. In December, creativity and new ideas are blossom- the company received a $1 million ing in Detroit.” grant from the Erb Family Foundation The company began its life as Over- to provide flexible support. ture to Opera, a branch of the Detroit Earlier that month, the Ralph C. WilGrand Opera Association that present- son Jr. Foundation named the opera ed excerpted operas for the DGOA’s company among 11 major arts groups educational outreach program. Under in the region that will benefit from a the Detroit opera company founder $100 million commitment and permaDavid DiChiera’s leadership, the orga- nent endowment at the Community nization progressively matured, estab- Foundation for Southeast Michigan. lishing its own board of trustees in The fund and additional support from 1971. By 1972, Overture to Opera was the foundation will provide Detroit officially accepted as a member of OP- Opera $200,000 in unrestricted operatERA America, and by 1973, the newly ing grants every year from now on. renamed Michigan Opera Theatre began operation as an independent orga- Contact: swelch@crain.com; nization separate from the DGOA. (313) 446-1694; @SherriWelch
16 | CRAIN’S DETROIT BUSINESS | MARCH 7, 2022
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MERGERS & ACQUISITIONS
Blake’s Hard Cider to acquire Oregon-based Avid Hard Cider Armada Township-based company to use Avid’s distribution chain to offer its cider out West BY DUSTIN WALSH
Armada Township-based Blake’s Hard Cider has entered an agreement to acquire the operating assets of Bend, Ore.-based Avid Hard Cider Co. Terms of the deal were not disclosed. As part of the deal, Blake’s will form a new entity called Avid Cider Co. LLC that will acquire Avid’s existing production facilities and taproom leases as well as all equipment, inventory, recipes, distribution agreements and overall brand properties. The new entity will retain the Avid brand name and continue its contracts with existing distributors, retailers and bars and restaurants. Blake’s will also use Avid’s distribution chain and production to supply its cider offerings in the Pacific Northwest as part of its growth strategy, including Oregon, Washington,
LIVENGOOD
From Page 6
Chris Miller, owner of BrightStar Care in East Lansing (no relation to Kelley Miller), offered to supply nurses for her in-home care at $70 an hour. That rate would cover the market rate of $45 to $55 per hour for RN wages, plus benefits, taxes and overhead, Miller said. “Nursing is not cheap,” Chris Miller said. “I can’t believe (Auto-Owners is) saving money with her in the hospital.” Jones said Sparrow hospital leaders have resorted to getting their government relations officer involved in trying to set up a meeting with state insurance regulators, hoping they can convince Auto-Owners to allow Miller to be cared for at home again. He described the weekslong efforts to get Miller discharged as “very frustrating.” Even a third-party case manager hired by Auto-Owners has been stymied by her own client, according to Jones and Chris Miller. “The external case manager has been trying to get ahold of some of the movers and shakers who could help in this situation, but it’s just been a difficult process,” Jones said.
Silence from halls of power The Michigan Health & Hospital Association recently sounded alarm bells for movers and shakers about car crash survivors being forced to occupy hospital beds. But no one with the power to rectify this predicament seems to be doing anything about getting Kelley Miller out of the hospital. Not Auto-Owners. Kathleen Lopilato, an assistant vice president in the legal division at Auto-Owners, declined to comment last week on the Miller situation and why there’s been a stalemate for six weeks — before hanging up on me. Not the MCCA with its $27 billion fund that could pay the roughly $2,300-a-day cost of Miller’s
Avid Hard Cider | AVID HARD CIDER VIA YOUTUBE
Andrew Blake
Idaho, Nevada, Montana and California, the company said in a news release. Blake’s is currently available in 22 states. “Blake’s Hard Cider has been on a rapid growth trajectory, catapulting
into the top six U.S. ciders in both sales and volume and we are confident that the timing is right to expand our footprint and compete nationally,” Andrew Blake, founder and president of Blake’s Cider, said in a press release. “Like us, Avid is
round-the-clock care for a registered nurse and aide working inside her home. The MCCA’s executive director, Kevin Clinton, did not return multiple messages seeking comment on Miller’s case. He reports to a board of directors comprised of auto insurance companies, including Auto-Owners. Not the office of Gov. Gretchen Whitmer, who has been largely focused on touting the $400-per-vehicle MCCA refund checks due to drivers by May 9. In a bowl game TV ad, Whitmer called the $3 billion in refund checks “a win for all of Michigan.” Not Whitmer’s Department of Insurance and Financial Services. When asked about Miller’s case and complaints filed against Auto-Owners, the state’s insurance regulator said it “cannot speak to or disclose information on individual cases.” DIFS Director Anita Fox is on record saying insurers can’t let car crash survivors fall into “warehouse care,” which is exactly what Auto-Owners and the MCCA have allowed to happen here. Miller, her longtime Sparrow physician Dr. Michael Andary, her longtime nurses Krause and Curry and her case manager, Sonja Hoxie, all say the strategy by Auto-Owners seems aimed at pushing Miller into a nursing home. That’s warehouse care, Director Fox. And the Legislature also remains mostly mum. Lawmakers hold the cards on changing the 2019 fee schedule that entitled insurers to cut payments to home health care and spinal cord rehabilitation centers by 45 percent after July 1 of last year. The cuts have wreaked documented chaos on Michigan’s home care industry. For months, the small businesses that perform post-hospitalization care for critically injured drivers have been pleading with lawmakers, showing them their books and reams of unpaid invoices to insurers that illustrate the economic disruption of the 2019 law.
An effort to change the fee schedule is gaining some momentum in the Republican-controlled House as lawmakers hear more stories about people like Miller being stranded in hospitals and home care companies getting stiffed by the insurers on bills for months on end. “To me it’s distressing when you see messaging from the governor’s office where it’s all positive and everything’s great,” said Rep. Ben Frederick, R-Owosso. “There’s human suffering happening here.” Frederick, the House majority floor leader, is now leading an effort within the House Republican caucus to change the fee schedule rates for medical providers that care for car crash survivors. “There were some things that needed to happen in 2019 to clean up fraud, to clean up abuse — we’ve done all of that,” Frederick said. “But let’s actually acknowledge there are challenges that real families are facing — these people have names and faces, they’re spread out throughout all of our districts in the state.” But changing the law is fraught with challenges, ranging from educating first-term House members who didn’t vote for the new law three years ago to getting entrenched Republican senators to acknowledge the law they crafted is imperfect. And then there’s election-year politics with a Democratic governor who has made those forthcoming refund checks a pillar of her bid for a second term. “When Gov. Whitmer came out and said they’re going to get $400 checks, people are expecting the $400 checks,” said Rep. Matt Hall, R-Marshall. “And we’re going to hear from a lot of people if they don’t get them because of changes to the legislation.” The voices of 7.5 million vehicle owners awaiting refund checks are drowning out the voiceless who are trying to salvage long-term care that is no longer guaranteed. Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood
family-run and has stayed true to its roots of producing high quality, locally sourced cider. By leveraging both our established distribution channels, we will collectively grow both brands in an authentic way.” Hard cider has seen an explosion
of growth in recent years. Despite the closure of bars and restaurants in many states during the early months of the pandemic, cider sales grew 11 percent in 2020 to $494.4 million, according to Chicago-based market research firm Information Resources Inc. Blake’s has expanded its product offerings in recent years beyond apple-flavored ciders, such as the Blake’s Lite Cider line introduced in 2020 that includes flavors including mimosa, strawberry kiwi and melon. Last year, Blake’s completed a $1 million redevelopment of its Blake’s Backyard in Almont, which includes a 10,000-square-foot taproom and restaurant as well as an entertainment venue. Blake was also a 2020 Crain’s 40 Under 40 honoree. Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh
Advertising Section
CLASSIFIEDS To place your listing, contact Suzanne Janik at 313-446-0455
MARKET PLACE BUSNIESS OPPORTUNITY
101 Year Old Established Business for Sale in the heart of Corktown Owners Retiring after 40 Years Close to New Ford District Broker Protected 248-891-8093 for more information
SUBMIT YOUR AD TODAY
REQUEST FOR BIDS
The Detroit-Wayne Joint Building Authority the owner and manager of the two-tower 745,000 square foot Coleman A. Young Municipal Center (CAYMC) located at 2 Woodward Avenue, Detroit, Michigan 48226. Anticipates issuing a series of RFPs for various building services and supplies. If you are interested in receiving an RFP, please send your request to commissioners@dwjba.com please include the Service or Supply RFP you would like to receive. Professional Services: • Property Management • Architectural and Engineering (mechanical, civil, structural, space planning, landscape, ADA, etc.) • Legal • Insurance • Accounting and Finance • Public Relations Building Standard Services: • Security Guard Service • Janitorial Service • Landscaping/Snow Removal • Pest Control • Plumbing • Electrical • Carpentry
Maintenance Services: • Painting • Glass/Glazing • Roofing • Carpet and Tile • Window Treatment • Asbestos Abatement • Marble Maintenance • Moving/Relocation Supplies: • Janitorial Supplies • Office Supplies • Miscellaneous Supplies (tools, ladders, PPE, etc.) • Signage/Graphics • Keys and Locks • AHU Filters • Lighting Supplies
REQUEST FOR BIDS
Request-for-Proposal for the installation of a Veterans’ Memorial The Detroit-Wayne Joint Building Authority (Authority) manages the Coleman A. Young Municipal Center located at 2 Woodward Avenue, Detroit, Michigan. The Authority has a tradition of honoring our military and active-duty service members and veterans by raising the flags of each branch of the U.S. military on their anniversary dates and the Purple Heart Flag on Veterans’ Day, Memorial Day, the 4th of July, and on Purple Heart Day. The Authority is issuing an RFPs for the installation of a plaza at the flagpole on the E. Jefferson lawn of the Coleman A. Young Municipal Center. If you are interested in receiving an RFP, please send your request to commissioners@dwjba.com.
MARCH 7, 2022 | CRAIN’S DETROIT BUSINESS | 17
RENTS
From Page 3
“It’s an opportunity,” he said. “I think it’s important to capitalize off the opportunities we have.” The for-sale market has seen rising prices as the supply of homes has lagged. That same dynamic is at play in the rental market, where it’s been increasingly difficult to find a high-quality rental home at an affordable price. Sony Morton, a Realtor with Bowers Realty & Investment, said that’s been the case for much of the pandemic. He recalled holding an open house last spring for a two-bedroom, 700-squarefoot lower unit in a duplex that would ordinarily rent for $500 a month. When he got to the home, 10 minutes late for the open house’s scheduled start time, he said there were cars parked on both sides of the street and people waiting to see the unit. “It was a Cedar Point line,” he said. “It came from the front door, past the driveway to the neighbor’s house.” The apartment ended up renting for $650 a month, he said, and to someone who paid a month and a half’s security deposit upfront, instead of just the month’s that had been requested. “It got so crazy,” he said. “If you have something nice-looking in Detroit, there’s a line for it.” And somehow, Morton said, the suburbs are worse. He worked with a retiree whose Southfield rent jumped 18 percent, to $1,650 a month. As people keep losing units, Morton said, it just drives prices higher. In some suburbs, he said, he’s seen rents go as high as $2,500 a month. It’s what Eric Wizenberg is seeing, too. Wizenberg, the principal of Reserve Management Co. and Suite Properties, said as the coronavirus pandemic led people to look for more space in their homes, the suburbs became increasingly desirable. Between stimulus checks and curbed expenditures, tenants had more money to spend, too. “Demand for rental is as high as it’s ever been,” he said. “Especially in the suburbs, it’s exceeding the supply.” Wizenberg said figuring out the right amount to raise rents is always a balancing act, since any increases can
Above, Part owner of JPA Holdings Derrell Grant in his office building in Southfield. At left, Grant shows photos of homes he rehabilitated on his iPad. | PHOTOS BY NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS D
quickly be wiped out if units sit vacant. The properties he owns in the city of Detroit generally don’t see large increases, he said. But the suburbs? “The suburbs are crazy,” Wizenberg said. “It definitely seems like we’re able
to constantly achieve rent increases, whether it’s a lease renewal or a new tenant.” Those increases, generally speaking, have been in the 12 to 15 percent range for existing tenants and around 20 percent for new ones, he said.
But it’s not the case for everyone. Justin Lindenmuth said he’s still waiting for payments from tenants who applied for coronavirus relief money from the state because they haven’t been able to pay what they currently owe. He has sold some single-family rental homes that were vacated to help cover costs while he waits to get paid, but said he doesn’t have plans to increase rents for those who have continued to pay on time. It’s a thank you and a courtesy, he said. “I like to keep good tenants,” he said. Nationally, Redfin shows the average rent is $1,891 a month, 15.2 percent higher than a year ago, while Realtor. com’s median rent nationally is $1,789, a 19.8 percent increase. Realtor.com’s data also looks at the size of units. In metro Detroit, a median studio was going for $1,075 a month, up 8.6 percent; a one-bedroom was renting for $1,150 a month, a 12.4 percent increase; and a two-bedroom rented for $1,499 a
month, 11.4 percent higher than January 2021. And a recent report from the Harvard Joint Center for Housing Studies said the largest rent increases in the Midwest were elsewhere in Michigan — in Flint, Grand Rapids and Kalamazoo, where rent increases exceeded 11 percent. With housing stock already constrained, the University of Michigan’s record enrollment puts additional strain on Ann Arbor-area units, said Alice Ehn, the executive officer of the Washtenaw Area Apartment Association. Ehn said most landlords don’t have a standard increase amount in mind, but base their plans on market conditions. That easily explains the recent spikes, she said: “A shortage of apartments equals rising costs.” Contact: arielle.kass@crain.com; (313) 446-6774; @ArielleKassCDB
REAL ESTATE
Where rents rose the most in metro Detroit BY ARIELLE KASS
Apartment complex rents rose in metro Detroit at the end of 2021, as did rents as a whole, but CoStar data shows there’s a wide discrepancy between rent increases in different submarkets in the region. The largest increase was in the Grosse Pointe submarket, where rents were up nearly 20 percent yearover-year from the end of the fourth quarter in 2020. On the opposite end, Birmingham and Bloomfield saw rents rise just 0.14 percent. Detroit as a whole had an 8.15 percent increase in multifamily rents. Brian Fineran, CoStar’s director of market analytics, said more people have been kept in the rental market in recent months because high demand for houses has made it hard to buy. But he said more apartments are expected to come online this year, and deliveries will soon outpace de-
mand. People who were paying higher rates to live downtown were less interested in staying in the city as the coronavirus raged, and often moved to the suburbs, Fineran said. That led to a rise in suburban rents. In Livonia and Plymouth, rents rose 8 percent, while they were up nearly 10 percent in Troy and Rochester, and 11 percent in both Pontiac and Dearborn. They were up more than 12 percent in Farmington Hills and Novi. On the other hand, multifamily rents rose just 3 percent in Midtown Detroit, and other parts of the city. Crain’s reported last wee that two recent reports, from Redfin and Realtor.com, showed metro Detroit’s January rents were up 10 percent on average. Contact: arielle.kass@crain.com; (313) 446-6774; @ArielleKassCDB
Metro Detroit rent increases by market, Q4 2021 Multifamily rents have gone up year-over-year in every metro Detroit submarket, according to CoStar data. Grosse Pointe Farmington Hills/Novi Southwest Wayne County Pontiac Dearborn Northwest Oakland County Livingston County Troy/Rochester Detroit Livonia/Plymouth Downriver Macomb County Royal Oak/Clawson/Ferndale Southwest Detroit Southfield Jefferson (Jefferson-Chalmers) Downtown Detroit East Side Detroit West Side Detroit Midtown Detroit Uptown Detroit Birmingham/Bloomfield
19.84% 12.47% 12.00% 11.01% 11.00% 10.10% 9.87% 9.61% 8.15% 8.14% 8.02% 7.31% 6.99% 6.87% 6.31% 6.12% 3.99% 3.38% 3.02% 2.95% 2.80% 0.14%
SOURCE: COSTAR
18 | CRAIN’S DETROIT BUSINESS | MARCH 7, 2022
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3/4/2022 1:45:19 PM
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ZOO
DOMINO’S
From Page ?
From Page 3
“We are still in very preliminary stages of examining the nature center under my leadership, and no decisions other than building the center in Macomb County have been made,” she said. The Great Lakes Center for Nature “will be the first big project that I (can) put my own hand in, so that’s really exciting for me,” Murphy said. But some officials in Macomb County are getting impatient. In a letter sent to Murphy last month, first reported by the Macomb Daily, officials from Clinton Township and Mount Clemens, the county seat, said they wanted to give her time to acclimate to her new role but were reaching out to understand decisions being made on the “long-awaited” Great Lakes Center for Nature proposed for the county in 2018. Two Macomb County commissioners also signed the letter. Officials from the two communities in February 2020 offered the zoo public land in Shadyside Park along the Clinton River Spillway at no cost. The property on the border of Clinton Township is owned by Mount Clemens. “The response from the zoo was polite but disappointing, as efforts to explore sites along Lake St. Clair continued,” officials said in the Feb. 18 letter. As of last month, officials said it was their understanding the zoo was targeting a tract of undeveloped wetlands owned by Macomb Community College, near its center campus and the M-59 commercial corridor — “the gateway to suburban sprawls and nowhere near natural flowing water,” as they described it in the letter. The nature center could serve as an anchor, connecting neighborhoods, residents and visitors to Lake St. Clair, they said. “In addition, placing the Great Lakes Nature Center at the location we are offering would demonstrate the zoo’s commitment to inclusion and be welcoming to people who may not be able to take the trip to Royal Oak,” where the zoo’s main campus is located, they said. Officials learned of the site the zoo is allegedly pursuing from county legislators and not the zoo, Clinton Township Treasurer Paul Gieleghem told Crain’s. He declined to name them. The response from the zoo to the letter was, “‘We appreciate the offer. We’re looking at all locations, and there’s nothing set in stone yet,’” said Gieleghem, who was on the Macomb County board of commissioners when voters in the county passed the zoo’s first operating millage in 2008. The zoo did not comment directly on whether it is or was considering the Mount Clemens site. The zoo has a physical footprint in Wayne and Oakland counties, which also passed the zoo’s first operating millage and renewed it a few years ago. “We want to make sure there’s a physical footprint in Macomb County and we’re getting more than just free field trips for kids,” Gieleghem said. The board of commissioners is aware of the two cities’ wishes to locate there, but the county is not set on any site, board Chairman Don Brown said. “The board’s view is that we’re looking and hoping the zoo finds a site. We continue to support their ef-
Staffing at the zoo is still down about 15 percent from winter 2020 before the pandemic, CFO Robert Schumaker said. But things are heading in the right direction. The zoo counts on earned revenue from parking, admissions, a percentage of concessions, camps and rentals for about half of its budget. Another third of the zoo’s budget comes from the tri-county millage, and the rest from fundraising and investment returns, he said. It had just shy of 38,000 members in late February, down from 48,480 in 2019. Pre-pandemic, the zoo was operating on a $45 million budget. It cut that to $28 million in 2020 and has been building back since, Schumaker said. Last year, operating revenue for the zoo totaled $39.6 million, with net operating income of $4.6 million, based on unaudited results, largely due to better-than-expected attendance in the second half of the year, Schumaker said. The zoo is operating on a $40 million budget this year. Gate limits are still in place for visitors. But attendance has been fairly strong, with 960,000 people visiting the zoo last year, Schumaker said, down from 1.3 million-1.4 million annually before the pandemic. Murphy said she is looking to reignite earned revenue this year by increasing gate admissions overall, special programs that are on the calendar — including the May 28 return of Dinosauria with new, animatronic dinosaurs — and through special events, memberships and increased rentals for things like weddings and birthday parties. That’s the goal, but in a thoughtful way that balances community need with the zoo’s mission, Murphy said. You want the zoo to be a resource for the community, she said, “but it should not look and feel like an amusement park.” Murphy said she is focused on getting more people invested in the zoo’s animal welfare, conservation and sustainability work and programs. “Once we get there, we can continue to do our mission full scale,” she said.
Weiner’s tenure, annual U.S. retail sales have grown from $3 billion to $8 billion. Weiner led the company’s “Pizza Turnaround” campaign, which was known for frankly discussing the quality of the chain’s pizza ahead of a reformulated recipe. He has also overseen a period when Domino’s saw success and growth by focusing on digital orders, which now represent 75 percent of the company’s U.S. retail sales. That technological transformation under Allison and Domino's previous CEO, Patrick Doyle has also included a pizza-ordering app that was easy enough to use that customers could order in 17 seconds, and the company continues to work on autonomous pizza delivery vehicles and drone delivery. The technological progress has helped the company increase sales in existing stores every quarter for 10 years, a streak that came to an end last October, when COVID-induced staffing problems started to take a bite out of how many pizzas its stores could make and deliver. And that's paid off in the com pany's stock price, which rose from $16.40 at the beginning of 2011 to peak at $564 last December. Since then, the price has come back to earth on worries about continued sales growth, and the stock was trading around $411 on Friday afternoon. Store openings were also delayed last year with slow permitting, equipment deliveries and construction. Inflation is also taking a bite, with the pizza giant saying it expects the cost of ingredients to jump 8 percent to 10 percent this year — about three to four times that of a normal year. Stores that had the most staffing issues — the bottom 20 percent of locations when it comes to number of employees per store — had same-store sales decrease by an average 7 percent, Allison said. That’s compared with an average 6 percent sales increase for the top 20 percent of stores that are closest to fully staffed. “There are a number of actions we’ve taken and are continuing to take,” Allison said of the labor issues. Domino’s in 2021 increased wages and benefits by more than $6 million over required wage increases and is planning to do $8 million more in 2022. Last month, Domino’s offered customers who choose carryout over delivery a $3 credit for use on future online pickup orders as it faces a shortage of delivery drivers. Domino’s is also looking at how to make delivery drivers’ jobs easier, like store employees running pizza out to delivery cars so they don’t have to get out at a Domino’s location. “We’re taking a look at, what are the options we have to make these jobs more flexible for our drivers, relative to the more historical approaches to how we’ve scheduled ... our delivery drivers,” said Allison. Domino’s global revenue fell 1 percent to $1.34 billion in the October-December period. That was short of Wall Street’s forecast of $1.38 billion, according to analysts polled by FactSet. U.S. sales fell 3 percent in the fourth quarter. Domino’s has grown by $3.5 billion in global retail sales in the last two years, Allison said. The average U.S. store took in more than $1.3 million in sales during 2021. — The Associated Press contributed to this report.
Contact: swelch@crain.com; (313) 446-1694; @SherriWelch
Contact: afrank@crain.com; (313) 446-0416; @annalise_frank
New habitats for bullfrogs, snakes and urban woodland reptiles will provide large, complex spaces that advance the DZS mission of animal welfare while offering guests close-up views of fascinating animals who are native to Michigan. | DETROIT ZOOLOGICAL SOCIETY
Murphy
Gieleghem
forts to do it,” he said.
Looking ahead In Wayne County, the zoo expects to reopen the Belle Isle Nature Center, which closed during the pandemic, by the summer, Murphy said. It’s used the closure to launch a previously planned, $2.5 million renovation of the center. The 10,000-square-foot center is home to 17 species of reptiles, amphibians and fish native to Michigan and local waterways. It serves as a base for a wide variety of programs including summer and winter camps, special events and citizen science — and it saw 83,300 visitors in 2019, the zoo said. When complete, the new and updated habitats at the center will enhance animal welfare and provide more immersive viewing experiences for visitors, further connecting them to the often-overlooked creatures who reside there and in the environment around the nature center, the zoo said. Among other things, the renovations and updates include: A sewer tunnel walkthrough in the entrance area. A floor-to-ceiling glass bird viewing alcove. A new mudpuppy habitat and updates to the pollinators habitat, with magnified views of an active bee hive and new programming with the Michigan Butterfly Network. An interactive trail cameras exhibit. Conversion of the barn and yard areas (which once housed fallow deer that are now on the zoo’s main campus) into a habitat for rescued, nonreleasable raptors. An outdoor patio for programs. Meanwhile on its main campus in Royal Oak, the zoo reopened the Polk Penguin Conservation Center last month, despite some persistent leaking of ground water. Talks are on-
going with the joint venture contractor on the project, Murphy said. The zoo is considering ideas for the vacated penguinarium building, she said, noting the original plan was to turn it into a bat conservation center but other ideas have also been floated by staff, including converting it into a catering center to support events at the zoo. The current 20-year-old master plan for the zoo is 80 percent complete, Murphy said. Remaining projects include updates to the Horace H. Rackham Memorial Fountain in the center of zoo’s main campus and improvements to make the zoo’s front gates more visible. The zoo is set to go into master planning next year to develop a new long-term plan for its campus, including habitats, species in care at the zoo and buildings, she said. Does the idea former Executive Director Ron Kagan floated for an aquarium in Detroit have legs? The master planning process is where projects like that will be discussed, Murphy said, adding, “Aquariums are a whole other level of detail,” she said. “I’m still trying to wrap my head around Great Lakes Center for Nature and Belle Isle and things we have going on strategic planning and learning.”
Making a plan The zoo recently began a strategic planning process Murphy expects to last through the rest of the year toward a multiyear plan that will lay out the organization’s goals through 2025. She’s intent on figuring out the culture of the organization and community at large to help set a path for the coming years, she said. “Our society has changed; people want different things now. They want or need a feeling of connection and getting back together,” Murphy said. “I’m going to listen to the ideas and vision of the group ... meeting with groups in both the community and our community as an organization ... and then I’ll develop a plan.” Even as they plan for the future, Murphy and her team are focused on returning the zoo to pre-pandemic staffing, revenue and programmatic levels.
20 | CRAIN’S DETROIT BUSINESS | MARCH 7, 2022
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POTASH
RUSSIA
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“The conflict in the Ukraine frees up Canadian potash producers to completely control the North American market with no competition,” said John Ezinga, vice president of agronomy for Lansing-based Michigan Agricultural Commodities Inc., which supplies farmers with inputs like fertilizer and ships and sells their crops. “We’re no longer in a competitive environment and any time you have less competition, it’s not good for the American farmer.” But a project 12 years in the making is finalizing an eye-popping $1.1 billion capital raise to construct a white potash mine operation in Evart, 20 miles northeast of Big Rapids, in a bid to partially offset U.S. reliance on imported nutrients and provide Michigan GREEN BAY GREEN BAY farmers with financial relief from soaring prices. The Michigan Potash and Salt Co. is projecting to break ground on the mine infrastructure by mid-year and supply MILWAUKEE 650,000 short tons of potash and 1 million tons of food-grade salt by 2025. That mine alone could meet about 6 percent to 7 percent of U.S. potash demand and supplant most of the supplyCH coming from the former Soviet Union into the U.S. “In the face of the horrific Russian invasion of Ukraine, the U.S. must recognize its dependency on Russian potash ...,” Ted Pagano, founder and CEO of MPSC, said in a statement. “At full buildout, MPSC’s project will be able to replace one-to-one Russian imports of potash with domestic production from Michigan in the most critical time of need.”
While the West’s strategy is to cut off Russia from financial markets and starve its economy, the blowback is hitting businesses in the West with even just loose ties to Russia. As some in the U.S. protest the war by refusing to buy Russian products or draining bottles of vodka from Russia as bars throughout Michigan have reportedly done, Russian Americans like Feterovich and Petrenko hope that doesn’t turn into blind resentment of Russian people — or their businesses, which already face immense challenges. “If you do business in Russia right now, you are screwed,” Petrenko said. Petrenko grew up in the Russian city of Taganrog near the eastern border of Ukraine. She left in 1997 to attend Michigan State University on an engineering scholarship and in 2004 launched her company Hadrout Advertising & Technologies, based in Ferndale. The company does web design, web hosting and digital marketing for local clients including Wayne County and the city of Detroit, with about $500,000 in annual revenue. It has four employees in Ferndale and seven in Taganrog, where Petrenko recruited web design talent she said couldn’t be found elsewhere. However, Petrenko isn’t sure how much longer she’ll have those employees now that she can’t send them paychecks through her bank VTB or seemingly any other avenue. “I’ve spent the past four days trying to download every app known to humanity, trying to send money to Russia,” Petrenko said. “I’ve probably wired only $10,000 so far and have $7,000 dangling out there somewhere between America and Russia ... How are these people going to eat?” She said clients have been calling her, worried about the stability and maintenance of their websites or nervous about doing business with Russians. “If this continues, there’s no way I can sustain this company,” Petrenko said. “I am a Russian citizen. I am from Russia. I think what’s happening in Russia is atrocious. My heart breaks for my people who never asked to go to war and the Ukrainian people. I think it’s a human tragedy.” Feterovich has similar feelings. “The suffering that’s happening there is absolutely unbelievable,” she said. Feterovich and her family left Moscow for metro Detroit in 1989 as part of a wave of Jewish refugees from the Soviet Union. She studied IT at Wayne State University before pursuing a career as a serial entrepreneur. She started her company, Ferndale-based Parliament Studios Inc., 12 years ago when Michigan lured the film industry with short-lived state incentives. Two years later, she launched “Start Up,” a national show about entrepreneurship that remains the production company’s flagship product. Parliament Studios employs 15 people in Ferndale with up to 10 technical contract employees in Russia and Ukraine at any given time, depending on the project. Its yearly revenue ranges from $2 million to $5 million but will likely dissolve quickly if the war continues to impede filming and editing. Feterovich’s wife and business partner Raisa Feter left Ukraine for
A rendering of what the potash mine could look like at the Michigan site. | BARTON MALOW
were retrieved from the earth in the 1980s. “We discovered it in the 1980s, but we kept it a secret until after 2010,” said Ward Forquer, vice president of potash and market development for MPSC E var and former Kalium employee. “We EVART MI H G were meeting demand back then and S I A SAGINAW didn’t want anyone to know how good the potash was here. But the secret got L G LANSING out.” DETROIT Pagano created MPSC and worked D OT alongside the USGS to test the old rock core samples in 2012 and has worked to TOL TOLEDO CLEVELAND CLEVELAND start a mining operation in Evart ever since. YOU The operation’s slow start is largely due to sanctions against supply com- due to the potential environmental impact of the mining process. ing out of the former Soviet Union. The company plans to drill holes to In December, the U.S. joined the E.U. and U.K. in imposing sanctions on the deposit nearly 1.5 miles down and Belarus Potash Co., an export subsidi- pump a brine solution to dissolve the ary of the largest potash producer in potash, pump it back up to the surface the world Belaruskali OAO, for the and then allow it to dry and reenter a country’s violent crackdown on politi- solid state, Forquer said. The process is cal dissenters leading to a migrant cri- similar to oil and gas fracking. The Michigan Department of Envisis for neighboring Poland. The move was designed to put pres- ronment, Great Lakes, and Energy apFarming for dollars sure on Belarus’ strongman leader Al- proved permits for the operation over Michigan farmers have been hit exander Lukashenko to end the prac- the protests of environmental groups. Pagano says MPSC will be able to exhard by rising input costs in recent tice of sending dissenters to other countries. Potash exports alone make tract 1,000 gallons of water per minute years. Most notably, the pandemic erupted up 4 percent of Belarus’ gross domestic or about twice that of the annual water use of the controversial water bottling a sea change in how consumers want to product. However, Ezinga said Belarus Pot- plant in Evart formerly owned by Nestle receive their food. Restaurants closed, at least temporarily, and farmers had to ash Co. is likely now funneling its pot- and acquired last year by BlueTriton shift production for at-home consump- ash exports to Russia for sale in the Brands, the makers of Ice Mountain. "We utilize deeper, non-potable wagrowing China market. tion and retail sales at grocers. “Potash prices have been rising for a ter sources," Pagano said. Due to supply chain constraint, risNonprofit Michigan Citizens for Waing fuel costs and trucking shortages, while, but now we’ve taken Belarus every input is expected to rise even and Russia are gone from the market,” ter Conservation challenged the perhigher throughout 2022, including crop Ezinga said. “Maybe Russia was the mits in court in 2018, but the legal chalchemicals, propane, repairs and labor. lowest-cost producer and they’ve just lenge was ultimately rejected in Even used row crop tractors, which typ- been taken out of the game. Tariffs on November last year, allowing the projically devalue by 10 percent each year, food production, which is what this is, ect to move forward. MPSC owns the 500 acres over the leads to higher prices at the supermarsaw costs rise 27 percent in 2021. deposit but has mineral leases on 5,000 Luckily, farmers have also been en- ket. Costs are going to rise.” acres from 450 different land owners, joying near-record or record-high pricForquer said. es for corn, soybeans and other crops Sufferin’ potash MPSC hired Southfield-based condue to the constraints, allowing them to keep up with rising input costs — at Potash is a limited natural resource. struction firm Barton Malow to build least for now. It’s only mined in 13 countries and is the mine infrastructure. Forquer said the mine will be opera“We’ve seen nothing but uncertainty extracted from deep within the earth’s for farmers,” said Chuck Lippstreu, mantle. Potash mines in New Mexico tional within 30 months of shovels hitpresident of the Michigan Agri-Busi- and Utah are running low on the min- ting the dirt and would reach full caeral salt high in potassium as pacity of producing 1 million short both deposits have been mined tons of potash three to five years later. “MAYBE RUSSIA WAS THE Besides the $1.1 billion investment since around World War I. into the mine, the project is expected to Th en in 2013, the U.S. GeologLOWEST-COST PRODUCER AND ical Survey announced it had dis- create 300 temporary construction THEY’VE BEEN TAKEN OUT OF covered the purest known pot- jobs and 180 full-time jobs at the mine, ash deposit on earth — roughly jobs that will be sustained for 150 years THE GAME.” 7,800 feet below the surface in of mining, Forquer said. John Ezinga, Michigan Agricultural The organization is in discussions Evart. The potassium-rich rocks Commodities are a relic from the drying up of with the Michigan Economic Developthe Devonia Sea, a salt-rich sea ment Corp. about securing tax incenness Association. like the Middle East’s Dead Sea that tives and grants toward the project. “To Michigan and our farmers, this “We are in a labor crisis. We face his- covered much of Central Canada and toric supply chaos whether that’s con- the Northern U.S. 350 million years ago. gives a reliable and dependent source tainer availability or truck availability. The deposit spans more than 15,000 of high-quality potash for generations Take all of the uncertainty, all of the acres in Osceola and Mecosta counties to come,” Forquer said. “It’s free from new economic events that have hit and has a projected value of $65 bil- sanctions and Canadian rail worker markets in the last two years, now add lion, according to the federal geology strikes and unforeseen weather events blocking imports or war.” on top of that the situation with Russia agency. and Belarus, and you’ve got a recipe for The rock core samples from Evart inflated prices.” were given to the USGS by Canadian Dustin Walsh: (313) 446-6042 The rising cost of potash is largely potash mine company Kalium and Twitter: @dustinpwalsh
metro Detroit nearly eight years ago. Together, they field more than a dozen calls a day from family, friends and colleagues in each country, FetGendelman erovich said. “We both feel the same about this conflict — that it’s completely unnecessary,” she said. “For us, it’s extremely sad.” Ukrainian American entrepreneur Vladimir Gendelman, 47, said the war 5,000 miles away is dragging down his business in Pontiac. He said he blames the Russian government and feels sorry for the Russian people as he does for those in his homeland. “I just feel sad, the overpowering feeling of sadness, because at the end of the day there is no difference between the Russians and Ukraine,” Gendelman said. “The difference between them is the difference between Canadians and Americans.” At Company Folders Inc., an office supplies company started by Gendelman in 2003, the priority has shifted away from business development to aiding Ukraine in its defense against Russia — and company employees caught in the crossfire. Around half of the printing boutique’s 16 employees live in Ukraine, including several in Kharkiv, the country’s second largest city that is under siege by Russian forces. Gendelman said the safety of his employees and fear for his hometown has consumed him since the conflict started. “I feel scared for the people that are there,” said Gendelman, a Jewish native of Kharkiv who left the country with his family in 1989 when it was still under Soviet control. “I feel helpless because I feel that I am responsible for my employees, and at the time they really, really need me, there is nothing I can do.” Gendelman said he is doing anything he can. Right now, that means keeping employees, unable to work due to the war, on payroll, and coordinating the delivery of supplies to Ukrainian fighters and citizens. The most recent request, Gendelman said, is for drones, night vision and Theraflu cold medicine. He said one of his employees, who made it across the Ukraine border to Poland, can shuttle supplies to the border. “The issue is, how do we get it from the border to Kharkiv,” Gendelman said, adding that he’s in constant contact with friends and aid groups in Kharkiv. Over the past few days, Gendelman has felt more like a logistics coordinator than purveyor of office supplies. As such, corporate orders for binders and envelopes have been put temporarily on the back burner, but sales impact has been minimal, and customers have been understanding, Gendelman said. Over the past 20 years, he grew his business to more than $3 million in yearly revenue with clients including Fortune 500 companies such as Ford Motor Co., Sony and Verizon. Like Feterovich and Petrenko, Gendelman hopes his business sees it to the other side of the conflict and that he can soon shift focus away from war and back to binders and folders. “I am not working because I am spending pretty much all my time dealing with that stuff,” he said. Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl
MARCH 7, 2022 | CRAIN’S DETROIT BUSINESS | 21
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THE CONVERSATION
Robert Kraemer on designing for the future of redevelopment Robert Kraemer, co-founder along with his wife Maureen of Detroit-based architecture firm Kraemer Design Group, has had his hands in some of the city’s more prominent redevelopments in the last few years, including the Shinola Hotel and the former Detroit Free Press Building downtown for Dan Gilbert, the Albert Kahn Building in the New Center area for Matthew Sosin and Adam Lutz and the Farwell Building in Capitol Park for Richard Karp and Richard Hosey. Kraemer spoke with Crain’s about the impact COVID-19 has had on the architecture industry and his firm, his and his wife’s adventures in historic lodge redevelopment in the Upper Peninsula and their new gambit together: A move to South Carolina to open a new office. | BY KIRK PINHO How has the architecture industry been impacted by the COVID-19 pandemic? Some architectural firms have done extremely well, been very busy, and in fact, coming out of this pandemic are busier than they ever have been. Then, other firms struggled, and our firm struggled, because the bulk of our work was hotel, hospitality and developer-driven projects, and those all sort of came to a screeching halt. Now we are seeing those coming back, which is great. There is certainly plenty of work out there. There are tons and tons of RFPs. The firms that do work in the institutional environment, especially governmental, there is an unreal amount of work right now because the ARPA (American Rescue Plan Act) money and other monies are flowing. You’re going to see project after project being announced and looking for staffing. How has Kraemer Design Group been forced to deal with it? When the pandemic first started, within the first week when things were getting a little crazy, we sent everyone home to work. That was a challenge at the beginning. About one-third of our staff was laptop-based, so that was easy, but the others were PC-based with double monitors and everything at the office. So literally everybody took their equipment home ... (and) we’ve only fully returned to the office this week. As a result, it’s a little different. We have a number of hybrid staff. For instance, our accounting team can work from home just as well as from the office. What we did find was younger staff were not getting the mentoring, not growing the way that we want them to, so that was a real effort to get them back ... What we’ve also done in the course of two years ... is start a Charleston office, and that’s where I am located right now. It
only exists with two people, Maureen and I. And then we started a Toledo office. We’ve had business there for years. Our goal is to not necessarily load those up to be standalone (offices). The Charleston area has an unreal amount of growth and it has a lot of the legacy historic work, a lot of hospitality. So we saw that as a good opportunity. Toledo is really much more indicative of our typical core work of our Detroit office, just extending them to Ohio. Is all this kind of in line with a succession planning effort? Succession planning was a bit in there. We have slowly started the process. Brian Rebain joined the firm as partner a number of years ago and we’ve added some new associates. There is a process we want to have with the firm, with the legacy and growth of our key leadership. The planets aligned because during the pandemic we spent a year down here (in Charleston) because we had a vacation home. My son, who is a high school freshman, is a very good lacrosse goalie. He was able to join a team down here, at a very good public high school with the No. 1 lacrosse team in the state. We saw that as an opportunity to get him into the school while at the same time seeing if we can build the office down here.
getting a little more refined look that people are interested in. That’s one. The other that we are seeing is that technology to document buildings has really, really changed. There has been 3-D scanning and laser scanning of facilities for years. But the software to use and translate that information has really improved the last couple years. We are seeing a greater level of detail and exploration, so that’s been fun. It’s a lot more visual and we can do a lot more. How has the Birch Lodge project on Trout Lake in the Robert Kraemer co-founder Kraemer Design Group
What’s the latest on historic preservation trends in real estate and architecture? For a decade or decade and a half, everybody wanted that exposed, raw construction in the old buildings, that quintessential loft look. But then you’re dealing with nicer buildings and they still wanted that, or at least that was the perception. I would say that has changed. There is a much more, I think, appreciation and love of that beauty of the more artistic side. I think you are
Upper Peninsula progressed? It is doing very well. We were supposed to open at the beginning of summer season and had some problems with the contractor. We limped along at the beginning. Then the pandemic hit and ... then there must have been this pent up demand to get away from home. We had a really good year for the summer and rolling into this past year, we exceeded the year before. We are basically full all summer and are open year-round now, except for November and April, which are sort of the yucky months. We are expecting to open a food and beverage outlet in the facility this summer ... It’s been a challenge because food availability is low when it comes to quality restaurants. Our biggest fear is there isn’t staff to run it. What have you learned in the redevelopment process? The project was actually fairly easy for us in a sense of the design and such. Probably the biggest challenge playing the sort of developer role, I made my own mistake with the contractor. We were not as strong with contractors as we should have been. But other than that, it was good, and our team of investors and partners are all interested in another project, so we have been sort of poking around. Ideally we want to find another historic lodge or hotel. I would love to find one in South Carolina, or a warmer c limate.
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Belle Isle fallow deer beloved by generations get new home
22 | CRAIN’S DETROIT BUSINESS | MARCH 7, 2022
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RUMBLINGS
BELLE ISLE’S EUROPEAN FALLOW DEER — a fixture of the island park for at least a century — have a new permanent home. Two years ago, when COVID-19 first began to spread, the Detroit Zoological Society temporarily closed the Belle Isle Nature Center, where the deer were a major attraction. The deer were moved to the Detroit Zoo in Royal Oak, where they will now live permanently, Detroit Zoological Society CEO Hayley Murphy told Crain’s. There are a few different origin stories about the Belle Isle herd, but many sources date them to the 1930s, when they were either released onto the island as a sort of living landscaping or escaped from the Belle Isle Zoo.
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White fallow deer at the Detroit Zoo in 2020. The deer moved to the Detroit Zoo after the Belle Isle Nature Center temporarily closed during the COVID-19 pandemic in 2020. They will not return to Belle Isle. | PATTI TRUESDELL/DETROIT ZOO
By the early 2000s, the deer herd had ballooned to nearly 400. Many of the deer were sick with tuberculosis.
The zoo stepped in to help manage the wild deer population, and in 2001 began capturing, sterilizing
and releasing male deer. The last wild deer on Belle Isle were captured in 2003. Many of those deer were sent to sanctuaries around the state and U.S., while a small herd of 25 deer remained on the island at the Belle Isle Nature Center. Now, just two of Belle Isle’s fallow deer remain, both females over 19 years old — considered an advanced age for their species. The zoo said they are being cared for in a habitat where they receive close attention from staff. The Belle Isle Nature Center is still closed while the zoo completes improvements including an expanded bird-viewing bay, a mudpuppy habitat and new hands-on exhibits.
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