Crain's Detroit Business, August 5, 2024 by Crain's Detroit Business

Food courts help malls stay a oat

yB Kirk Pinho

Mall food courts are evolving and some Southeast Michigan mall owners are starting to embrace that evolution.

Longtime a staple of enclosed shopping centers, food courts have for decades included national mainstays like Auntie Anne’s, Mrs.

Fields, A&W, Cinnabon, Panda Express, Sbarro and Orange Julius — tried-and-true brands that have mass appeal to a mall’s broad shopper base. Whether you’re lling your bags at Hermès in Somerset Collection or Hot Topic in Westland Center, your stomach might need to be lled as well.

At least, that’s the way it was.

How Lineage got its $20B Nasdaq debut

Lineage Inc. shares rose following the largest initial public o ering of the year, capping a two-day urry of initial public o erings for Michigan companies.

e Novi-based logistics giant (Nasdaq: LINE) saw its stock rise by as much as 5% that day in its debut as a public company, and they continued to rise in its rst

week-plus on the market, trading around $86 on Friday for a roughly 10 percent increase from the $78 IPO price.

e company’s July 25 debut and subsequent stock rise have given it a market value of nearly $21 billion.

e cold storage warehousing and transportation giant raised $5.1 billion after selling nearly 65 million shares at $78 million apiece, including the underwrit-

ese days, many malls have pivoted: opting for more unique food options that, in and of themselves, can be destinations. ink unique regional o erings with local chefs and di ering price points ranging from budget to higher-end.

Locally, there’s a sushi and hibachi restaurant and a Korean barbe-

ers’ overallotment. It had originally expected to market 47 million shares for $70-$82 apiece.

See LINEAGE on Page 18

‘Endless

cue and hot spot joint opening in the coming months. A food truck concept that started in Detroit opened a large outpost in that same suburban mall’s former auto repair hub. A popular Oakland County bakery and pizza out t set up shop in the region’s swankiest mall. ere’s a local co ee shop and a fast-growing locally based

slider chain in Dearborn. A local Mediterranean and Greek eatery. All have opened, or are opening, in malls around the region that wanted, at least to an extent, step away from the ubiquitous fare of the 1980s, 1990s and 2000s and step into the modern era.

Detroit Opera gains a new, young audience

For years, Detroit Opera, like other performing arts organizations noted, with some concern, the loyal but aging faces in its audiences.

Now the organization sees something di erent as it looks out into the audience: young, diverse faces.

Audiences are returning to Detroit Opera, following the

A Florida family falls in love with and invests in Mackinac.

COVID-19 pandemic and the arrival of Yuval Sharon, the Gary L. Wasserman artistic director, in 2020, bringing his innovative take on the art form to both the Detroit Opera House and novel venues like its parking garage. at’s a sign it’s engaging new audiences artistically, in line with its mission.

But they are bringing with

See OPERA on Page 16

CONVERSATION

For the president of Michigan Community College Association, increasing access to higher education is more than just a job. PAGE 19

yB Sherri Welch

yB Kurt Nagl

Lineage CEO Greg Lehmkuhl (center) and co-founders and co-executive chairmen Adam Forste (left) and Kevin Marchetti “ring the bell” to celebrate the launch of the listing on the Nasdaq. | NASDAQ SCREENSHOT

A Sbarro employee serves patrons. While pizza chains are still a draw, local restaurant concepts are growing their footprint in shopping centers and driving new interest in malls again. | BLOOMBERG

WSU doubling down on collaboration to increase impact

Leaders of Michigan’s top three research universities are doubling down on their collaboration through the University Research Corridor to help drive more economic impact in Detroit and the state as a whole.

e three, all relative newcomers to Michigan's higher education sector, are increasing their own research collaboration and teaming up with business, nonpro ts and the public sector to strengthen talent attraction and retention and new business to help lift Michigan's economy, they said during the Crain's Power Breakfast on higher education on July 25.

"We're all in. We're spending the time to think strategically about how we can leverage our combined assets as three research universities for the bene t of the state," said University of Michigan President Santa Ono, speaking on behalf of himself and URC partners Wayne State University President Kimberly Espy and Michigan State University President Kevin Guskiewicz.

e URC launched in 2006 to strengthen talent, research innovation and economic growth in Michigan throught is anchor universities:

UM, MSU and WSU. It was modeled on the Research Triangle Park in North Carolina, which counts among its anchors the University of North Carolina-Chapel Hill, where Guskiewicz served as president until he joined MSU earlier this year.

URC touts on its website impact on education, generating patents, developing life-saving medical treatments, preparing a skilled workforce and attracting high-tech businesses to help drive the state's economic revitalization. But the leaders of its anchor partners say they can do more to leverage their individual and collective strengths.

Everyone was excited about the three-day NFL Draft and its economic impact, Espy said. (PostDraft gures put the impact at $213.6 million.)

"Well, if you look at the three universities what we do, that's like having a draft every other day of the year, that's how much impact the three of us have," Espy said. "So think of the bene ts of us working together here in Detroit in the fabric of Detroit. It bene ts each and every one of us and Detroit bene ts the state."

"Each of us has a piece of the puzzle that when you put it together, the whole is greater than

INTRODUCING ANN ARBOR TECHNOLOGY CENTER

the sum of the parts," she said.

Currently, UM and MSU are investing hundreds of millions of dollars in new research sites and partnerships in the city WSU has long called home.

For its part, Wayne State has its own research and technology park: Techtown, Espy reminded the audience. "We focus on technology business on non-technology business and are really trying to drive that supported infrastructure."

"But I know that working together, the three of us can do even more," she said.

Espy cited Michigan Future data showing the state's personal income has gone from number 16 to number 39 amongst the 50 States over the last 20 years. " at means each and every one of us need to do more to be focused on economic development, she said. e partnership between MSU and Henry Ford Health is going to be key, Guskiewicz said. "We have the presence over in Grand Rapids obviously and in East Lansing and are really excited about what the opportunity with Henry Ford Health and the new research opportunity will bring ... that's going to be, as I like to call it, a magnet for talent."

"I think that's part of what we

need to be doing as university leaders is making sure that our institutions are committed to being sort of economic engine for the state of Michigan. And doing that is about attracting top talent, being a magnet for that," he said. Michigan has signi cant health care needs across the state, he said. "I think we all have a role to play in that as we think about the University Research Corridor."

UM's investment in Detroit aligns with the goals to help the city's and state's economy as well, Ono said. e Ann Arbor-based university is investing about $500 million in the center split between building costs and programming. In addition to being an innovation incubator in areas like robotics, arti cial intelligence and machine learning, "it'll also be a place that will o er new degrees very likely

in how to train the sustainable workforce of the future," Ono said.

"My prediction is it's going to be saturated before it's even built. And so there's a dare even conversations about a second building. at's not yet planned. It's preliminary," he said.

UM has also made a signi cant investment in the cradle-to-career educational initiative on the former campus of Marygrove College. "We really want to have an impact on Detroit and ... reach in to the public schools and encourage more students to go to all of our ne institutions," Ono said.

As an extension of those e orts, UM and the Detroit Regional Chamber teamed up during the Mackinac Policy Conference in May to announce their collaboration on a Detroit to Ann Arbor innovation corridor.

•

OTHER PRESTIGIOUS OFFICE, MEDICAL AND RESEARCH DEVELOPMENT BUILDINGS

yB Sherri Welch

From left: Crain’s Executive Editor Mickey Ciokajlo chats with Wayne State University President Kimberly Espy, Michigan State University President Kevin Guskiewicz and University of Michigan President Santa Ono at Crain’s Power Breakfast. | BRETT MOUNTAIN

Conservancy’s interim CEO focusing on accountability

While the criminal and civil cases against the Detroit Riverfront Conservancy’s former CFO and alleged co-conspirators play out in court, interim CEO Ryan Sullivan is focused on moving the organization and its work past the cloud of embezzlement.

Roughly 50 days into his new role, Sullivan has put in place an internal plan aimed at focusing and aligning the nonpro t’s efforts to recover the nearly $40 million in charitable funds allegedly embezzled, preserve its DNA amid leadership changes, protect the conservancy and other nonpro ts from similar

malfeasance in the future and complete the city’s Riverwalk. Sullivan and other conservancy leaders are sharing the “4 Ps” framework — prosecute, preserve, protect and prosper — he’s developed to gain alignment and accountability around areas of priority as the organization navigates the embezzlement issue.

After “prosecute,” a single word that says it all about the rst focus for the conservancy, the 4 Ps plan includes goals and actions to preserve what the conservancy has built over more than 20 years, to protect it and other nonpro ts going forward from similar malfeasance and to set it up to prosper.

e larger goal, Sullivan said, is to align e orts and ensure the organization has a solid foundation as it works to complete the 5.5-mile RiverWalk, a destination park set to open next year, and other e orts.

“We want to and expect to be held accountable for the objectives and initiatives within that framework. … (We) have to do the work to execute against that framework and move the organization forward.”

e conservancy is in active dialogue with large foundations, community partners and individual donors, Sullivan said.

Florida family bullish on love of Mackinac

A love a air with Northern Michigan that started two years ago with the acquisition of a family-owned Mackinac Island ferry service has steadily expanded into other sectors, and could inspire a Florida family to pursue more Michigan deals soon.

e Naples, Fla.-based Homann Family of Cos. started its journey here in 2022 with the acquisition of Shepler’s Ferry, which was the family’s rst deal in Michigan. In May of this year, the Ho manns acquired Mackinac Island-based Sip N’ Sail Cruises and its two boats.

Most recently, the company last month announced its acquisition of Mackinac Island Ferry Co. and a move to consolidate ownership of all of the passenger ferries traveling between the island, Mackinaw City and St. Ignace. Following the three Michigan deals, the company’s marine division now has 46 vessels across seven states.

Greg Ho mann, the second-generation coCEO with his brother, Geo Ho mann, told Crain’s Grand Rapids Business that the Shepler’s deal was purely “opportunistic-based,” a typical pattern for the multi-vertical family conglomerate.

However, the Homann family’s business pursuits led to a more cultural interest in Michigan.

munity, the natural beauty of Mackinac Island and its surrounding area — and we wanted to invest more. And that’s typically what we do when we buy something: We always look to scale.” e scaling has already begun. In addition to about 20 vessels that the Ho manns added to their eet across the three marine deals, the deals included more than 116 parcels of land in

“We really enjoy everything — the community, the natural beauty of Mackinac Island and its surrounding area — and we wanted to

invest

Greg Hoffmann, co-CEO of Hoffmann

“With Shepler’s Ferry, we found that opportunity and really fell in love with the business, and then subsequently fell in love with the area that they operate in,” Ho mann said. “We really enjoy everything — the com-

more.”

Family of Cos.

the Straits of Mackinac area, including docks in Mackinaw City, Mackinac Island and St. Ignace. ey also acquired 51 buildings and 6,500 parking spaces as part of those deals.

Grif n Claw Brewing to stay open after Chapter 11 ling

Business will continue for a popular local brewing company after it led for bankruptcy protection July 26 because of an ongoing lawsuit.

Gri n Claw Brewing Co. operations will continue as normal, Managing Partner Scott LePage told Crain’s on July 26, and none of the 130 employees will be affected by the ling. e matter also does not a ect the LePage family-owned restaurant Lumen Detroit downtown.

LePage did not disclose Grifn Claw annual sales or revenue gures but said the company has seen growth over the last

three years in a down craft beer market.

“We explained to them that this is an ownership dispute,” LePage said. “ eir jobs are safe. Before the ling, we were current with all our vendors. We’re a pro table business and we’ve always been pro table.” Gri n Claw has two locations: a taproom and production brewery in Rochester Hills and a taproom in Birmingham.

Eton Street Brewery LLC, doing business as Gri n Claw Brewing, led for voluntary Chapter 11 bankruptcy protection on July 26. Company co-founder Bonnie LePage is listed in the ling as company manager and presi-

dent. She founded the company with Mary Nicholson in 2013. e bankruptcy ling comes following a lawsuit led by the Nicholson family related to contributions to the business, according to LePage family attorney Chris Cataldo of the Taft law rm. Cataldo told Crain’s the lawsuit is an internal dispute over claims by ownership. e Nicholson family invested into the business nancially, while the LePage family contributed years of services, extensive restaurant assets, as well as real estate through a related business, Eton Street Brewery Real Estate LLC.

yB Jay Davis

Rachel Watson

Operations will not be affected after Grif n Claw Brewing Co. led for Chapter 11 bankruptcy protection on July 26. | NEAR PERFECT MEDIA

Ryan Sullivan, interim CEO of the Detroit Riverfront Conservancy | RENEE RODRIGUEZ/DETROIT RIVERFRONT CONSERVANCY

Sherri Welch

Greg Hoffmann, co-CEO of Hoffmann Family of Cos., based in Naples, Fla.

| HOFFMANN FAMILY OF COS.

See MACKINAC on Page 18

Of ce-to-housing conversions would get tax credits

Members of U.S. Congress, including some from Michigan, are reviving an e ort to get federal support for converting obsolete o ce and other commercial buildings into non-o ce uses.

In particular, mixed-income conversions with some units set aside for a ordable housing. is isn’t the rst time legislation similar to the Revitalizing Downtowns and Main Streets Act (H.R. 9002) has been introduced since the COVID-19 pandemic wreaked havoc on central business district and suburban o ce markets around the country.

E orts to get what at the time was just called the Revitalizing Downtowns Act stalled after it was introduced in 2021 with a broader breadth of conversion eligibility that included things like hotels, institutional uses and mixed-use projects. is time around, the legislation would provide a 20% federal tax credit for converting commercial buildings that have fallen into obsolescence into mixed-income housing where at least 20% of the units are a ordable to those making 80% of the federally-designated Area Median Income.

In and of itself, that’s a fraught topic in Detroit, where that metric folds in the generally higher household incomes in suburban communities in the Detroit-Warren-Livonia metropolitan statistical area, or MSA, thereby skewing what is considered a ordable in the city where household incomes tend to be lower. In the U.S. House, Rep. Dan Kildee (D-Flint) is a co-sponsor, along with other Democrats and Republicans. In the upper chamber, Michigan’s two U.S. Senators, Debbie Stabenow and Gary Peters, both Democrats, are co-sponsors. All three Michigan lawmakers co-sponsored the 2021 version of the proposal, as well.

Eliza Duckworth, a spokesperson for Stabenow, said the legislation was reworked to accomplish two main goals.

“We wanted to focus on the untenable commercial vacancy rates and the housing shortage, so our new version accomplishes that,” Duckworth said.

In addition, whereas the 2021 version provided tax credits solely for o ce conversions, this year’s version broadens out to include other types of commercial buildings, Duckworth said.

According to the NAIOP, a commercial real estate development trade association, the legislation would allocate $15 billion in conversion tax credits, with $12 billion of that allocated to state housing nance agencies, such as the Michigan State Housing Development Authority, or MSHDA, based on population and $3 billion speci cally “for conversions in economically distressed areas.” e credits would be required to be used by Dec. 31, 2027.

Historic preservation tax credit projects in rural areas would be eligible for credits up to 35% on the rst $2 million in investment, and the credit increases to 30% if the redevelopment is in a low-income U.S. Census tract or “di cult development area,” the analysis by NAIOP says. To qualify for the elevated levels of subsidy, 20% of the units must be for people making 60% or less than the AMI, instead of 80%.

In a press release last month, Stabenow, who is not running for re-election this year, said “converting these unused buildings into housing is a win-win — providing people with a ordable places to live while helping our communities turn vacancy into vibrancy.”

e NAIOP says a November 2022 study found that real estate values plunged by $413 billion as a result of the WFH trend, which was greatly accelerated by the pandemic that started in early 2020 and sent millions of o ce

workers home in an attempt to stave o the spread of COVID-19.

e o ce market is still struggling to grasp that.

According to new data from the local o ces of New York Citybased brokerage house Newmark, downtown Detroit’s o ce market totaling about 15.45 million square feet of space is 19.7% vacant, with some 166,800 square feet of negative absorption so far this year. e broader downtown o ce market, which includes neighborhoods like the New Center area and Midtown, in all has about 17.1 million square feet, which is 19.6% vacant. Year to date, there has been 184,500 square feet of negative absorption. e metro Detroit o ce market has about 79.48 million square feet, with a vacancy rate of 22.3% and, year to date, negative absorption of about 328,100 square feet, according to Newmark data for Q2.

Of course, not all of that vacant space could be converted into residential, for a variety of factors.

But if some of it in metro Detroit and around the country can be converted, it would go toward addressing what the NAIOP says is a need of 4.3 million more residential units to meet rental housing demands by 2035. ere is little disagreement that more housing in the city (and elsewhere, of course) is needed to meet demand and help lower housing costs. Locally, estimates on the number of units vary, but some have pointed to a desire to have 10,000 residential units in the downtown alone.

Achieving that is complicated for myriad of reasons, which I wrote about a year ago.

Not a whole lot has changed on the challenges front since then. Developers must still contend with inter-related complications ranging from nancing to construction costs to demand to rent levels, to name just a few of them.

Lawmakers and others hope a revived e ort at new federal incentives will help with that.

The Morrie in Royal Oak closing to make way for new concept

A downtown Royal Oak music hangout and restaurant last month to make way for a new concept.

e Morrie ended operations on July 28 after nearly eight years in business. Latin and sushi fusion restaurant Blind Owl will take its place at 511 S. Main St. in September.

is will be the second Blind Owl for restaurateur Nicolas Andreasson, whose original location is at 36310 Main St. in downtown New Baltimore. He is leasing the Royal Oak space from Aaron Belen of AFB Hospitality Group, who bought the building in 2015 before opening e Mor-

rie in 2016.

Terms of the lease, along with Andreasson’s investment into the expansion, were not disclosed.

Andreasson said the spot is perfect for his expansion.

“We’ve been looking to expand for a while, and this was the perfect spot,” Andreasson said in a statement. “Our goal is to be recognized as the premier destination in Royal Oak for culinary innovation with the freshest ingredients, unparalleled hospitality, and vibrant social gatherings where every guest feels welcomed, indulged and eager to return.”

Blind Owl features international fusion food with items such as street tacos, shawarma nachos,

fettuccine alfredo and sushi rolls.

e menu also includes chicken wings, cheeseburgers and grilled cheese sandwiches. Blind Owl will also have a full bar and live music ursday-Saturday.

e Royal Oak Blind Owl will have 45 full- and part-time employees and seating for 260.

Belen said he plans to focus on his real estate development business.

Belen also owned e Morrie in Birmingham, which closed and sold earlier this year to an undisclosed buyer who is working to open a new concept. Belen’s Royal Oak French restaurant Bistro 82 closed early in 2020. He also owns nightclub Stairway in downtown Royal Oak.

Kirk Pinho

About half of the of ce space is vacant in Detroit, seen here in 2024 looking east toward downtown along Michigan Avenue in Corktown. DEAN STORM/CRAIN COMMUNICATIONS

Jay Davis

The Morrie Royal Oak closed last month after almost eight years in business. Fusion restaurant Blind Owl will move into the space in September. | THE MORRIE ROYAL OAK

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Matt Elliott President, Bank of America Detroit

Time is right to streamline cannabis regulations

Businesspeople know that markets and the world never stop changing. Now, lawmakers in Lansing have a golden opportunity to show they can react in a timely fashion to a big change.

We’re talking, of course, about medical cannabis.

Bills have been introduced to virtually eliminate the distinction between medical marijuana and its recreational cousin. e two markets, created by separate laws, would be merged into a single licensing scheme under legislation sponsored by state Reps. Graham Filler, R-St. Johns, and Jimmie Wilson Jr., D-Ypsilanti.

It’s a move that just makes sense on its face for an industry that now eclipses liquor in sales in Michigan — o ering regulatory simpli cation and fewer headaches for businesses, without really sacri cing anything. It’s also a welcome nod to reality.

What’s known in the business as “adultuse” cannabis — the kind you don’t need a doctor’s permission to buy — has now thoroughly taken over the Michigan weed market. Cannabis sold through “medical” channels accounted for just 0.7% of Michigan weed sales through June of this year. (Lesson: Convenience and accessibility always win in a retail business.)

Medical marijuana was always a bit of a charade anyway — it’s not like it was dicult to nd doctors willing to sign o on medical cards after voters approved medical marijuana in 2008, 10 years before

COMMENTARY

recreational use was legalized. e proposed changes would maintain bene ts for people who have those cards — they’d be exempt from the 10% excise tax on cannabis, just like they are now

when going through medical dispensaries. Regulatory burdens on cannabis businesses would be lifted, and the retailers who maintained both medical and recreational licenses would be able to take that

down to one license and one set of approvals and paperwork.

Many customers haven’t maintained their medical cards even though they get those tax bene ts — the number of cardholders has declined by more than half in just two years, from 225,120 in May 2022 to just 101,160 as of May 30 this year. So there’s little risk that the state and local governments will lose much of the tax revenue they get now.

You need look no further than to the market for alcohol to see why multiple sets of regulations can skew a market.

Distilled liquor has been sold under a di erent set of rules from beer and wine in Michigan since Prohibition ended, resulting in a market that limits competition in di erent ways and helps entrenched interests protect their turf using the government as a foil. at prompts massive battles over any little change in the laws.

e parallel to weed isn’t perfect — medical cannabis was disappearing on its own — but the history of liquor regulation does highlight the risks of unintended consequences.

Changing the law, however, requires a challenging vote in the Legislature — a three-quarters vote would be required to change the state’s cannabis law. But we’d urge lawmakers from both sides to move quickly to make the change, and both can tout it as a win for simpli ed government that responds to a changing world.

Michigan is showing the world we make more than cars

As I re ect on my recent trip to Europe, where I had the privilege of meeting with leaders of some of the world's most innovative companies in the aerospace, defense and battery technology sectors, I continue to be lled with a sense of optimism for Michigan's future. is journey was not just about bringing good-paying jobs to Michigan but about showcasing the unique strengths that make Michigan an ideal destination for both businesses and workers to thrive in the 21st century.

Right now, Michigan is showing the world that we make a lot more than just cars. In the decades ahead, our state has the potential to dominate the manufacturing of batteries, chips, aerospace technologies, and clean energy.

Michigan has always been a beacon of industrial prowess and innovation alongside an empowered workforce. As an engineer by training and someone who has started small businesses and grown products within major companies, I understand rsthand the critical role that innovation plays in economic development.

Our state has a rich history of manufac-

turing excellence, including the highest concentration of engineers in the country, and a culture that fosters creativity and entrepreneurship. ese attributes are precisely what I highlighted during my discussions with business and public sector leaders. Michigan is not just open for business — we are a state where American people and businesses can grow and succeed. Last year, we were proud to award $18 million to support high-tech startups, helping lead Detroit to become the #1 emerging startup ecosystem in the country. From 2008 to 2015, we were last in the country for workforce population growth and now, we’re one of the top. We have made signicant strides in creating a business-friendly environment and empowering our worldclass workforce.

During my meetings, I emphasized the diverse talent pool that Michigan o ers. Our state is home to world-class universities and training centers that produce top-tier talent in engineering, technology, and other critical elds. By investing in Michigan, companies gain access to this talent and can collaborate with our academic institutions on cutting-edge re-

search and development projects.

Michigan's strategic location also provides a logistical advantage for businesses looking to expand their reach. With access to major markets in the United States and Canada, as well as robust transportation infrastructure, Michigan is a gateway for companies aiming to grow their operations and distribution networks.

e conversations I had with business leaders rea rmed their interest in Michigan as a global hub for innovation and economic growth. Many expressed enthusiasm about the potential for collaboration and investment, recognizing the unique opportunities that our state o ers. I am con dent that the relationships we have forged will lead to new partnerships that will bring good jobs and economic prosperity to Michigan.

Our

We are the state that invented modern mobility and built the middle class during the 20th century. Together, by fostering Michigan grit and innovation, we will be the birthplace of the next big idea that builds the middle class of the 21st century and beyond. In the coming months, my ofce will work closely with state and local leaders, as well as our partners in the private sector, to turn these conversations into concrete investments — from a ord-

state has the potential to dominate the manufacturing of batteries, chips, aerospace technologies, and clean energy.

As lieutenant governor, my focus has always been on creating good jobs and growing companies in Michigan while ensuring that everyone in communities bene ts economic growth. e progress we have made is a testament to the grit and ingenuity of Michiganders. However, there is still much work to be done, and we must continue to build on our successes to ensure a better future here at home.

able high-speed internet to world-class public education. Together, we can create a thriving economy that provides opportunities for every Michigander.

Michigan is poised to lead the way in the new economy, and I am excited about the possibilities that lie ahead. By attracting global investment and fostering a culture of innovation, we can Stand TALL together and continue to make things that change the world.

BLOOMBERG

Lt. Gov. Garlin Gilchrist II

Working to make tomorrow safer. Tomorrow is on.

The Great Lakes are a vital source of water, life and play for all of Michigan. That’s why we’re committed to their safety and environmental protection. With the Great Lakes Tunnel Project we're taking extra precautions in the Straits, making a safe pipeline even safer. Placing Line 5 within the Great Lakes Tunnel will eliminate any risk of an anchor strike.

While the tunnel is being built, we’ve added additional safety measures—including hi-def cameras and a marine monitoring/alert system— at our 24/7 Maritimes Operation Center. Safety in the Straits is our top priority. We’re committed to keeping the Great Lakes safe for generations to come.

Learn more at enbridge.com/line5tunnel.

‘Endless demand’ for housing in Ann Arbor drives projects, costs

yB Nick Manes

e nationwide housing shortage that has reared its ugly head in Michigan is acutely felt in Ann Arbor.

With an ever-growing university and general demand at consistently high levels, the average housing price in the Ann Arbor area stands 78% higher than the statewide average. Ann Arbor o cials have taken various steps to bring more supply to market, but say considerably more work is needed to alleviate the high cost of living in the city or broader region.

e competition in Ann Arbor’s housing market has been called downright “scary,” and $1 million-plus homes are increasingly common.

Based on those factors and more, Jennifer Hall, executive director of the Ann Arbor Housing Commission, estimates that Washtenaw County likely needs 10,000 more housing units in the coming years.

“It’s just it’s an endless amount of demand for housing,” Hall told Crain’s, adding that the issue of high demand and limited supply is exacerbated by the growing presence of the University of Michigan,

its a liated health care system Michigan Medicine and a bevy of events throughout the year that lead to demand for short-term rentals.

To help alleviate the problem — even slightly — Hall’s organization in June announced that Related Midwest had been selected as a co-developer for a planned mixed-income, high-rise apartment tower in Ann Arbor’s central business district.

Plans call for 260-300 rental units, with a minimum of 100 units available for those earning up to 60% of the region’s area median income, or less than $52,080 annually for one person, according to gures from the Michigan State Housing Development Authority.

e balance of the units will be targeted toward moderate-income households.

e proposed project’s location, right in downtown Ann Arbor, is important, Hall said, as much of the housing in the central business district is geared toward students or are condos for higher-earning professionals.

“So we will be the largest dedicated building for people of low and moderate incomes that’s been built in the city (since) maybe go-

ing back to the 1960s when co-ops were built,” Hall said.

Taking action

As of the end of May, the average price to purchase a home in the Ann Arbor area stood at just under $549,000, up more than 3% from the previous May, according to the most recent gures from the Ann Arbor Area Board of Realtors.

By comparison, the statewide average at the same time was just more than $308,000, up 8% from the previous year, data from the Michigan Realtors trade group shows.

e median rent in Ann Arbor stands at $2,300 per month, compared to $1,395 statewide, according to Zillow. e typical “starter” home, for those looking to move up from renting to owning, starts at around $356,000, per Zillow.

area to build to the city’s maximum height limits without the need to include various special features, while also removing some incentives for a ordable housing that the policymakers said had been ine ective, according to an MLive report.

Dozens of tall buildings have sprouted in recent years with at least seven of the city’s 12 tallest buildings completed in the last decade.

e origins of the city and broader region’s housing shortage and escalating a ordability issues are myriad and depend somewhat on who you ask.

“In broad strokes what we’re seeing is just limited supply,” said Kirk Westphal, executive director of the Neighborhood Institute, an Ann Arbor-based organization focused on housing and transportation policy. “And the supply is being limited by zoning ordinances which were written anywhere between 60 and 100 years ago in the area that really haven’t changed much in most areas.”

Still, Westphal — a former member of the Ann Arbor City Council and the city’s planning commission — is quick to note that the city has taken myriad steps in recent years to address some of those decades-old ordinances that he believes have exacerbated the housing issues found in Ann Arbor.

“Height is a reality today, and the reason we have to build upward, i.e. build vertical, is because we can’t a ord to build horizontally,” Howard Frehsee of Cerca Trova, a Bloom eld Hills-based developer of multiple projects in Ann Arbor, told Crain’s for a 2022 report. “ e only way we can o er nice, new, clean, properly developed housing is we have to go vertical.”

University impact

e near-constant growth of the University of Michigan also plays in heavily to the housing dilemma plaguing Ann Arbor. e growth of the undergraduate student popu-

“Height is a reality today, and the reason we have to build upward, i.e.

build vertical, is because we can’t afford to build horizontally.”

Howard Frehsee of Cerca Trova, a Bloom eld Hills-based developer

at includes an affordable housing millage approved by 73% of voters in 2020 that allows for the levying of up to 1 mill on Ann Arbor property for building, maintaining or acquiring “permanently a ordable” housing up to 60% of the area median income.

Late last year, the Ann Arbor City Council unanimously voted to allow developers in the downtown

lation in recent years, coupled with the expanding Michigan Medicine health care system, has been “driving the demand” for housing, said Hall with the Ann Arbor Housing Commission.

UM for many years left the development and building of student housing to private developers, but o cials say the university is back in

the game in a very signi cant way.

In 2004, the undergraduate student-to-bed ratio at UM was 40%, but has since dropped to 28%, per data from university spokesperson

Kirk Westphal (photo at left) is executive director of the Neighborhood Institute, an Ann Arbor-based organization focused on housing and transportation policy. Above, the University of Michigan is building signi cant on-campus housing for students, with about 4,000 beds planned in the coming years. | PHOTOS BY NICK MANES

Kim Broekhuizen.

Broekhuizen pointed to the Campus Plan 2050 planning document, which “consists of a series of framework and systems plans outlining greenspace, mobility enhancements and potential locations for future facilities, among other features,” according to a news release.

In recent years, university ocials have approved plans for adding signi cant on-campus housing for students, with about 4,000 beds planned over two phases in the coming years.

“A ordable housing is a national and state level issue, this is especially true in high-demand communities like Ann Arbor where demand for housing vastly outpaces

supply,” Broekhuizen wrote in an email to Crain’s. “ e University has been part of numerous conversations regarding this issue. U-M has focused on what we can do immediately and that is to dramatically increase the number of high-quality, a ordable housing units for our students.”

Ann Arbor of the future

While local o cials largely agree that the city’s largest institution adding signi cant amounts of student housing will ease some pressures, many are also thinking about the Ann Arbor of the future.

While the city’s core downtown and campus areas have dense, mixed-use development, housing

Building business resilience with strong banking partnerships

In an unpredictable economy, a trusted banking partner can be your greatest asset

JOEL RAHN

Executive Vice President, Commercial Banking Independent Bank

Joel Rahn is the Executive Vice President, Commercial Banking at Independent Bank. He has over 35 years of commercial banking experience in the West Michigan market. He is a graduate of Central Michigan University. An avid supporter of his local community, Joel currently serves as a National Board Member for Bethany Christian Services, and has held prior Board positions with The Right Place Program, Wedgewood Christian Services, and the Michigan Bankers Association.

There is certainly some uncertainty about where the economy is headed as we move into the second half of the year. From possible economic slowdown to the upcoming presidential election, geopolitical tensions and the impact of emerging technologies like AI, some dynamics may trigger households and businesses alike to begin to hunker down and hold back on making big spending decisions. is in turn can have a profound impact on your company’s revenue stream.

It is also possible that certain economic policies, like the recent investment in infrastructure, required many businesses to ramp up production, requiring additional investments and quick access to capital.

In either scenario, a critical component of a business’s success is a strong banking relationship. Many successful business owners view their relationship with their banker as important as the one they have with other trusted advisors, such as their accountant or attorney. In fact, many business owners have confessed that they never truly understood just how

important their banking relationship was until they needed it.

While banking products have, in many respects, become commoditized, it is the underlying relationship with your banker that can make the ultimate di erence in how you will be able to weather an economic cycle (good or bad).

business partner that you can count on to be there when you need them.

• Access to credit – Do you know the decision makers? Many business owners will likely never know the key decision makers that control access to credit for their business. is is a distinct advantage to working with a community bank, as decisions are made by local banking professionals

Finding a nancial institution to partner with you and your business on your nancial journey is one of your business’s most important steps.

Finding a nancial institution to partner with you and your business on your nancial journey is one of your business’s most important steps. When evaluating your banking relationship, these are some key points to consider:

• Stability – If your bank experiences nancial stress, this may pose a problem for your business. A wise business owner stays updated on how their bank is performing. You want a

who know and understand the nuances and challenges of the communities we serve. Your ability to get to know these key decision-makers helps make every step of the banking and decision-making process more personal, streamlined and timely.

• Trusted advisor – Your banker should be a trusted advisor.

Remaining transparent with your banker, sharing not only your shortand long-term goals but also your

business challenges. is allows your banker to provide sound nancial advice based on the unique needs of your business, and to proactively anticipate future needs.

• A team approach – You want your bank to provide comprehensive solutions, not just transactions. A team approach provides customers with nancial experts who can assist with everything from lending to cash management, investments and wealth management.

While there will always be factors that cause uncertainty in the economy, having a strong relationship with a banker you trust and who knows your business will allow you to make decisions that ultimately help your business thrive and grow. Member FDIC.

LARGEST EMPLOYERS IN WASHTENAW COUNTY CRAIN’S LIST

offull-timeemployeesmayincludefull-timeequivalents(FTE).GeneralMotorsCo.declinedtoprovidecurrentcounty-level guresthisyear.TheU.S.PostalService,whichwasNo.14onlastyear'slist, didnotrespondbeforepublication.Itisnotacompletelistingbutthemostcomprehensiveavailable.Crain'sestimatesarebasedonindustryanalysisandbenchmarks,newsreportsandawiderange ofothersources.Unlessotherwisenoted,informationwasprovidedbythecompanies.CompanieswithheadquarterselsewherearelistedwiththelocationandtopexecutiveoftheirmainDetroit-area of ce.Actualrevenue guresmayvary.NA=notavailable e. Crain'sestimate. 1. TrinityHealthIHAMedicalGroup. 2. AsofDecember2023. 3. AsofDecember2022. 4. FormerlyMercyHealthPhysician Partners. 5. AsofJanuary. 6. AfterFaurecia'sacquisitionofacontrollingstakeinHella,thecombinedcompanyisnowknownasForvia.Faurecia'sacquisitionofHellawascompletedinFebruary2022. 7. AnnouncedJuly12,2022,thatthecompanynamewouldbechangingtoRealTruck. 8. FigureisFTEcountsfromtheCenterforEducationalPerformanceandInformation. 9. FigureisFTEcount. 10. Estimate from MWPVL International Inc. Want the full Excel version of this list — and every list? Become a

FOOD COURT

“A lot more food courts are putting local concepts in and 10 years ago you never saw that,” said Cindy Ciura, principal of Bloom eld Hills-based CC Consulting, a retail consultancy. “It was highly unusual. Now you see really popular concepts going into mall food courts for popular local avor.”

It’s all part of a mall’s survival in an environment that has seen them torn down for warehouses and apartments — or soon to be — and seen them face nancial woes that have led to them hitting the market for sale.

Unlike things like apparel and other goods, soft consumables — for example, spas and other repeat services — and food are e-commerce resistant and therefore appealing to mall owners who are still rattled by, among other things, bankruptcies of department stores and retail chains that have resulted in thousands of store closures nationwide.

“ ey are looking at local, authentic, experiential and all the words we talk about with foodies and farm-to-table o erings,” said Ken Nisch, a South eld-based retail expert who is chairman of JGA/FutureBrand. “ at takes one group of typical food court tenants and makes them, sort of, on the wrong side of the spectrum and opens the door for others to come in. It’s a lot more entrepreneurial and grassroots and regional than it used to be before.”

Malls have also become, in general, more reliant on food as part of their rent rolls. at’s not by accident.

According to data provided by Newport Beach, Calif.-based Green Street Advisors LLC, malls in the early 2000s had just 5% of their gross leasable area taken up by food and beverage users and 5% entertainment, while 75% was apparel. As of 2022, it was 15% food and beverage, 15% entertainment and just 45% apparel. Other and non-retail uses rounded out the rest of the space, per Green Street.

Je Green, a Phoenix-based partner for Ho man Strategy Group, a retail feasibility consultant, said restaurant sales per square foot tend to be higher than many apparel stores. For example, Green said, a Panda Express can bring in between $1,500 and $1,700 per square foot in sales, compared to, say, an American Eagle or Aeropostale, which might bring in $500 per square foot.

“Because there is not much square footage, your food court runs maybe $800 to $1,500 in sales, averaging about $1,000,” said Green, who worked in metro Detroit for years prior to moving west rst to San Francisco and then Phoenix.

None of this is to say that national chains are going to be extinct in Michigan and American malls. ey are, after all, money makers, said Jim Bieri, founder of the eponymous Detroit-based Stokas Bieri Real Estate.

“Companies like Chick- l-A, Taco Bell, Burger King, the various Asian concepts, pizza concepts, still do big business. ey’re a

good way to bring people increase the dwell time in malls,” Bieri said.

Emily Arft, a Green Street analyst focusing on the mall sector, said in an email that tenant mix shift has been “mostly defensive in nature, triggered by changes in consumer preferences towards experience versus goods (also to combat e-commerce).”

“Expanding o erings beyond apparel to restaurants, entertainment, services, etc., concepts help increase the overall appeal of a mall, resulting in more frequent visitation and longer dwell times, which ultimately increase the likelihood of additional transactions occurring at the surrounding shops,” Arft said. “Diversi ed tenant mixes create a more cohesive retail environment where tenants can bene t from one another.”

At Oakland Mall, Mario Kiezi, who bought the Troy mall in March 2022 and has been embarking on a years-long e ort to reimagine it, is bringing in a pair of 10,000-square-foot inline restaurants — including a Korean

barbeque and hot pot restaurant replacing a former Spirit Halloween, as well as an unlimited sushi and hibachi restaurant called Sake — and has shu ed his food court roster, adding Boboka, a Mexican food concept. He’s also adding a Boba beverage shop.

“American consumers are bored of the national brands you see in shopping centers and malls,” Kiezi said. “Food, if done right, can be a destination.”

At Somerset Collection in its Peacock Cafés food court, which has about 25,000 square feet with about 7,000 square feet available for lease to serve about 400 seats, you’ll nd local favorites like a new Crispelli’s Bakery and Pizzeria, which also has locations in Berkley, West Bloom eld Township, Grosse Pointe Woods and elsewhere, and Honey Tree, which has been at the mall since 1996. Last year, the popular Clawson sushi restaurant and Japanese grocery store Noble Fish opened a pop-up location in the mall as well, although it has since closed.

ose complement the luxury mall’s national chain o erings.

“Since the Peacock Cafés opened in Somerset Collection North, our four originals — Häagen-Dazs, Mrs. Fields, Chinatown and Honey Tree — have stood the test of time and continue to be guest favorites,” said Kathryn Millea, general manager of Somerset Collection. “As consumer interests have evolved over the last 28 years, our approach

to the Peacock Cafés is to o er a balance of nostalgia and newness where everyone can nd something delicious.”

Mall food courts around the state vary in seating capacity.

According to the Nyack, N.Y.based Directory of Major Malls, there are 28 retail properties around Michigan with a food court, and 25 of them are in enclosed shopping centers. ose centers range from 100,000 square feet to north of 1.5 million square feet and their food courts range in size from 50 seats to 1,000.

Regardless of size, food court restaurant mix will likely continue to evolve with a mix of longtime standbys and newcomers.

“Generally, food court tenants still include national fast food and fast casual staples,” said Stephanie Cegielski, vice president of research and public relations for the New York City-based International Council of Shopping Centers, an industry trade association. “However, as the U.S. population evolves, food courts continue to add more diverse and ethnic offerings that give consumers a taste of something new and unique. Food courts are also o ering more variety through di erent price ranges, with higher-grade tenants and upscale eateries. Additionally, as consumers become more interested in connecting with their communities, food courts continue to integrate local concepts that highlight the unique character of the surrounding community.”

Shoppers at the Somerset Collection mall in Troy on Black Friday in 2022 BLOOMBERG

PeterA.Lichtenberg, Ph.D. Director,Institute ofGerontology atWayneState University

RebeccaS.Sorensen, CFP®,CIMA® SeniorVicePresidentWealthManagement,USA ParamountWealth ManagementPartners, UBSFinancialServices,Inc.

City’s startup ecosystem is 2nd-fastest growing in world

yB Anna Fifelski

Venture capital funding in Michigan remained steady between 2022 and 2023, and Detroit ranked second among startup ecosystems worldwide for its growth in the last year.

e Michigan Venture Capital Association released its yearly impact report July 22, with data compiled from PitchBook and funded by the Michigan Economic Development Corp.

e report outlined a slight drop in funding volume between 2022 and 2023, though deal size saw an increase.

“In a year in which rms across the country struggled to raise capital, Michigan venture capital rms demonstrated immense success,” Patricia Glaza, managing director for ID Ventures and MVCA Board chair, said in a news release. “ e strength of our VC rms and start-up companies makes Michigan stand out as an emerging ecosystem.”

PitchBook’s Growth Score is based on one-year, three-year and ve-year growth rates for which they considered the number of VC deals, exits and fundraising activity. Detroit had the second highest score at 72.5, losing by 0.3 points to Dubai as the city with the highest growth and dubbing Detroit as an “emerging tech hub.”

VCs. And I think that we have to do as much as we can to help support them as well.”

According to the report, Michigan venture activity remains primarily centered in software in areas such as arti cial intelligence, manufacturing, health tech, robotics and more. Investments in life sciences, health care and software companies continue to dominate.

Michigan remained steady in its venture capital deals this past year, with seven fewer deals in 2023, with 182 valued at $1 billion, a slight decline from the 189 deals at $1.1 billion that the state saw in 2022.

“Key deals that drove the total of VC invested included the $300.0 million funding of battery tech developer Our Next Energy, the $109.0 million infusion in autonomous transport software platform May Mobility, and a $75.0 million 100% nancing of cybersecurity provider Censys,” the report states.

2023 had the most capital raised by Michigan-based funds of the past decade, with four funds raising around $500 million, overtaking 2016’s tally of approximately $450 million.

WEDNESDAY,AUG.28 8-9:30A.M.

giveawayatevent!

Ara Topouzian, executive director of the MVCA, told Crain’s that the steady fundraising that Michigan saw, and the startup and venture capital ecosystem’s success through the past several years is putting the state on the radar and in conversations with tech communities like those in the coastal regions.

Last year, Michigan saw the highest ever deal value of outside investors, reaching a total of $543.7 million. Coastal investors from the Bay Area and New York rms participated in a combined 55 venture rounds in 2023.

“I think that we’re a cohesive venture ecosystem, which means that, to me and to the community, that these outside investors want to do business here. ey want to collaborate here. And I think that’s a good thing,” Topouzian said.

“On the other end of it, too, we should also be fostering our Michigan venture community. VCs are typically the rst boots on the ground for nance, for helping the startups, angel investors and in

Most venture capital investment in the state remains concentrated in Southeast Michigan in the Detroit-Warren-Ann Arbor metro area.

“A record $8.9 million in average nancing value in 2023 suggests that investors still have plenty of capital to invest in the best-prepared, best-positioned startups,” the report states.

Michigan had 11 exits at approximately $700 million in 2023, an increase from the 13 exits valued at $200 million in 2022.

According to the report, the bulk of exits occurred via strategic acquisition, as opposed to buying or public listing. e exit value was primarily driven by the $630 million acquisition of Auburn Hills-based VIA Motors by Ideanomics.

In the Great Lakes region, VC deal value dropped signi cantly between 2022, with 1,343 deals in 2022 valued at $17.2 billion, whereas 2023 saw only $6.8 billion for 1,194 deals.

Topouzian said the progress that Michigan has seen the past several years shows great potential for the state’s venture capital and startup ecosystems.

Newlab at Michigan Central and Michigan Central, as seen in early 2024, in the Corktown neighborhood. DEAN STORM/CRAIN COMMUNICATIONS

Finalists Named for 2024 Michigan ORBIE® Awards

MichiganCIO has announced the nalists for its 2024 Michigan ORBIE Awards. Winners will be revealed at the ORBIE Awards on Friday, November 15th from 8:15AM - 11:15AM at The Henry. The Michigan ORBIE Awards honors chief information of cers who have demonstrated excellence in technology leadership. Nominated CIOs and those in equivalent positions are evaluated based on innovation, business value creation and community involvement. To learn more, please visit orbie.org/michigan/2024.

Detroit landlords support proposed rental ordinance overhaul — but ‘still digesting’ the measure’s details

yB Nick Manes

In proposing a new rental ordinance for landlords and tenants, Detroit o cials say they’ve tried to strike a balance between the needs of the two. In doing so, they’ve garnered some support from some rental property owners.

Detroit City Councilwoman Mary Waters — a former renter — said she understands the needs of landlords, but as one of the city’s two at-large council members, she hears mostly complaints from tenants.

“We know that we have some pretty good landlords who are just trying to do the right thing,” Waters told Crain’s during a July 22 news conference to formally unveil the ordinance, which Crain’s reported on previously.

“We are sensitive to those who are landlords. We plan to address (landlord concerns), especially during hearings. We want to be fair, but we also want to make sure that renters understand what their rights are.”

At its core, the proposed ordinance aims to entice landlords to bring their rental units into compliance, the rate of which stands at less than 10%, according to city estimates. At the same time, the ordinance would provide more

“teeth” to punish “bad” landlords, according to o cials.

Landlord groups say they’re broadly supportive of the proposal.

“We support the goal of streamlining inspections, removing red tape and making it easier for housing providers to be in compliance,” said Andrew Kuhn, CEO of Royal Oak-based property management firm Sunrise Communities LLC and president of the Apartment Association of Michigan, a landlord trade association.

“We have a responsibility to provide safe and secure housing to our residents, and by focusing efforts on ‘bad actors,’ the city is showing serious e orts to be good partners in this very real, vital issue. We’re still digesting the actual proposed amendment and I’m sure we’ll have questions, but in general we’re happy to see Mayor Duggan and the council’s e orts on this matter.”

Still, the association — which represents owners of about 150,000 rental units around the state — is not without concerns regarding speci c language in the 70-page ordinance document.

Speci cally, Kuhn pointed to ordinance language tied to proposed inspection fees for various hous-

ing types, such as single-family, duplex and multifamily, as well as how the city might sta the proposed inspection changes in an e ort to bolster compliance.

Among the proposed changes in the ordinance are the elimination of a 37-point inspection for home conditions and introducing a new “15-point core health and safety inspection,” according to city documents.

Waters, who is running for the U.S. House, said City Council’s goal is to hold a hearing on the matter, either before or after the body takes an August recess.

Other small landlords, speaking at the news conference organized by the Duggan administration, also spoke highly of the proposal.

“I work very hard to keep all of my properties in compliance,” said Evelyn Harris, a Detroit landlord with fewer than 10 rental properties, adding that the costs to do so are expensive and generally passed down to tenants. “So this ordinance would be de nitely well needed.”

In an e ort to root out the landlords who might wish to eschew the compliance process entirely,

the ordinance also aims to overhaul an existing escrow system that allows tenants to pay their rent into an escrow account if conditions at their rental property fail

“What I am saying, for those of you who think you can continue to collect rent from people and not make sure that your property is safe for the renters, then you can think again.”

Mary Waters, Detroit City Council member

to meet compliance standards. e city’s escrow program, as it stands, is too narrow and the requirements to be used by tenants “do not re ect the reality of many renters,” according to a city briefing document. Under the proposed ordinance, the escrow program would have added exibility for renters without a written lease or who pay their rent in cash.

“We’re saying to landlords, ‘Get your act together,’” Waters said of the proposed changes. “And not all landlords are bad. at’s not what I’m saying. What I am saying, for those of you who think you can continue to collect rent from people and not make sure that your property is safe for the renters, then you can think again.”

Still, the initial goals with the proposed changes are fairly modest, with the twoyear goal being a 30% increase in certi cates of compliance issued. Duggan said that would amount to 25,000 more housing units in the city being brought into compliance and would make for “a great day.”

Pushed for any projections beyond the two years o ered, Duggan — who has yet to say whether he will seek re-election to the mayor’s o ce, but who some expect to run for governor — demurred.

“I think that’s something you ought to hear about in the mayoral election next year,” Duggan said.

Shyft nears launch of electric delivery vans after delays

yB Kurt Nagl

Novi-based Shyft Group is planning to deliver its rst electric delivery vehicles by the end of the year in what would be a welcome milestone amid a pro t and sales slide.

e specialty commercial vehicle manufacturer is planning to ramp up production of its Blue Arc EV in Charlotte in mid-Michigan. e EV prototype was rolled out in 2021 but faced production delays, including battery issues with bankrupt supplier Proterra. CEO John Dunn said production of the Class 4 walk-in van, whose batteries are now being supplied by Novi-based Our Next

Energy, is now on track.

“We are at an in ection point of the program,” Dunn told investment analysts July 25. “We are on the cusp of starting commercial vehicle production.”

Shyft (NASDAQ: SHYF) saw its stock value rise 16% to more than $13.50 per share July 25 as it provided its second-quarter report.

e EV update shined in nancial performance re ecting topand bottom-line declines. e company took in $192.8 million of revenue, down 14% year over year, while net income dove more than 50% to $2.2 million.

Weak demand for parcel delivery vans and motorhomes continues to hamper the business,

o cials said, but they are hoping for a recovery by early 2025. e downturn prompted Shyft to cut employee counts by 30% coming into 2024, and e orts to consolidate leadership are ongoing.

“Shyft members are acting with urgency to drive improved results with a focus on commercial activity, pro tability and cash ow,” Dunn said.

Also on July 25, the company announced the acquisition of Independent Truck Up tters, which has locations in Roseville, Kansas City and Oakland, Iowa, netting $55 million in sales in 2023. e purchase involved $46 million cash and an $8 million earnout subject to annual business perfor-

mance during the next two years.

Blue Arc’s rst customers will be FedEx, which ordered 150 units, and North Carolina-based dealership owner Randy Marion, who has been trying to get his hands on electric delivery vans since Electric Last Mile Solutions Inc. went defunct more than two years ago.

“We’re very excited about the interest from other customers as well,” Dunn said. “As we get vehicles on the road, that interest will continue to develop.”

As automakers and the mobility industry struggle writ large with a costly electri cation transition marked by ts and starts, Shyft CFO Jon Douyard said the company doesn’t need to churn out an enormous number of units to make money. e company is targeting break-even by the end of 2025.

“We’re not out here trying to be loss leaders,” he said.

Detroit’s proposed rental ordinance aims to entice landlords to bring their units into compliance, the rate of which stands at less than 10%, according to city estimates. GETTY IMAGES/ISTOCKPHOTO

Shyft Group rst rolled out plans for its Blue Arc EV in 2021. | SHYFT

“We’re saying to landlords, ‘Get your act together,’” Detroit City Councilwoman Mary Waters said of proposed changes to the city’s rental ordinance as Mayor Mike Duggan looks on during a news conference July 22. | CITY OF DETROIT FLICKR

State’s health care leaders focus on lowering drug prices, improving health outcomes

By Clare Pfei er for Crain’s Content Studio

Elevating care and improving health outcomes for Michiganders topped o the packed agenda at the Michigan Association of Health Plans (MAHP) 2024 Annual Conference.

A few key takeaways at the annual gathering of leaders in the health care industry included:

• Policymakers are calling for a focus at the state and federal level on reducing pharmaceutical costs and increased transparency.

• Skyrocketing prices for certain weight loss drugs are impacting health care access and the bottom lines of individuals and businesses.

• Changes to the behavioral health system and polices around maternal care aim to improve patient outcomes.

e annual event celebrates achievements among the state’s health care insurance providers and industry advocates and looks ahead to what legislative and policy changes could bring to the industry. MAHP is a nonpro t established to promote the interests of member health plans and to provide leadership for the promotion and advocacy of high quality, a ordable, accessible and equitable health care for Michigan residents.

is year, topics relating to the costs and access to necessary medical care and prescription drugs were a common thread throughout the conference.

Addressing attendees, Michigan Lt. Gov. Garlin Gilchrist II said access to health care and insurance coverage is imperative for the state. “One person being uninsured is one person too many,” Gilchrist said. “Nobody should have to max out their credit cards or empty their bank accounts to get care.”

Pharmaceutical prices

During the event, much of the discussion focused on GLP-1 medications like Ozempic and Wegovy, which can be used for weight loss as well as other chronic health issues like diabetes or even smoking cessation. While there’s no doubt of their popularity, the cost of these drugs has skyrocketed, experts told the conference.

“You have this captive population that would love to have these drugs. Fi y percent of the U.S. is obese, and another 25 percent is overweight, and another 25 percent wants a beach body. Everybody wants this drug,” said James Gelfand, president and CEO of e ERISA Industry Committee, which focuses on programs that shape federal and state health and retirement bene t policies.

With costs of these drugs rising exponentially in the U.S., Gelfand said, “that is such a high amount of money, paying that amount of money for all the patients who want or need that drug would put us out of business. It would put Medicare out of business. It would put Medicaid out of business.”

Gelfand said this is one example of why Washington is likely to take action to x the system for drug pricing. “Some of the things that are broken in the system, the private sector cannot x. We are going to have to change the laws,” he said.

Avik S. A. Roy, president of e Foundation for Research on Equal Opportunity, called the drugs a “public health revolution” in the industry and said that “if anything, we should be looking at ways to increase utilization of GLP-1s.”

“Government payers are the ones who end up with the cost of obesity more than commercial payers do,” Roy said.

“(Congress is) looking into the big pharmacy companies‚ product hopping, pay for delay, patent evergreening, orphan drug claims, terminal disclaimers and several others. Product life-cycle bills are popular because they could save money,” he said. “Some of that is going to happen, but it’s just a matter of how much or how big are they going to go,” Gelfand said.

Gelfand said that, ultimately, there needs to be cooperation among a variety of stakeholders to make sense of the pricing. “You have to work together between payees, employers and PBMs to be a united front on this; otherwise the drug manufacturers are going to win.”

Legislative take on pricing

A bipartisan panel of Michigan state legislators also echoed the call to nd a x for the high drug costs, including greater transparency when it comes to pricing. e panel was moderated by Mark Sanchez of Crain’s Grand Rapids Business, and panelists included seven state lawmakers with leading roles and relevant experience with health care policy in the Michigan Legislature: Sen. Winnie Brinks, D-Grand Rapids; Sen. Kevin Hertel, D-St. Clair Shores; Sen. Michael Webber, R-Rochester Hills; Rep. Brenda Carter, D-Pontiac; Rep. John Fitzgerald, D-Wyoming; Rep. Julie Rogers, D-Kalamazoo; and Rep. Curt VanderWall, R-Ludington.

“We need to make sure we are doing everything we can to be responsible and to use taxpayer dollars well to make sure people are getting the prescription medications they need,” said Sen. Brinks.

Sen. Hertel agreed, adding that the state has limited authority in

this matter, and called on federal lawmakers to take up the issue. “We need to see change in Congress to make real change in a ordability in the cost of prescription drugs,” he said. “Unfortunately, Congress hasn’t been able to do much of anything.”

Rep. Carter called for more transparency in how drugmakers are coming up with pricing. “Transparency would help lower costs of health insurance,” she said. “Why should an industry be shrouded in secrecy?”

Rep. Rogers said that Michigan House Bill 4409 passed that chamber and is now in the senate, and it would address the lack of transparency.

“You have a bipartisan group up here. ere’s a lot of agreement. I think there is a lot of bipartisan support on the transparency topic.”

Rep. VanderWall said “the transparency bill is a good start,” but the state needs to look deeper at options to truly o set the costs. “We need to look at the bottom line and we need to make sure we can turn those dollars back to every one of us in this room. … I do believe we have to be willing to get into the nitty gritty — and unfortunately, nationally, it’s just a football that both sides are willing to punt.”

Addressing disparities in health care

Director of the Michigan Department of Health and Human Services

Elizabeth Hertel said the state is working to solve inequities in health care, especially improvements to pregnancy care, behavioral health access and community health care.

“We know that we have higher rates of prenatal deaths among Black women in

the state of Michigan. We will continue to bring programs forward to minimize those disparities,” Hertel said.

One change she highlighted was that, since last year, Michigan Medicaid now covers doula services for care provided to birth parents in community-based, prenatal, labor and birth and postpartum settings when recommended by a licensed health care professional. “For us to be able to support those choices with Medicaid is especially important.”

For behavioral health, she noted that the shortage of quali ed providers has been a huge issue nationally and in Michigan, and the state has been addressing this.

“ e state and labor department has made a lot of investment in talent pipelines and attracting talent to these careers,” she said. “ e pandemic we went though was incredibly traumatic, and we were all traumatized one way or another — but I think nobody more than children and adolescents. My focus has always been on: How do we expand access?”

Scan to read more on MAHP’s Annual Conference:

Moderator Matt Salo, Senior Strategist, Salo Health Strategies (center) leads a conversation on prescription drug pricing with panelists Avik S. A. Roy (right), president of The Foundation for Research on Equal Opportunity, and James Gelfand (left), president and CEO, The ERISA Industry Committee.

State legislators discuss prescription drug pricing policies and other state health care issues at the 2024 MAHP Annual Conference in Traverse City in July. From left: Moderator Mark Sanchez of Crain’s Grand Rapids, Sen. Winnie Brinks, D-Grand Rapids; Sen. Kevin Hertel, D-St. Clair Shores; Sen. Michael Webber, R-Rochester Hills; Rep. Brenda Carter, D-Pontiac; Rep. John Fitzgerald, D-Wyoming; Rep. Julie Rogers, D-Kalamazoo; and Rep. Curt VanderWall, R-Ludington.

them a new habit that has nancial implications for the opera company: a penchant for opting into productions here and there or on impulse rather than seasonal engagement.

ough subscriber numbers bring nancial implications, there’s no magic number of subscribers Detroit Opera is looking to reach, said President and CEO Patty Isacson Sabee, especially because the number of productions now versus pre-pandemic is di erent.

But Detroit Opera is trying to deepen its engagement with the new audiences.

“What we’re trying to do is bring people to the opera in whatever way they want to come. It’s great if they subscribe. It’s also great if they just buy one ticket or one ticket at a time ... our metric of success is if we can grow the audience, diversify the audience, have a bigger impact.”

Isacson Sabee was named to succeed Wayne Brown as president and CEO of Detroit Opera a year ago and o cially started the job in January.

She brings what she calls “opera-adjacent” experience to the role. Before coming to Detroit, Isacson Sabee spent 21 years at the Seattle Symphony, which shares an orchestra with Seattle Opera.

When she started there, the two

organizations shared a performing arts facility, o ce space and an orchestra. Isacson Sabee said she was “very much involved in the cadence and sequence of their programming and how they would do their repertoire” and how it would impact the symphony.

e two groups also negotiated together the musicians’ contract, but also use of the stage crew and the same production facility, she said.

In Detroit, “the comeback from COVID has been hard and has required really truly understanding new patterns of visitor, subscriber (and) donor behavior,” Isacson Sabee said.

Like most other organizations, Detroit Opera had to reduce its costs through sta cuts and reduced productions during and after the pandemic, Isacson Sabee said. “But ultimately, that’s not a long-term solution for sustainabil-

ity because we have a large xed cost in an opera house,” she said. “And it doesn’t create as much impact. at’s why we’re here.”

Going into next season, Detroit Opera is increasing its main stage productions from three to four and tripling the number of dance performances to six, Isacson Sabee said. e season will include “something for everyone,” which is how the local opera company and many others have long planned seasons.

“We think about all the di erent variety there is within the repertoire and all the di erent ways for people to enjoy a 400-year-old art form,” she said.

Between the site-speci c work and the approach of bringing a more timely, relevant, inclusive feel to how it is directed and produced that Yuval Sharon has brought to Detroit Opera and the made-in-Detroit rsts, the compa-

ny is attracting a new audience, Isacson Sabee said.

“It’s younger now. It’s less a uent. It’s less well-educated and twice as diverse. So we are creating a broader-inclined audience for the o erings that we have at the (Detroit) Opera House,” she said.

e desire — and need — to engage newer audiences was the impetus for the theme-based seasons Sharon plans for upcoming seasons, something announced last month in tandem with news that he’ll continue to produce innovative opera in Detroit for another three years.

Sharon’s idea for seasonal themes was spurred by the constant questions that performing arts are having about subscription audiences, Isacson Sabee said: Are subscriptions dead? Are people only doing single tickets now? e question led Isacson Sabee to consider what does entice people to sign up for four operas a season, Isacson Sabee said.

e goal of the theme-based seasons is to “bring people on a journey through the opera season (and) work with community partners that might have a real vested interest in the work we’re doing,” she said.

Detroit Opera will also curate educational, dance and other public programming around the theme.

e thematic approach will launch with the 2025-26 season,

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INVITE DECISION MAKERS

still a year out. But Detroit Opera is already beginning to plan around it, Isacson Sabee said, and is engaging with partners.

While working to deepen audience engagement, Detroit Opera is also looking at how it can become more inclusive and relevant to the broader community, Isacson Sabee said.

In education, for example — a large part of its work before the pandemic — it’s now working to nd ways it can support broader education goals through the art form, working into school needs.

For example, amid the need for pre-K and early elementary arts education, Detroit Opera worked with educators to develop a storybook opera program that is a literacy equivalent and a performance opportunity. It’s taking programs like that into schools around the region but looking at what asynchronous programming in classrooms and online could look like, as well, she said.

Another community program with Henry Ford Health’s cancer institute is focused on art as healing, something that’s part of a sector-wide movement, Isacson Sabee said.

“ e funding resources for something like art as healing are di erent and broaden our ability to take advantage of being able to be out in the community and provide this,” she said.

Detroit Opera is operating on an $18 million budget this year.

Detroit Opera has gained younger and more diverse audiences. | HELMET ZIEWERS/DETROIT OPERA

“People have a lot of questions, as you would imagine and expect. But I would characterize the vast majority of those conversations as positive and supportive as we’re navigating through these challenges that we have right now,” he said.

Sullivan, 40, was named to the interim leadership role after longtime conservancy CEO Mark Wallace resigned at the end of May and moved into a transitional adviser role in the wake of former CFO William Smith’s alleged embezzlement over the past 12 years. e conservancy’s board terminated Wallace’s contract in June.

A member of Crain’s 2020 Class of 40 Under 40, Sullivan built his career on nance, taking an investment banking job in New York City after graduating from Michigan State University in 2006. He came back home to join Rock Ventures LLC in 2010, where Detroit Riverfront Conservancy Chairman Matt Cullen was president.

Sullivan helped build out Bedrock founder Dan Gilbert’s gaming operation in Ohio, and in 2016 he was named CEO of Xenith LLC, a growth-phase company in Rock’s portfolio that provided subsidized football helmets and shoulder pads to underfunded school districts. A product recall at Xenith and the COVID-19 pandemic enabled him to sharpen his leadership and crisis management skills before departing in 2021 to return to investment roles. He joined the Detroit Riverfront Conservancy this spring.

MARKET PLACE

“It’s really pulling on all of my strengths and experiences to shepherd us through this time,” Sullivan said of his new role. “As a Detroiter and longtime riverfront advocate, I am honored to serve the conservancy and help lead the organization on its mission to prosecute, protect, preserve and prosper. We will come out of this stronger, together.”

Prosecute

e civil lawsuit led July 24 against Smith, several of his family members, his close friend and local businessman Darell Greer, and companies they both owned, is a clear example of the activity under “prosecute,” Sullivan said.

BANKRUPTCY

From Page 3

Gri n Claw lists 49 creditors in the ling. Its biggest debt is $95,948.34, owed to the city of Rochester Hills for water and taxes and nearly $43,000 to Birmingham, according to court documents. Milwaukee-based malt provider Malteurop is owed $35,000, while DTE is owed $20,000 and Blue Cross Blue Shield of Michigan is owed $15,000. e company in the ling lists assets of $10 million to $50 million and liabilities of $1 million to $10 million.

All of the actions the conservancy is either leading directly or supporting to address criminal wrongdoing and e orts to recover as much of the embezzled funds as possible through a variety of means fall under the same heading, Sullivan said.

He declined to say whether the conservancy is considering any sort of civil action against its longtime auditor, George Johnson & Co., which was under contract when the alleged embezzlements took place without notice.

“I won’t speak to any speculation or, you know, future actions or anything of that nature. What I would say is, you know, we’re going to be very transparent in how we communicate the actions within the prosecute banner as we go forward. Our investigation is still ongoing,” Sullivan said.

Preserve

“Preserve” is all about maintaining and preserving the work the conservancy has done for more than 20 years, the impact that it has on a very real and daily basis on the lives of so many people, and “that DNA that has made the riverfront the No. 1 Riverwalk in the country for three years running,” Sullivan said.

Key personnel changes are among the actions already taken with that in mind, Sullivan said.

Among them: Naming Karen Slaughter-DuPerry executive in charge of construction to oversee completion of the Ralph C. Wilson Jr. Centennial Park; promoting director of programs Rachel Frierson to vice president of operations and programming to consolidate the focus on visitor experience; and bringing in a new team led by

Filing for Chapter 11 bankruptcy protection under Subchapter V is increasingly popular among smaller companies because it is quicker and less costly. e squabble comes after the two families forged a long relationship in the hospitality business.

Norman LePage and Ray Nicholson collaborated to own and operate restaurants Mac & Ray’s in Harrison Township, Big Rock Chophouse in Birmingham and East Side Mario’s in South eld. e two opened the Gri n Claw Brewing Co. taproom in 2011 in Birmingham and expanded to Rochester Hills in 2019. e LePage family sold Rochester Hills-based

Paul Trulik, senior vice president of the global not-for-pro t division of Quatrro Business Support Services.

“ at’s a lot of leadership change in a relatively short period of time, but really speaks to the focus that we have and the commitment that we have to preserving the great work that this organization has done and will continue to do as we go forward,” Sullivan said.

e “ nancial cleanup” Trulik is leading falls squarely under the “preserve” part of the conservancy’s go-forward plan as well, he said. It includes getting accounting systems up to date and things entered properly into the system in the wake of alleged criminal wrongdoing and amid the shift from a legacy leader to a whole new team.

“We’re actively working through that. … We have our arms around the situation and are moving forward so we’re not sounding any red alarms over cash crunch or anything of that nature right now,” Sullivan said.

Protect

e charge to “protect” really speaks to Cullen’s early commitment that the conservancy would nd out how the embezzlement happened, scrutinize the internal controls it had in place and where they fell short, understand the changes needed and then not only implement them but share those best practices with other nonpro ts to help protect against similar issues in the future, Sullivan said.

A committee of board members and business, philanthropic and nonpro t leaders is looking

Clubhouse BFD restaurant to establish the second Gri n Claw.

Ray Nicholson died in 2019. A dispute came up over repayment of a loan to the LePage family from the sale of Clubhouse BFD and repayment of a loan made by the Nicholson family. e Nicholson family in January 2023 led a lawsuit in Oakland County seeking more than $14 million from Gri n Claw. No deal has been reached in the lawsuit. e bankruptcy ling will halt any litigation against Gri n Claw.

Various members of the Nicholson family and representatives for the family did not immediately respond to Crain’s request for comment.

servancy made progress on in June when the International Bridge Co.’s owner, the Moroun family, agreed to shift from its plan to put a concrete-crushing site on the west riverfront.

In the near term, the next piece of waterfront development on the horizon is completion of the Ralph C. Wilson Jr. Centennial Park, something expected next year, with a $35 million commitment from the Ralph C. Wilson Jr. Foundation and the possibility of other foundation support.

closely at best practices and consulting with centers of excellence around the country and other experts it can learn from as part of the process, he said.

“It’s too early to really report out on any of the key takeaways or conclusions of that workstream. But that gives you some insight as to what we’re doing, how we’re doing it, who we’re doing it with, and what to expect, you know, kind of at the end of that process,” Sullivan said.

Prosper

e nal “P,” prosper, hinges on the conservancy’s success in the other areas of the framework, Sullivan said.

“What does the next ve or 10 years of the organization look like and beyond? We have to do everything in the other initiatives to really ensure that we have the solid foundation so that the organization can prosper longer term,” he said. at includes developing the last three-quarters of a mile of the 5.5mile Riverwalk, something the con-

Rather than going to the Detroit Riverfront Conservancy, those funds will be raised and administered by the Community Foundation for Southeast Michigan through a supporting organization or fund under its umbrella, an arrangement similar to its ongoing administration of multi-year foundation commitments to the Grand Bargain that enabled the city of Detroit to emerge from bankruptcy.

In talking about the “prosper” goal for the conservancy, Cullen and other executive committee leaders said in an email to supporters last month that the conservancy is “nalizing a reimagined nancial support structure that will ensure completion and sustainability of the 5.5-mile vision for the Detroit Riverfront, including the now under construction Ralph C. Wilson, Jr. Centennial Park.”

“ ose conversations are active and ongoing (about) the scope of the Community Foundation’s role,” Sullivan said. “But you know, regardless, at the conservancy we will be working to secure the nancial support for the entirety of sustaining and completing our mission as we go forward. And clearly, the Community Foundation structure is a big part of that.”

Work continues at the Delta Dental Play Garden at the Ralph C. Wilson Jr. Centennial Park. | NADIR ALI/DETROIT RIVERFRONT CONSERVANCY

e Ho mann family is now the largest real estate holder in the area and employs 500 people, according to the rm.

Meanwhile, the Ho mann family’s interests in Michigan have expanded beyond marine transportation. ree separate deals have involved:

Ho mann Media Group’s acquisition of St. Ignace-based Maurer Publishing LLC, the publisher of the St. Ignace News and the Mackinac Island Town Crier, in March 2023.

e acquisition of Gladstonebased Besse Forest Products Group, an Upper Peninsula wood products manufacturer, in March of this year.

e acquisition last month of Lowell-based Envision Engineering, a full-service metal forming manufacturer, to add to its manufacturing portfolio. Grand Rapidsbased M&A advisory rm Calder Capital represented Envision in the deal.

Scott Marshall, St. Ignace city manager, said local o cials have had largely positive impressions of the Ho mann family since their investment streak in the Straits, particularly for the company’s interest in keeping the former owners’ legacies intact.

“ e Sheplers have been famous for investing in employees and using the ‘Disney method’ of training employees,” he said, referring to an employee orientation style that emphasizes family-owned business culture. “It sounds like the Ho mann family has much the same sensibility and wants to continue that.”

Ho mann said the family has its eye on a couple of additional hospitality-related investments in Northern Michigan, but no agreements have been formalized. He said they’re also interested in venturing into marine freight opportunities, which would complement the ferry businesses.

“Our ears are always to the oor,

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

Hoffmann

origin story

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

From there, David Ho mann branched out into private equity through Osprey Capital LLC, now structured as a family o ce, and into real estate via Ho mann Commercial Real Estate, which today manages properties cumulatively valued at more than $1 billion, according to the rm.

Under the second generation, the Ho mann Family of Cos. now owns about 200 businesses headquartered in 13 U.S. states, Canada and the U.K. Together, the companies have 11,000 employees with operations across more than 250 locations in 30 countries, accord-

ing to the Ho mann Family of Cos.’ website.

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

Northern Michigan isn’t the rst time they’ve doubled down on a speci c location. ree years ago, the family announced plans to invest $150 million in the historic wine region around Augusta, Mo., which is about 50 miles west of St. Louis. eir portfolio in that area includes six vineyards and wineries, a golf club, a pair of plant nurseries and a slew of other hospitality and entertainment businesses.

‘Unique’ investing approach

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

“If it’s your home geography, we

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

Helminski added that it’s also unusual that the Ho manns chose Michigan businesses — local ferry services and two small newspapers — that serve very speci c geographies and are unlikely to scale.

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

Helminski also said the Homanns are unique in that only a “small minority” of family o ces dabble in direct deals, or companies that they will own and operate.

Mike Brown, partner and managing director of Grand Rapidsbased investment banking rm Charter Capital Partners, said

many of the larger family o ces have gotten into direct deals precisely because they don’t want to pay the steep fees that private equity rms might charge to manage their investments.

He said the advantage of this approach is that the family can then be choosy about which companies they invest in — and likely pay a lower price because they aren’t trying to drive fast returns.

“A private equity group really wants to grow a business fast — that’s how they return money for their investors,” he said. “A family o ce will often buy a business that is very pro table and just hold on to it … inde nitely. ey don’t have to sell it.”

Brown said that could be advantageous for the ferry companies, because they are limited in their revenue growth by the number of tourists that come to the area, which isn’t likely to change drastically from year to year.

“I’m sure they’ll do things to improve operations and (trim expenses) and things like that,” Brown said. “But a lot of family ofces like to buy culture — a business that has a good culture — and maintain that.”

Ho mann echoed that, noting that they rst were drawn to Shepler’s because the family was able to navigate the challenges that come with running a business together for nearly 80 years.

“Our company was started by our father, so we had a lot of synergies and things to talk about at the acquisition table,” he said. “… ( e Sheplers) have shown that they not only are great people, but they run a really, really amazing operation that we were honored that they would even consider us to be involved with.”

He added: “ e locals of that area are every bit as nice of a caliber as Chris (Shepler) and his family, so we were like, ‘Man, we stumbled upon just a beautiful place, not only to see, but to experience and work alongside with,’ and so that’s why you’re starting to see our appetite to continue to invest more in there.”

Greg Lehmkuhl, who became CEO at Lineage in 2015, said now is the right time to unlock capital from the public market — 16 years and 116 acquisitions after launching with a single warehouse in Seattle.

“We’ve raised over $7 billion in the private markets over the past few years, so this was really just a continuation of an investor relations outreach,” Lehmkuhl told Crain’s on July 25 shortly before the stock began trading. “It feels amazing to make it to this point, just energizing and super excited about the future.”

e chief executive said the stock pricing is in line with expectations of the company at the culmination of hundreds of “testing the waters” meetings over the past 18 months. He said he expects the stock to trade up over the coming quarters and years.

“We are absolutely ecstatic about the level of con dence we got and

the level of interest and orders we got from the rms that we were hoping to get,” Lehmkuhl said. “We had the luxury yesterday of choosing our future ownership at least on the public oat side from the best investors in the world.”

Michigan appears to have IPO fever. A day before Lineage’s launch into the public market, Birmingham-based software company OneStream rang the opening bell and saw its stock price soar more than 30% on the rst day of trading. Meanwhile, Grand Rapids-based Acrisure, which looks poised for an IPO, hired the vice chair of the New York Stock Exchange to serve as its president, the company announced July 24.

David Sowerby, managing director at Bloom eld Hills-basednancial adviser Ancora, said this represents a big breakthrough for Michigan.

“ e harsh reality is that more companies would go out the back door through mergers and acquisitions, taking the headquarters out of Michigan versus those coming

in the front door via IPOs,” Sowerby said. “You’ve begun to see that slowly reverse. Michigan is a more competitive state.”

Amid the breakneck expansion, Lineage has no plans to leave its headquarters in Novi, where more than 600 employees are based, including much of the leadership team, Lehmkuhl said.

Sowerby said Lineage’s IPO is among the largest he has seen in Michigan in more than 25 years in the industry. “ is is by far one of the most impressive IPOs I have seen … its size, its investor appetite,” he said.

While Lineage’s stock didn’t pop the same way as OneStream, coming out of the gate above the set IPO price is one mark of a successful launch. e large number of underwriters in the deal, as well as interest from sophisticated investors like Norway’s sovereign wealth fund, demonstrates healthy demand for shares, Sowerby said. Lineage Inc., formerly Lineage Logistics, is the world’s largest cold storage warehouse company and

an industrial real estate investment trust, or REIT. Its portfolio includes 482 warehouses across the globe, totaling more than 84 million square feet, and it employs 26,000 people. e company was founded in 2008 by private equity executives Adam Forste and Kevin Marchetti, currently co-executive chairmen of the company. e pair established Bay Grove Capital as Lineage’s parent company, and Bay Grove will continue to have a majority of the voting power following the IPO.

e public o ering marks the next chapter of Lineage’s pursuit to dominate the massive but highly fragmented cold storage market. e top 10 players in the space, including Americold Logistics and U.S. Cold Storage Inc., make up just 25% of global market share — meaning three-quarters of the word’s cold storage warehouses are owned independently, often by families looking to exit. at is what has fueled Lineage’s acquisition spree.

“ ese are family-owned businesses that are going through gen-

erational change, that are all in different places in their own journeys,” Lehmkuhl said. “We can’t tell sellers when to sell. All we can do is stay the acquirer of choice in the industry as we have established ourselves.”

Going forward, Lineage aims to spend at least half a billion dollars each year in the development of new facilities and acquisition of peers, Chief Financial O cer Rob Crisci told Bloomberg.

Lineage has slowed M&A activity dramatically over the past yearand-a-half to preserve its balance sheet for an IPO. More acquisitions are coming down the pike but maybe not at the same torrid pace as the days following the COVID-19 pandemic, Lehmkuhl said.

In the meantime, a celebration was in order. Lehmkuhl said he planned to spend the rest of the day soaking it all in with family and colleagues.

“We’re going to go back to the hotel and rope o a big area and relax and reminisce on the last 10 years or so,” he said.

The Hoffmann Family of Cos. last month announced its acquisition of Mackinac Island Ferry Co. and a move to consolidate ownership of all of the passenger ferries traveling between the island, Mackinaw City and St. Ignace. | MACKINAC ISLAND FERRY CO.

For Brandy Johnson, increasing college access in Michigan is more than a job

As the rst generation to go to college in her family, Brandy Johnson, president of the Michigan Community College Association, has a passion for making college accessible. It’s why she founded the Michigan College Access Network in 2010 and years later in that role nudged then-gubernatorial hopeful Gretchen Whitmer and other candidates to set a bold post-secondary attainment goal for the state, make college more affordable and community college tuition-free. The nudge earned Johnson, 40, an invitation to join Gov. Whitmer’s administration as a policy education adviser in 2019. She served in that role for two years before moving to the Michigan Community College Association in late 2021, becoming the rst woman to lead one of the state’s higher education associations. Amid it all, Johnson, with her husband — the “Tom Izzo of debate at MSU” — is raising two young children with all of the day-to-day issues and heart-swelling successes most families see but the added challenges of both being born with birth defects. Yet, she nds time for fun as the sole female in her family’s fantasy football league. This conversation has been edited for length and clarity.

By | Sherri Welch

You’re an Arizona native. How did you wind up in Michigan?

For undergrad, I went to Arizona State University. While I was there, I actually interned for then-governor of Arizona, Janet Napolitano. at got me really interested in state politics and working for governors. After I graduated, I did Teach for America and taught third grade in a really low-income area of Las Vegas, which got me very turned on to education policy. I came to Michigan in 2007 to go to the Gerald R. Ford School of Public Policy at the University of Michigan. I thought I would y back out to the beautiful Southwest before the ink was dry on my degree, and things just did not shake out like that. I really have to consider myself a Michigander now. I’m married to Will Repko, head debate coach at MSU. He is the Tom Izzo of debate. He is the winningest debate coach alive. He has three national championships with MSU and is a nationally recognized debate coach. We met, actually, because I interned for then-Gov. Jennifer Granholm, and that turned into a full-time job in the policy division in her administration. In 2010, MSU won the national debate championship. After talking with the governor’s press secretary, I reached out to him (Repko) to congratulate him and to set up a meet and greet on behalf of the governor, and the rest is history.

You founded the Michigan College Access Network in 2010 to increase college readiness, enrollment and completion in the state. What led you to do that?

When I moved up to Lansing, I was single and didn’t have much of a life. I would work during the day for Granholm and at night I dreamt up MCAN and wrote a business plan for it. is was during the Great Recession when it was abundantly clear that those who had college degrees were way more recession-proof than those with a high school diploma or less. I am a rst-generation college-going student. I have recognized the trajectory change in my own family because I went

to college, and so it’s something I’m really passionate about. What the state was lacking was any sort of strategy or statewide infrastructure to really fuel a movement to help more individuals pursue college. e idea was very similar to what became Gov. Whitmer’s 60 by 30 goal, but I worked on it 10 years earlier. I left MCAN at the beginning of the Whitmer administration to take a position as education policy adviser in her administration for two years. I worked on 60 by 30, Michigan Reconnect and Futures for Frontliners, among other things.

You’ve led the Michigan Community College Association for the past two and a half years. Is the new community college tuition guarantee your rst win there? It’s maybe my biggest, but the other really big win was in my rst year related to nursing. ere was this very historic, longstanding policy debate between two-year colleges and four-year colleges about whether or not community colleges should be able to confer bachelor’s

degrees of nursing. My rst year, I negotiated a compromise that really was a win-win for the colleges, but also for future nurses and employers. Basically, it requires universities to partner with a community college to deliver bachelor’s degree courses on the campuses of community colleges. Each community college is receiving $2 million to support their program. It was a $56 million win in the state budget.

What’s keeping you up at night?

Ever since Michigan Reconnect passed to make community college tuition-free for adults 25 and older, we’ve seen an in ux of adult students. And the fact is, adult students are juggling a lot more. And so there are times when adults who are good students drop out for non-academic reasons. And, you know, that keeps me up at night. More nancial aid that can help students with their basic needs will allow them to work fewer hours and dedicate more of their time and attention to their studies so that

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they will get that better job and that better paycheck and that upward socioeconomic mobility. e state is also convening a student basic needs task force that will be making some policy recommendations on these topics, and we’ll be supporting those.

You also have a busy home life, right?

We have two kids. Kirby is 8 and our daughter Robin Jane is 6. Both of our kids were born with some medical complications and birth defects, and so both have required signi cant surgeries. Our son is doing really well. His surgeries all happened on his skull when he was about 1 year old. Our daughter was born with a condition called Goldenhar syndrome as well as a cleft lip and cleft palate and heart defect. Basically, her face didn’t develop properly, and one side of her face has smaller or missing features. So she only has one ear; her bones are really small on one side. She has many, many more surgeries to come over the course of her childhood, but she is doing exceptionally well and just nished kindergarten. She has these facial di erences and hearing loss. Otherwise, she is the most typical, brilliant, funny, 6-year-old you’ve ever met. It’s de nitely shaped us as a family and has brought us closer together. We’ve spent so much time in hospitals. I think it’s made us also a lot more compassionate.

Despite your busy life, you’re a fantasy football addict?

My brother is a huge sports fanatic. So probably more than 15 years ago, he invited me to be in his fantasy football league, and then I just got really hooked. It’s my one non-work, non-kid hobby. I y home to Arizona every Labor Day weekend to participate in my draft. I’m the only female on the 14-person league with my brother, uncles, husband and a bunch of our friends that we grew up with. I’m the current runner-up. I was in the Super Bowl this last year, but lost. I’ve never won our “Slobberknocker” family trophy. I think this is my year.

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Maria Marcantonio, Sharon Mulroy

Account executives Ainsley Burgess, Tawni Sharp

People on the Move manager Debora Stein, (917) 226-5470 or dstein@crain.com

Classi ed sales Suzanne Janik, (313) 446-0455 or sjanik@crain.com

Sales assistant Rachel Smith

CRAIN’S CONTENT STUDIO

Senior director of Crain’s Content Studio Kristin Bull, (313) 446-1608 or kbull@crain.com

Crain’s Content Studio manager Clare Pfeiffer

PRODUCTION

Vice president, product Kevin Skaggs

Product manager Tim Simpson

Media services manager Nicole Spell

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Reprints Laura Picariello, (732) 723-0569, lpicariello@crain.com

Volume

Brandy Johnson is president of the Michigan Community College Association. | MICHIGAN COMMUNITY COLLEGE ASSOCIATION