Issuu

ENTERTAINMENT: Rock the House has new owner, but band stays together. PAGE 5

SOURCE LUNCH Meet Sikich partner Pam Wright. PAGE 19

CRAINSCLEVELAND.COM I NOVEMBER 25, 2019

RETAIL

BOXED OUT

Changing consumer habits require creativity from mall operators

Pinecrest, a mixed-use district in Orange Village, has a “live, work, play, but stay” vibe. | CONTRIBUTED PHOTO

BY DOUGLAS J. GUTH

When asked about the future of the indoor shopping mall, former Fairmount Properties managing director Emerick Corsi said he doesn’t need to look further than his own backyard to recognize its dire state. “You’d need two hands to count all the malls closing just between Cleveland and Canton,” said Corsi. “There’s going to be a dispersion of shopping

centers across the U.S.” Changing consumer habits have shuttered enclosed malls by the thousands in recent years. A report conducted by Credit Suisse in 2017 estimated that 20% to 25% of U.S. malls would close by 2022. Retailers have announced more than 8,600 store closings so far in 2019, a butcher’s bill attributed to online commerce and the downfall of traditional big-box merchants.

The resulting glut of unused space demands creativity from mall operators. Corsi, harkening back to his decades of work in commercial leasing, said younger shoppers are no longer “department-store people,” meaning they would rather buy online or from their favorite local boutique. While the rise in e-commerce has put an enormous dent in mall traffic, the reality of the transforming retail space is more complex, noted Jaime

Ward, head of Citizens Bank’s retail finance group. Generally, shopping malls are classified by sales per square foot. “Class A” facilities cater to more luxury-focused retailers and enjoy robust sales even from their smaller tenant stores — a factor considered a better barometer of mall health than overall sales average. See MALLS on Page 13

More in Focus Online competition brings plenty of closings. Page 10 >> Q&A

with a retail “forager.

Page 12

DEVELOPMENT

How Northeast Ohio became Northeast Ohio BY RACHEL ABBEY MCCAFFERTY

Cleveland versus Akron. East Side versus West Side. Downtown versus suburbs. Northeast Ohio is a region of strong identities. This can confuse outsiders, a challenge made apparent every four years when the national media ar-

rives for its election coverage visits. It names our cities but often visits our suburbs, attributing the problems — and political beliefs — of one to the other. How did we get here? For some insight, we spoke to historians about how the region developed into its existing cities and suburbs, and how the racial and economic divisions

NEWSPAPER

that arose with that growth are still with us today.

From the city to the suburbs Prior to World War II, Northeast Ohio’s cities were, for many, the place to live and work. Take Youngstown, for example. Youngstown got its start as an iron

town, adding in steel production shortly before 1900, said Donna DeBlasio, consultant and retired/part-time professor of history at Youngstown State University. Pretty much everything in the city relied on those industries, and the population built up within walking distance of the mills. That pattern remained among immigrants and African Americans af-

ter the community's wealthy were able to buy cars or pay to ride the trolley, allowing them to move farther away. Youngstown, like many cities, had problems with redlining and restrictive covenants that kept African American, Jewish and Italian populations out of certain areas. See NEO on Page 15

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NEWS AND TRENDS FROM NORTHEAST OHIO’S TECHNOLOGY SECTOR

TECH MATTERS A COLLABORATIVE EFFORT

Information sharing provides roadmap to cyber-resiliency

ne typically does not find a group of marketers huddled together in a conference room sharing their advertising secrets, nor CIOs divulging new technologies under development amid a shared digital platform. Yet, information sharing is a common practice among cybersecurity professionals, and for good reason, according to local industry experts. Businesses face a barrage of information security threats. Criminals identify new software vulnerabilities and attack vectors every day. The costs of combating cybercrime have catapulted in recent years. Organizations in 2018 spent an average of $13 million to fight cybercrime, a marked increase from the $1.4 million spent during the prior year, according to Accenture, a global professional services firm. Protecting organizations from the constantly evolving cyber danger is not something any one individual or organization can do alone, said Mike Woolard, risk and compliance manager at Richfield-based OEC. “Information sharing is the way we stay educated and learn about new threats and vulnerabilities so that we can deploy patches and safeguards, as well as train our staff and our employees and everybody internally about security risks,” he said. “It’s really how we do our job better.” Northeast Ohio has a number of formal and informal cybersecurity sharing networks. OEC, for example, is the host site of the monthly Northeast Ohio Information Security Forums. The meetings draw anywhere from 50 to 75 cybersecurity professionals from across the region, Woolard said. Attendees talk about attacks or suspicious activity they are seeing in their own networks and learn how to deploy techniques that identify weaknesses.

Randy Pargman, senior director of counterintelligence and threat hunting for Binary Defense, said that Stow information security provider participates in national and international threat-intelligence platforms in addition to local groups, such as Pittsburgh-based National Cyber-Forensics and Training Alliance. “We contribute information that we find about malware samples, command and control servers, and other threats,” said Pargman, adding that the company does not share particular malware samples or any information that could identify their clients or the nature of the company’s cyber threats.

The Northeast Ohio CyberConsortium (NEOCC), meanwhile, provides an environment in which companies, universities and hospital systems can disclose detailed technical information on cybersecurity incidences, executive director Jeff Brancato said. Brancato refers to NEOCC and national industry-based centers, such as the Financial Services Information Sharing and Analysis Center, as “collaborative defense.” “They enable more deeply trusted relationships to form and are needed in order for organizations and their professionals to feel comfortable exchanging sensitive information,” he said.

PREPARING TODAY’S STUDENTS FOR TOMORROW’S CHALLENGES

PHOTO PROVIDED

The Baldwin Wallace University Cyber Security Team was one of just 10 teams in the nation that in April participated in the National Collegiate Cyber Defense Competition after claiming first place at the Midwest regionals.

CALENDAR OF

EVENTS A PRODUCT OF

P002_CL_20191125.indd 2019 Tech Matters-11-25.indd 2 1

s of earlier this year, the U.S. faced a deficit of almost 314,000 cybersecurity professionals. Skills such as intrusion detection, secure software development and attack mitigation are among the most difficult to find, which contribute to the shortfall, according to the National Initiative for Cybersecurity Education. The University of Akron and Baldwin Wallace University are helping to lead regional efforts to prepare students for the kinds of highly skilled technical roles needed to protect businesses and their networks. Stanley Smith, a visiting professor who helped create the cybersecurity track at the University of Akron, said roughly 200 students are enrolled in its bachelor’s degree cybersecurity program, which in spring 2020 will produce its first cohort of graduates. The university in January was selected to join Ohio’s statewide cyber range, a virtual environment that is used for cyber warfare training and security technology development. Akron is the second Ohio site tapped to host a cyber range; the first opened at the University of Cincinnati in May 2018.

“The range is a classroom-like setting; however, the equipment that one would access through a laptop simulates a networking environment and includes applications and programs used to defend and secure networks,” Smith said. The site will be used for cybersecurity clubs and summer cyber camps for high school students, he said. Baldwin Wallace provides a cybersecurity analyst major, orchestrated by its Center for Cyber Security and Computer Science Research. The major includes information security systems, network diagnostics and troubleshooting, and penetration testing courses. The university also is home to a highly competitive Cybersec Team, which regularly places and wins on a regional and national level, according to university spokesperson Shawn Salamone. “In addition, BW is building a state-of-the-art STEM academic center that will house computer science, including cybersecurity and other programs, opening in January 2021,” Salamone said.

DECEMBER 3

DECEMBER 5

DECEMBER 9-11

SYNCSHOW: 7:30 a.m. to 9 a.m., Greater Cleveland Partnership, 1240 Huron Road East, Suite 300, Cleveland. Sales, marketing and customer service are key components of the totality of the customer experience (CX), which must be seamless from start to finish. The CEO of SyncShow will discuss how companies can achieve superior CX. gcpartnership.com/events/December-2019/SyncShow

MOVING TOWARDS EQUITY: 9 a.m. to 11 a.m., MidTown Tech Hive, 6815 Euclid Ave., Cleveland. Learn more about how your company or organization can operationalize racial equity learning at this free event. Space is limited. tinyurl.com/y38boybr

BLOCKLAND SOLUTIONS CONFERENCE: Huntington Convention Center of Cleveland, 300 Lakeside Ave. East, Cleveland. This second annual conference returns with a robust lineup of speakers and events, all geared toward informing business and government leaders how emerging technologies can help make their operations more competitive and secure. Web site has the full agenda. blocklandsolutions.com

This advertising-supported feature is produced by Crain’s Content Studio-Cleveland, the marketing storytelling arm of Crain’s Cleveland Business. The Crain’s Cleveland Business newsroom is not involved in creating Crain’s Content-Studio content.

11/21/2019 11/20/19 9:27:06 4:58 AM PM

FINANCE

Arctaris aims to bolster financing for area manufacturers Boston-based company wants to leverage local partners to help bring national investors to county BBY KIM PALMER

Jonathan Tower, managing partner at Arctaris Impact Investors, wants to build a “social impact fund” of up to $50 million to address the needs of Northeast Ohio’s undercapitalized manufacturing companies, and he is asking Cuyahoga County Council to contribute $1.5 million. Tower last Monday, Nov. 18, told members of the council’s Development and Planning Committee that Arctaris, a Boston-based investment firm, has pioneered a capital structure that blends public capital from federal and state government agencies with private capital from institutional investors and foundations to provide funds for companies in low-income communities. The company boasts that its Michigan Income and Principal-Protected Growth Fund, developed in 2013 with the state’s economic development corporation and Arctaris, “has created or saved more than 6,000 jobs in the manufacturing, services and technology industries.” “We have been investing in companies and in infrastructure projects to achieve long-term sustainable growth and create quality living wage jobs in low-income areas for 10 years,” Tower said. Arctaris said it is willing to commit $5 million to the fund, and the Gund Foundation has committed to a 10year, $500,000 low-interest loan. The council committee will hold a second reading after Thanksgiving on the $1.5 million loan request, and if the loan is approved, Tower expects to have all the funding in place by the first half of 2020. Arctaris has committed to match every public or foundation dollar with $9 of its own. “We want to see a city-focused program with $25 million to $50 million in total capital,” Tower said. Those funds also include something called a principal protection guarantee, in this case in the form of $15 million in grants from the Kresge Foundation, a grantmaking social in-

“WE HAVE IDENTIFIED CERTAIN HUBS IN COORDINATION WITH THE COUNTY THAT COULD BE IN A POSITION TO BENEFIT WITH CAPITAL. THIS IS AN OPPORTUNITY TO BRING A SIGNIFICANT AMOUNT OF CAPITAL INTO THESE COMMUNITIES TO START THE LONG-TERM REVITALIZATION PROCESS.” ——Jonathan Tower, managing partner at Arctaris Impact Investors

vestment foundation, that were awarded to Arctaris in March. Robert Jaquay, associate director at the Gund Foundation, hopes that the proposed fund eventually becomes a tool to help revitalize entire communities in the core of the city, creating concentrations of quality jobs accessible to those people in underserved neighborhoods. “We have identified certain hubs in coordination with the county that could be in a position to benefit with capital,” Tower said. “This is an opportunity to bring a significant amount of capital into these communities to start the long-term revitalization process.” With 1,200 manufacturing companies in Northeast Ohio, and 300 of those in Opportunity Zones (areas designated by the state as distressed and eligible for projects with favorable tax incentives under a new federal program), Arctaris could benefit the manufacturing sector, which has suffered from systemic undercapitalization, said Ken Patsey, president and executive director of Manufacturing Works, the manufacturing-focused economic development organization that used to be known as Wire-Net. “For the larger businesses you have a lot of private equity and banks interested in those deals,” Patsey

said. “When you get under $2 million in EBITDA (earnings before interest, taxes, depreciation and amortization) like our members, you don’t see banks interested.” Over the next five years, Patsey estimates 70% of those owners of small to midsize companies are looking to sell their business and are in need of

buyers. “It is a baby boomer thing,” he said of owners aging out and looking to sell. “Obviously in Cleveland, you are dealing with a lot of third- and fourth-generation businesses, and the prospect that the family is going to step in to take over is unlikely.” The companies are further challenged because owners of manufacturing companies sometimes overuse SBA loans and carry high levels of long-term debt, Patsey added. Manufacturing Works is generating a parallel fund of up to $25 million to help the undercapitalized companies, but Patsey points out that by partnering with Arctaris, funds could be aggregated to provide more deals. “Our plan is to raise our own fund and do something called side-byside investing,” Patsey said. “We are looking to raise $25 million, and having Arctaris as a partner would mean we do more investing because we would be putting less of our funds in each deal.” Tower said the Arctaris fund is de-

signed to help organizations like Manufacturing Works recruit and finance potential buyers, while also providing money for improvement and growth, especially in Opportunity Zones. “There are requirements within the legislation that if you buy an asset that is already in an Opportunity Zone you need to match dollar for dollar with substantial improvements investment,” Tower said. “That could mean investing in additional capital equipment or funding the acquisition of the assets of another business.” Funds like Arctaris also employ “patient capital,” which is designed to mature over time and help businesses remain in the community for the duration of the loan terms — and ideally longer. “What makes manufacturing business so attractive is that like real estate, they have structures and they are hard to move,” Patsey said. “It is likely that if you invest in that type of company in an Opportunity Zone, it will be around to benefit from in 10 years.”

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UH, Cleveland Clinic overspend in federal shared savings program BY LYDIA COUTRÉ

MetroHealth and Summa Health are receiving multimillion-dollar payouts from the federal government for helping to save money in their care for seniors in 2018. That is a feat roughly only 37% of 548 participating accountable care organizations (ACOs) were able to achieve. MetroHealth will receive $4.3 million and Summa Health will receive $4.5 million for their performance in the Medicare Shared Savings Program (MSSP), an ACO program designed to reward providers that offer high-quality, coordinated care at a controlled cost — a pivot away from the traditional reimbursement models in health care that pay based on services rendered. Through the program, designed to achieve quality and efficiency for this patient population, the Centers for Medicare and Medicaid Services establishes a spending benchmark for each participating ACO. To get a share of the savings, a health system has to spend less than that threshold by at least a certain percentage, also dictated by CMS. University Hospitals and Cleveland Clinic both spent above their established benchmark in 2018, as they did the year prior. Last year, UH spent above its benchmark by $10 million and the Clinic spent above its benchmark by $9.5 million. Both of those were a lower overspend than in 2017. MetroHealth’s ACO, MetroHealth Care Partners, saved money in the program at a rate of 6.9%, well above its threshold of 2%. “We take into account every patient that’s attributed to us,” said Dr. Nabil Chehade, senior vice president and chief population health officer for MetroHealth. “We risk-stratify them —the acuity of the care that are needed — and we deploy some sort of care navigation, care coordination, very targeted toward their needs. So, basically, it’s truly actively managing

health care for every individual in our ACO.” For all six performance periods that Summa has participated in the shared savings program, the system has saved the federal government money. In 2016 and 2017, it didn’t save quite enough to hit the benchmark that triggers a payout, but for performance year 2018, Summa once again was able to cash in on its ACO savings, with a savings rate of 5.3%, compared to its threshold of 2.5%. “We continue on an annual basis to look at how we’re engaging the populations that we manage, the MSSP population, and so I wouldn’t say as much that there was something dramatically different as much as I think our ability to manage this population continues to improve year over year,” said Jeffrey Price, president of NewHealth Collaborative, Summa’s ACO. “It’s that continued improvement, that continued improvement in how we engage the patient and the continued improvement relative to how we engage the providers, who are ultimately taking care of these members really, is what allows us to be successful,” he continued. Price said the system has a distribution model that puts the majority of the funds it receives through the shared savings program “back into the providers’ hands to reinvest in their infrastructure, and then NewHealth Collaborative keeps a smaller portion of those funds to reinvest in its infrastructure, which ultimately supports the physicians.” Health leaders note that the savings threshold is based in part on systems’ historical performances in the program, meaning that as systems achieve savings each year, the bar becomes more difficult to pass the following year. Bradley Hillard, chief medical officer for population health at UH and president of the University Hospitals Coordinated Care Organization

(UH’s ACO), said that although the ACO spent above the benchmark, its average spend for Medicare beneficiaries was the lowest it’s had in six years. “We’ve lowered the total cost of care for our patients, year over year, but we haven’t obtained the benchmark that was set forth by CMS,” Hillard said. “We’re always compared to ourselves and the benchmark that they set for us. So they set a benchmark target for us, and then we try to spend below that amount. Even though we haven’t been unable to do that in five out of the six years we’ve been in the program, we have lowered the total cost of care, on average, per beneficiary through that timeframe.” In a statement, Dr. Nirav Vakharia, president of Cleveland Clinic’s ACO, said that the system participates in the shared savings program to connect with other ACOs across the country and “bring the best ideas back to Northeast Ohio.” “Cleveland Clinic participates in this program because we believe it is important to contribute to keeping the patients and communities we serve healthy, and not just caring for them when they are ill,” Vakharia said in a prepared statement. Though the system spent over its threshold for 2018, Vakharia pointed to areas of clinical achievements: While participating in the program over the past few years, the system has helped 15,000 patients control their blood pressure and helped 5,000 patients with uncontrolled diabetes to re-establish care with their provider. “We remain committed to driving outcomes like these while ensuring we remain good stewards of our health care resources,” Vakharia said in the statement. The shared savings program also awards each ACO with a quality score. Cleveland Clinic’s ACO’s quality score was 85.9%, MetroHealth’s was 88.1%, UH’s was 82.7% and Summa’s was 92.2%

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ENTERTAINMENT

Rock the House 'keeps the band together' for growth BY JEREMY NOBILE

For Matt Radicelli, what started as a few DJ gigs to earn some spending money as a kid has evolved into a multimillion-dollar AV and event services enterprise and one of the region’s fastest-growing small businesses. And its new majority owner as of October has no plans for slowing down despite playing in a competitive industry. It’s a sort of rags-to-riches story for Radicelli, whose family — which includes 10 siblings — never had much extra money when he was growing up and whose mother cried when he told her college wasn’t in his future. Instead, the Twinsburg native sought self-sufficiency with his own business. Rock the House Entertainment Group is in its 20th year of operation. Headquartered in Oakwood Village, where it planted operations in the mid2000s, the enterprise now employs nearly 50 people full time, 75 part time and is on pace to bring in more than $8 million in revenue this year. Radicelli still works as CEO since selling Ryan Konikoff a majority stake in the business last month. And he has no immediate plans to retire. So not much has changed other than a more formalized ownership structure among the partners. The whole reason Radicelli decided to sell is so nothing would change with the business. He ignored advisers who discour-

“I SAW AN OPPORTUNITY WITH A PERSON SHOUTING FROM THE MOUNTAINTOPS, SAYING, ‘I WANT TO BE HERE.’ AND I LOVED THAT.” — Matt Radicelli, founder and CEO of Rock The House, on selling Ryan Konikoff a majority stake in the business

and Damon’s Grill, where he’d install AV equipment. It was during one of Radicelli’s teen parties that he met Konikoff, whose grandfather was a booking agent. Serendipitously, that agent dialed up Radicelli when the DJ for a bat mitzvah he was planning fell through, turning Radicelli on to a business stream to which he hadn’t given much thought. Come 1999, two years after high school, Radicelli incorporated Rock the House. The focus was no longer on teen clubs as much as on kid parties and weddings. He funded the operation with money saved from years of working various gigs. He’d also sold his contracts for Chammps and Damon’s. The next decade was all about building up RTH as a high-end, interactive entertainment business. Radicelli slowly hired on more helpers, from DJs to AV techs, and expanded his array of light and sound equipment, which now includes options from LED walls to indoor pyrotechnics. He also bought up other gear for value-added entertainment services, like photo booths and oversized games.

aged him from selling his controlling stake because the company has become so profitable. But Konikoff, a longtime associate of Radicelli’s who began DJing for him at age 14, was prepared to take his skills elsewhere unless Radicelli let him buy in. Fortunately, the founder said he “wanted to keep the band together.” “We might take a dip in sales (without Konikoff ) because he’s a salesperson, but things would’ve declined and we would’ve continued,” Radicelli said. “But I saw an opportunity with a person shouting from the mountaintops, saying, ‘I want to be here.’ And I loved that.” Radicelli began DJing at 12 at events for his middle school peers. By 16, he was a regular fixture at local pop-up teen clubs, eventually branching into nightclubs for college revelers in Akron and Kent. At its peak, Radicelli’s brand of clubs, Pulse, rotated between five locations, drawing as many as 400 to 600 teenagers to each event. Before graduating high school in 1997, Radicelli already was diversifying, traveling to events for restaurant companies like Champps Americana

By 2008, RTH had become a $1 million business. “We were so far ahead of things in Cleveland, no one could keep up with us,” Radicelli said, crediting his involvement in DJ Think Tank with supplying him with ideas for the company. Radicelli had trained Konikoff, a few years his junior, as he began DJing gigs at 14. Konikoff left the business, though, for college and worked on cruise lines before returning to RTH in 2006. There, he was offered a split of profits if he could grow the wedding business in particular. The incentive must’ve worked, as the business achieved double-digit revenue growth year after year and continues to hit that mark, Radicelli said, with the exception of one year during the Great Recession, when business was effectively flat. “I don’t know we had in mind this would become a company we’d spend our careers doing,” Konikoff said, referring to both himself and the other business partners involved. Radicelli bought up competitors: Selective Sounds Entertainment in 2011 and Zone Entertainment in 2013. Both are now divisions of RTH, whose overall business now includes corporate events, one of its newer revenue streams. Among the company’s largest national clients is MetroPCS/T-Mobile. “From a revenue standpoint, the national work is going really well for us,” Konikoff said, noting that it’s

about 25% to 30% of the business today. “But we believe there are still tons of opportunities to grow in Northeast Ohio. We just want to do that in our hometown while developing these national accounts.” The company touches an estimated 1,800 events annually. Radicelli said RTH is weighing expansion options, noting he’s looked at properties in Solon and Twinsburg. A benefit of the current headquarters in Oakwood Village is that it’s close to a Penske truck rental facility and RTH’s warehouse that holds all its equipment. Having that all together saves on logistics costs. Whatever the case, the company intends to stay in Northeast Ohio, where it builds out its footprint in a hub-and-spoke business model. As to why Konikoff decided to buy in to RTH and not build out something brand new, there’s a very practical reason behind that. “I’m an entrepreneur at heart. And that’s important to me,” he said. “But I would rather create and build with a team like this than go out and start something on my own.” That’s why he gave Radicelli the friendly ultimatum: Let him buy in, or watch him go. But he never really wanted to go. “We already have great people here and I get to work with my best friends every day,” Konikoff said. “So why start another business?”

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co-founder and chief strategy officer, Keyfactor

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DEVELOPMENT

With help from Amazon, Warrensville sees long-term investment paying off BBY KIM PALMER

A little more than a year ago, Amazon opened a fulfillment center on the border of North Randall and Warrensville Heights. Two thousand fulltime employees were needed for the 24/7 operation in the 855,000-squarefoot facility built on the site of the razed Randall Park mall. To mark the one-year anniversary in September, Amazon presented a $20,000 check to Warrensville Heights schools, the district that serves North Randall, to help Sellers fund STEM programming. The school system that same month was able to announce that its grade on the Ohio School Report Card had gone from an F to a C in two short years — something no other district has ever done. That quantitative improvement in the school system is a huge component of the turnaround Warrensville is experiencing, according to Mayor Bradley Sellers. “We went on a mission and said this had to happen,” Sellers said, explaining how his office worked to change perceptions in the community. “This was a place that wasn’t growing. It was aging out, and we had to convince them there is an economic return on the investment of the schools.” As an inner-ring suburb, Warrensville Heights’ story is a familiar one. Because of consistent decline, its population had dropped to 13,000 and school enrollment fell from 3,200 in 2000 to under 1,300 in 2014. The district also had 11 school superintendents in 11 years. Fast-forward to 2018. The city passed a $110 million school levy and is breaking ground on a new elementary campus that now may need to expand since the district has added more than 400 new students in the past couple of years. “We had a lot of apartments and people were transient, and now they are not so transient,” Sellers noted. “We are meeting people where they are, and that has started to help us populate our neighborhoods.” Better schools made the city more desirable. As a result, a 100-house subdivision sold out in three years, with new families taking up residence. That’s impressive for a city that Sellers admitted was on the verge of becoming a cash-sale housing market. Warrensville now has 200 units of new housing stock with a median housing value of $81,000. “We’ve seen an increase in the housing market of 13%. The commercial and industrial real estate market is up 12%,” said Jerome DuVal, the city’s economic development director. “We are in the top 6% of the 59 municipalities in terms of growth. We are having one of the fastest paces of growth.” That growth is a result of intentional planning and “meeting people where they are.” DuVal said successful cities have begun to plug in approaches that had been used by the private sector, such as subsidizing affordable “turnkey” housing for younger residents.

Younger homebuyers are willing to pay upward of $1,000 in rent if it’s a controlled cost and they can be sure the monthly payment is consistent, rather than dealing with the variable costs associated with homeownership. “One of the biggest problems for young residents was the cost of day care, so we now have pre-K for ages 3 and 4,” said Sellers. “For a young family, it takes that cost away and now you are tethered to Warrensville because no one else is doing this at a place affordable to live in.”

See WARRENSVILLE on Page 18

The Amazon fulfillment center on the border of North Randall and Warrensville Heights brought thousands of new jobs to the area. | CONTRIBUTED PHOTO

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Warrensville Heights’ motto is “Welcome to the Friendly City.” That’s one of the main reasons Sheldon Myeroff chose to base his hobby-turned-second-career there. Since 2017, Chagrin Valley Custom Furniture’s storefront, warehouse and workshop has done business on Miles Road, where, Myeroff pointed out, interstates “271 and 480 and 422 all come together, so that anybody in the whole city can get here.”

November 25, 2019 | CRAIN’S CLEVELAND BUSINESS | 7 9/30/19 1:05 PM

11/21/2019 11:30:57 AM

FROM THE EDITOR

RICH WILLIAMS FOR CRAIN’S CLEVELAND BUSINESS

Embracing ‘cultural humility’ amid the noise

EDITORIAL

Wrong direction

ne thousand. That’s the amount by which nonagricultural wage and salary employment in Ohio fell last month, to 5,592,100 in October from a revised 5,593,100 in September. Any number that shows employment in decline, even one as relatively small as 1,000, is reason for concern. But here’s another number that should worry the state’s political and business leaders: 5. That’s the number of months so far in 2019 that Ohio employers have reduced jobs from the prior month. In reviewing state data, liberal think tank Policy Matters Ohio noted that as of October, “Ohio had 10,300 fewer jobs than it did in January.” (According to the Ohio Department of Job and Family Services, total employment in January was 5,602,400.) Over the last 12 months, Policy Matters said, “Ohio’s job growth rate is just 0.4%, compared to the national average of 1.4%.” The Buckeye Institute, a conservative think tank, also was concerned. It issued a statement from one of its economists, Andrew J. Kidd, Ph.D., that noted the October report “signals concern for Ohio’s job market even THE STATE ESSENTIALLY IS though the unemSTUCK IN NEUTRAL WHEN IT ployment rate remained unchanged COMES TO JOB CREATION. at 4.2%. The household survey shows fewer people employed and more people searching for, but not finding jobs.” Some of the October struggles are related, directly and indirectly, to the now-settled strike at General Motors. Manufacturing lost 2,300 jobs last month, and trade/transportation/utilities lost 1,700. Both sectors should bounce back as GM workers have returned to plants that are again making cars, trucks and SUVs. Job numbers also are down this year in Indiana, Michigan and West Virginia, reflecting weakness in the manufacturing sector. President Donald Trump frequently brags about the strong economy nationally, but in Ohio, the words ring somewhat hollow, as the state essentially is stuck in neutral when it comes to job creation. Ohio policymakers should take a fresh look at what they can do to encourage economic growth. One potentially posi-

tive step came last week, when Republican state lawmakers announced plans to introduce legislation that would recognize occupational licenses issued in other states. We need to see more details, but such a move could create economic opportunities by making Ohio more welcoming to people who are looking to move and continue their careers. We’ve been fortunate for years now to live in generally prosperous economic times. The October jobs report is a reminder that things are getting a little more fragile and may require more policy creativity to keep the good times going.

New voices Brad Whitehead has done an exceptional job leading the Fund for Our Economic Future since its inception in 2004. And he has done something exceptional as he exits the Fund’s top post. Whitehead, 59, announced last week that he plans to step down as president at the alliance of more than 30 funders — foundations, corporations, higher education institutions, government and civic associations — focused on bolstering Northeast Ohio’s economy. (In March, Whitehead will move into the role of senior adviser for special projects. The Fund expects to announce a new president in early 2020.) With unusual candor, Whitehead said that while the decision to leave the president’s job wasn’t easy, it is “absolutely the right time” to do so and to help bring new thinking into Cleveland institutions. “I believe we are falling short of our potential as a region in part because we are not allowing sufficient space for generational leadership,” Whitehead said. “We will benefit from fresh perspectives, fresh ideas, fresh culture.” Good for him to leave a little early rather than too late. The Fund under Whitehead’s leadership has more than done its part to encourage innovation in the region, most recently with The Paradox Prize, an initiative to encourage thinking about solutions to what the Fund calls the transportation paradox of “no car, no job; no job, no car.” It’s an admirable act of leadership to make room for new people to find solutions to our challenges.

Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com) Managing Editor: Scott Suttell (ssuttell@crain.com) Contact Crain’s: 216-522-1383 Read Crain’s online: crainscleveland.com

Thanksgiving is a day to give thanks: Thanks for family, for good health, and for … Thanksgiving Day shopping? Uh, no thanks on that last one. Thanksgiving, sadly, is becoming the forgotten holiday, kind of like leftovers that make their way to the back of the fridge, behind the box of baking soda. And that’s a shame, because Thanks- Elizabeth giving is a blessing — a time for family McINTYRE and friends, but also a bit of self-reflection. No better time than this year, when everyone seems to be talking over each other. And I’m not just talking about Uncle Charlie at the Thanksgiving table. It seems no one is listening to each other, and everyone is talking. Listening is important. We should all try it some time. It’s at the very core of a concept called cultural humility, a concept recently introduced to me by James Knight, vice president of diversity and inclusion at St. Edward High School in Lakewood, where I’m a new member of the board of trustees. The question to ask this Thanksgiving, besides “Can you please pass the sweet potato casserole?,” is this: Are you listening to those around you? At its essence, cultural humility is about the willingness to suspend what we know, or assume we know, about people different than us. It means being open to new ideas, perspectives and other cultures, while still being true to yourself and with the willingness to be a learner about someone else’s culture, experiences and knowledge. If we ever hope to get beyond the partisan noise of our times, I suggest we add a healthy dose of cultural humility to our personal and professional relationships. As Knight explained, “With cultural humility, you are coming at it from a place where you can never know all that there is to know about a group of people or a person until you’ve been in their shoes.” That makes sense for every profession. And it works around the Thanksgiving table and the conference table, at the bar and in the boardroom. Our workplaces, communities and families are becoming more diverse — culturally, politically, socially and economically. Most professionals no longer work in homogeneous environments. Getting to more deeply know those who work alongside us also helps the bottom line, Knight said. “From every discipline, from religion to social science to social work to education to business to health care, when we humble ourselves and really begin to look from a different perspective, it makes us better,” he said. “The companies that do that the best are the ones that tend to be more profitable.” Leaders, whether in business, a classroom or a family, must begin with self-awareness and acknowledge their own weaknesses. “Sometimes leaders are so good at one thing that arrogance can invade their thinking. They forget what it’s like to be on the other side,” Knight said. That leads to missed opportunities when people are uncomfortable contributing. “The leader’s job, while trying to provide vision and all these different metrics to perform well, is we can’t forget that people are a part of it,” he said. “They need to create a healthy culture where people can bring their best self. “When people feel valued and feel they matter, they will give you more.” What better time than now, the holiday season when we offer thanks and get into the giving spirit, to give this a chance in our lives. Sure, pile on the turkey and the stuffing, but make sure you leave room on your plate for a heaping helping of cultural humility.

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing ClevEdit@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.

Sound off: Send a Personal View for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.

8 | CRAIN’S CLEVELAND BUSINESS | November 25, 2019

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OPINION

THE GRASS IS GREENER ON OUR SIDE.

ECONOMY

Cleveland moves from No. 22 spot to fifth in city inequality rankings BBY BLOOMBERG

Atlanta is the capital of U.S. inequality for the second year in a row, according to a Bloomberg analysis of large American cities with a population of at least a quarter-million. And Cleveland made a big rise in the inequality rankings. Atlanta’s average income for the top 5% of households exceeded $663,000 while families in the bottom half of the population earned less than $65,000 — a ratio of 10.2 to 1. Nationwide, the ratio was 6.7 to 1. Bloomberg measured the distribution of household income in 87 cities using 2018 data from the U.S. Census Bureau’s American Community Survey. Atlanta earns the title of inequality capital with a Gini coefficient of 0.57, followed by Miami, New Orleans and New York. The scale ranges from zero, which reflects absolute equality, to one — complete inequality.

It’s complicated Data on inequality is complex, and it’s not always clear what it’s signaling about the economy of a region or country. Recent Federal Reserve research said that a “relatively low level of regional wage inequality is often the result of a weakening local economy, while relatively high regional wage inequality is often a consequence of strong but uneven economic growth.” Thus, inequality sometimes springs from positive events. Increased demand for high-skilled workers can lead to more robust wage growth for employees toward the upper portions of the wage distribution, while people less well paid may not share the gains. The Fed analysis shows that regions where manufacturing jobs have plummeted over the past three decades may have weaker demand for workers near the high end, thus lowering regional wage inequality.

Big movers Cleveland moved to the No. 5 spot in the inequality rankings, from 22nd on the list the previous year. Half of the city’s households made just below $30,000, according to the census, whereas those among the top 5% of earners made an average of $262,924 — 36% higher than the previous year.

By the numbers

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``Average amount made by the top 5% of earners in Cleveland. The figure is 36% higher than the previous year. SOURCE: BLOOMBERG ANALYSIS OF U.S. CENSUS DATA

The cities that saw the biggest jumps in inequality relative to their peers were Irvine, Calif. (which jumped 34 spots); Fort Worth, Texas (up 24 spots); and Raleigh, N.C. (up 20). Among those making big moves in the opposite direction — in other words, becoming more equal — were four cities in California: Stockton, Long Beach, Sacramento and Chula Vista.

Shrinking middle class Atlanta’s geographic boundaries contribute to its high inequality ranking. The official city limits only hold about 10% of the greater metro-area population. Cities are too small a geographical area to measure income equality since the middle class often has fled to the suburbs, Georgia State University professor Dan Immergluck said. If the city lacks a significant middle-class population it will rise in inequality, while the larger region, with a robust middle class, will show less discrepancy. Atlanta also has suffered from a lack of economic mobility. It ranked 49th of 50 metro areas in a 2014 Harvard study of intergenerational mobility — or poor children growing up to become well off. And Georgia ranks in the bottom third of the poorest states in the nation. The Atlanta metro area is the home of 14 S&P 500 companies with a total market capitalization of nearly $900 billion, including Home Depot, United Parcel Service and Delta Air Lines Inc.

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November 25, 2019 | CRAIN’S CLEVELAND BUSINESS | 9

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RETAIL

CONTRIBUTED PHOTO

A WILD RIDE IN STORE Giving shoppers an experience helped shape the design of Arhaus’ flagship store in Legacy Village in Lyndhurst. Arhaus chairman and CEO John Reed has termed the design a “theatrical experience.”

As the web continues to roil Northeast Ohio retail businesses, the change is generating both pain and ingenuity | BY STAN BULLARD

Cara’s Boutique & Gifts has weathered several economic ups and downs since owners Mary Climer and Paulette Lisy set up shop in 1993 selling women’s clothes, jewelry and accessories at the Promenade plaza in Westlake, long before Crocker Park went up to its south. Now, it’s dealing with the onslaught of online retailing’s challenge to brick-andmortar operations. Ironically, the death knell for several competing women’s fashion retailers this year isn’t creating any more business for the shop, which in other eras might have been the case. Lisy said she believes the shift to online sales is offsetting gains the store might get from other area closings in the category. But the business partners, who paired their management experience at the former May Co. and Higbee department stores, respectively, continue to power through and look forward to the holiday season. “Spring never came to Cleveland this year, so we’re hoping November and December pull this year out,” Lisy said.

Welcome to the world of local retailers. They are facing off with online competition as it prompts an enormous shakeout among mass merchandising retailers. The consolidation — often called a retail apocalypse — is also taking place during a long, though tepid, economic expansion in which consumer confidence is a driving factor. Coresight Research of New York City reported that as of Nov. 15 this year, U.S. retailers had announced 9,052 store closures, more than in all of 2018. The consultancy also forecast 12,000 closings for 2020. The drumbeat is reverberating throughout Northeast Ohio. More than 55 store closings have been announced for Northeast Ohio locations in Cleveland-Elyria-Mentor and the adjoining Portage-Summit metropolitan statistical areas, which include Akron, according to Crain’s research.

MORE THAN 55 STORE CLOSINGS HAVE BEEN ANNOUNCED FOR NORTHEAST OHIO LOCATIONS IN CLEVELAND-ELYRIAMENTOR AND THE ADJOINING PORTAGESUMMIT METROPOLITAN STATISTICAL AREAS, WHICH INCLUDE AKRON.

See STORE on Page 12

10 | CRAIN’S CLEVELAND BUSINESS | NOVEMBER 25, 2019

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11/21/2019 1:42:34 PM

FOCUS | RETAIL

One is enough for Wayside Furniture Rather than add a new location, longtime Canton retailer shows what one very big store can do BY JUDY STRINGER

Over his 20 years as president of the company, John Ferrato has certainly considered expanding his popular Canton-area Wayside Furniture store with additional locations. “Then I come to my senses,” he said. Multiple stores mean more complications on the operations side, according to Ferrato. The extra overhead would drive up prices for the family-run business, which prides itself on “everyday low prices” rather than gimmicky sales events. Then there’s the possible impact on customer service. He said it’s “very challenging to have high-quality people delivering a high level of service when you have to staff and try to manage multiple locations.” But Ferrato’s most fervent argument against hatching a regional furniture chain is global in nature. “How big do you need to be?” he asked. “Is bigger really better for communities? “I’d rather see green space and drive a bit instead of having so many retail locations all over the place,” he added. “One big location works best for us.” Big, indeed. Wayside’s selling campus is spread out over three buildings on Canton Road (Route 91), occupying roughly 125,000 square feet in Springfield Township. That’s nearly five times the size of the average furniture store, which Ferrato said is somewhere around 26,000 square feet. While he declined to provide revenue figures for the business, Wayside

Wayside Furniture’s bread and butter are mattresses, solid-wood bedroom and dining room sets, and premium upholstered sofas, chairs and loveseats | CONTRIBUTED PHOTO

employs 174 workers, according to Ferrato, and the “furniture-only store” is one of fewer than 20 in the country “that does the level of volume we do out of one location.” The grandchild of Italian immigrants, Ferrato — along with his father, Blaise, and brother, Blaise Jr. — bought the Wayside Furniture business in 1985, when it was a single building. His father died two years into the family ownership, and Ferrato became vice president as a college senior, serving under his older brother. The duo built additions in 1991 and 1994, more than doubling the store’s original footprint. They also added a new 125,000-square-foot warehouse in 1995. When Blaise Jr.

unexpectedly died in 1999, Ferrato assumed the leadership and continued to grow the business. Today, three of his 12 siblings are involved in the daily operation of the company. In 2000, Wayside purchased the property north of the store to accommodate more parking and an expanded leather display, he noted. It also put in a café, run by his sister and her husband. Another addition enlarged the main building in 2004, and the family bought property south of its site in 2007, creating more parking and a new clearance outlet. The latter has since tripled in size. While Wayside’s early years under Ferrato’s leadership were marked by growth, he said the furniture store —

like most of its retail peers — felt the impact of flagging consumer spending during the Great Recession. He said the company has “been happy to sustain,” since then, in the face of “fast-changing shopping habits,” including the rise of e-commerce and the proliferation of furniture outlets chains like Ashley HomeStore, which has 800 locations worldwide. “Ashley is unique because they also happen to be the largest furniture manufacturer,” Ferrato noted. “We sell their product and compete against their franchised and company-owned brick-and-mortar stores and websites. The good news is they are great people to work with — still a privately held family business. The bad part is they, like all retailers, are trying to navigate the Wild West of e-commerce, social media, etc.” It’s particularly challenging when Ashley, for example, sells furniture to Amazon or online housewares merchant Wayfair. Those sites can turn around and market some of the same products as Wayside — and Ashley’s own stores — at a discount. “Wayfair has not made any money yet. They are willing to sell at a loss until nobody will loan them any more money or until somebody buys them,” Ferrato said. As for Amazon, Ferrato said the digital giant can subsidize losses on furniture with its more profitable divisions and product lines. Both platforms, he added, tend to sell smaller, less costly furniture items than Wayside’s bread and butter, which are mattresses, solid-wood bedroom and dining room sets, and premium up-

“HOW BIG DO YOU NEED TO BE? IS BIGGER REALLY BETTER FOR COMMUNITIES?” — John Ferrato, president of Wayside Furniture

holstered sofas, chairs and loveseats. “It is one thing to have a person or robot handle, load, deliver a shirt that can’t be damaged, but an entirely different thing to handle a sofa or dining room or bedroom (set),” he said. “We feel we remain relevant/ competitive by offering furniture and mattresses only. We are very good at buying it, delivering it and servicing it.” Ferrato said he also believes Wayside has an edge when it comes to shopping experiences that can’t be duplicated online, such as loaner furniture for customers waiting on custom orders and inexpensive homemade meals in the onsite café. That is not to say, however, that Wayside has shunned the internet. Ferrato said the company embraced e-commerce “early on” and consumers can and do browse and buy many of its products online. Having an internet presence is particularly helpful for displaying “the catalogs of stuff ” not on the showroom floor, he noted. Yet, Wayside will not ship items outside its 1.5-hour delivery zone. “If we can’t service you after delivery easily,” Ferrato said, “we do not want to go there.”

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NOVEMBER 25, 2019 | CRAIN’S CLEVELAND BUSINESS | 11

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FOCUS | RETAIL | Q&A

The art of retail foraging Joanne Neugebauer explains how she seeks out new products and gets them from source to shelf for Whole Foods Joanne Neugebauer and her peers at Whole Foods Market call themselves “foragers.” But instead of combing the forest for edibles, these foragers comb local communities for innovative, trending products. They’re seeking new items for Whole Foods Market shelves. Neugebauer has been a “forager” for the Mid-Atlantic region since 2017, seeking out products in Ohio and six other states. She finds them by referral, in the media and at trade shows. After identifying products with significant potential, she works through an administrative process that gets them to the shelf for consumers. In 2018, she “discovered” and placed 80 brands across all product categories. The newest product to the Cleveland market was Rust Belt Pepper Co., a Mediterranean pepper relish, that launched in the Rocky River Whole Foodstore. Other companies local to Northeast Ohio include The Dairy Free Co., Inca Bucha, The Sweet Spot Gelato, Elmore Smith BBQ Sauce, Flour Pasta Co. and Honey Hostess. Cleveland-area brands that have spread to every store in the Mid-Atlantic region include Garden of Flavor, Mackenzie Creamery, Swell Skin, Cleveland Kraut, Wow Wonders and Chill Pop Shop. — Paris Wolfe

``What prepared you to be a forager? I’d been interested in local food from my days as a botany major in college. After college, I interned at University Hospitals’ office of sustainability. When that ended, I applied for a part-time job with the prepared-foods team at Whole Foods Market on Chagrin Boulevard. I thought I would be there for six months. I worked simultaneously at the City of Cleveland Mayor’s Office of Sustainability, learning about retailing food and larger regional food systems. In 2014, I decided to go all in and soon was leading the preparedfoods department at the Whole Foods store in Orange Village. In 2015, a trip to Togo to visit a national body care supplier, as part of the Whole Foods Market volunteer program, drove home the importance of sourcing and how we can impact our communities and the world. The experiences prepared me to move from a store to the regional office. ``What’s a typical day? I am always reviewing new products. I help existing brands troubleshoot

aspects of being a local brand, from insurance requirements to doing demos in our stores. I collaborate with the marketing team and regional product buyers for onboarding and determining how to best share the inspirational stories behind the local supplier brands.

“I TRY TO MAKE THE ‘NO’ AS EMPOWERING AS POSSIBLE.” ``How do you find new products? I find products everywhere and anywhere you can think to sell an item. I’ve found new products at airports, farmers markets, Instagram and incubator kitchens. Oftentimes, our team members give us some of the best leads as, ultimately, they are the key to a new brand’s success. ``What product would you like to see someone make? I’d like to see something that surprises

STORE

From Page 10

A Crain’s analysis of CoStar online data on the same geographic area found that as of Sept. 30, 2019, vacancy reached 17%, up from 13% in the same period a year earlier. Among the mall and shopping segment of the retail sector, it’s even worse. According to CoStar, vacancy in openair shopping centers as of Sept. 30 this year was 14%, up from 11.6% a year earlier. Vacancy rates in both categories are almost as high as in the depths of the last recession, even though changes since then should have moderated vacancy, such as three enclosed malls being razed to be replaced by Amazon warehouse operations and a plethora of new large-format stores, from Meijer to Menards. Another CoStar statistic shows just how much online sales are roiling brick-and-mortar retail. Over the last year, more than 500,000 square feet of selling space has been emptied and not reoccupied — the industry calls it negative absorption — nearly twice as much as retailers shed in the region during the worst years of the Great Recession. Fundamentals, meanwhile, are operating in unexpected ways. Usually, rents go down when vacancy goes up. But that hasn’t happened so far. CBRE research estimates average retail rents in Northeast Ohio increased 2% this past year, making it one of the 10 areas where rents climbed the most in the country. Most shopping center owners feel confident that physical stores will survive. Mitchell Schneider, founder and president of First Interstate Properties of Lyndhurst, whose company developed Legacy Village lifestyle center, among others, said, “Listen, (retail’s) a challenged industry, especially in apparel. However, 90% of sales are in bricks-and-mortar stores. I think we will see more empty stores. However, for small shops in primary retail locations there is a decreasing amount of space for an increasing number of (new or new-to-area) retailers. Market-dominant shopping

National women’s apparel and accessory companies are shutting down at a prodigious pace, but that’s not producing more customers yet at Cara’s Boutique & Gifts in Westlake, said Paulette Lisy. She and business partner Mary Climer are department store vets who have run the shop since 1993. | STAN BULLARD

centers will fare well despite the bumps in the road.” However, not all landlords see things that way. Chad Kertesz, a real estate developer active in Ohio City and Beachwood, last year rented two stores at a property he owns at 2929 Detroit Ave. with one eye on the worldwide web. One store, Avalon Express, is a clothing resale shop where the stock changes regularly and customers must visit to see what’s available and if it fits. The other is Three Dog Bakery, which sells treats baked in-store, including canine birthday cakes. “This is not an established retail location,” Kertesz said. “But they are doing well. People are looking to shop in an area where before they could only get coffee or work out.” Retailers on the local level are trying to adapt. One instance where the online bloodletting has actually aided a new retail concept is Raising Cane’s Chicken Fingers, which has opened six Northeast Ohio stores since 2018 and is constructing another one on Center Ridge Road in Rocky River.

That store is going in on the site of a demolished office building that had long-empty retail space on its first floor. The chain’s Lakewood location replaced a Bob Evans restaurant. Jake Crocker, chairman of Columbus-based RCO Ltd., which has the local Raising Cane’s franchise, said it’s typical for retail spaces to become available. However, he put the growth of the chain, where a good location remains important, in the context of the way online sales are changing retail. “In our view, it’s back to convenience. People demand convenience, whether it’s buying goods through Amazon or popping into a restaurant or drive-thru,” Crocker said. “At Raising Cane’s, it is providing fresh product in a quick period of time. The industry average is under three minutes, and ours is two minutes and 45 seconds with our focused menu and emphasis on customer service.” Another factor is that consultants tell retailers they now need to provide an experience for customers as well as goods. Kevin Schmotzer, formerly small

business executive in the Cleveland department of economic development and now the city’s LGBTQ+ liaison, said how retailers fare today often depends on how they create an experience that will turn shoppers into repeat customers. The owner of a pet supplies store on Clifton Boulevard himself, Schmotzer pointed out he’s creating a setting where customers feel welcome and have social contacts while shopping. The experience factor shaped the design of the new Arhaus flagship store of the Boston Heights-based furniture chain in Lyndhurst’s Legacy Village. The store’s roof even serves as a patio to showcase its patio furniture. John Reed, Arhaus chairman and CEO, termed the design a “theatrical experience” in a news release on the store’s opening. JB Dunn, one of three owners of J3 Clothing Co. in Moreland Hills, said creating an experience has always been a factor at the shop but that a recent renovation accented it. The store just added three shops within the shop for three of its suppliers and works to make every customer feel at home.

me while making me immediately understand where and how the item would be sold in the store. Make a product that you stand behind wholeheartedly that meets or exceeds our quality standards. ``What’s the best part of the job? The hugs and high-fives. It’s often a celebratory “We did it!” moment after numerous phone calls, emails and troubleshooting sessions getting a product from discovery to shelf. Also, the people and brands have amazing stories of why they choose to make what they make. From “mom-trepreneurs” to accidental discoveries to generational family farmers, the stories behind the makers are as varied and interesting as the products themselves. ``What’s the hardest part of the job? The hardest part is when we choose to pass on a brand. I try to make the “no” as empowering as possible. What might be a “no” today may be a “yes” later as the brand and market evolves. “It’s a relationship-driven company,” Dunn said. “We make sure what we are selling them fits right. It’s quite different from the online approach.” The online wave has also opened the door for more franchises based on personal services, such as Massage Envy, a fitness and yoga chain. Tori Nook, the principal of the Anchor Cleveland real estate brokerage in Beachwood, said she has not seen mom-and-pop stores pushing into shopping centers for years, but there is a wave of franchises associated with services that’s providing avenues for some small businesses to enter the retail space. John Tilson, a managing director in the Chicago office of middle market investment bank Brown Gibbons Lang & Co., has worked with retailers for years but now focuses on helping manufacturers and online retailers sell directly to consumers. He said he sees the play for physical retailing over the next few years as finding concepts that can capitalize on reusing existing vacated storefronts. When landlords accept that empty space is “a hole in their pocket,” he said, it may create openings for a new wave of specialty retailing. Chuck Cerankosky, who follows warehouse clubs and other retail as a principal for institutional equity analysis firm Northcoast Research of Cleveland, said Seattle-based Costco Wholesale shows that physical stores can continue to prosper if they refine their concepts to suit their customers. He noted that the economic expansion is reflected by Costco’s increasing sales of luxury goods, albeit at an appealing price. He also wondered how some online strategies will fare in a downturn. For example, Cerankosky said, how will consumers like the now-popular home delivery from grocers, which they are paying for, once the next recession hits? “Will stores offer a discounts for coming in to shop the same way that (some) gas stations do for cash?” he asked. Likewise, Lisy of Cara’s advises startup retailers to think small, adding, “The smaller the (store) footprint, the better.”

12 | CRAIN’S CLEVELAND BUSINESS | November 25, 2019

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FOCUS | RETAIL

MALLS

From Page 1

Class B and C malls garner fewer sales per square foot, with Class C malls suffering the most store vacancies. “There’s a shift from just being purveyors of other products in a brick-and-mortar setting to finding out how customers like to buy things and having data to tailor to their needs,” said Ward. Restoration Hardware, a seller of upscale home goods, is taking an omnichannel approach to retail, sending customers catalogs they can peruse, then bringing them into a location where a designer helps complete an online order. Ward said centering an in-person shopping approach on online sales satisfaction reflects a renewed commitment to customer service that’s too often not found at a typical anchor store. “The Sears of the world are still trying to operate these huge spaces, selling ladders and snowblowers next to the apparel section,” he noted. “That’s an example of a company not adjusted or invested (to consumer needs).”

Major changes afoot Malls outside of Class A are likely doomed unless they undergo a major overhaul, observers said. Throughout the country, large department stores are being replaced by sports-bar-

Round 1 was a key part of the Great Lakes Mall’s $15 million update. The entertainment center opened in 2018. | CONTRIBUTED PHOTO

and-arcade combination Dave & Buster’s and other large-scale entertainment venues. In 2018, Great Lakes Mall in Mentor opened Round 1, a 50,000-squarefoot entertainment center and restaurant with arcade games, karaoke rooms and bowling lanes. At the time part of a $15 million update of the Lake County shopping complex, Round 1 anchors a larger gathering space featuring retail, dining and rec-

reation, said marketing director Kate Miller. Since Round 1’s debut last year, Great Lakes Mall has also unveiled a 55,000-square-foot Hobby Lobby location, and is set to introduce a firstin-market Brew Kettle restaurant early next year. Additionally, the suburban shopping destination hosts 70 events annually in a large community space. Last month, the mall held a fami-

ly-friendly Boo ’n Brew fundraiser to welcome Brew Kettle into its tenant mix and raise money for United Way of Lake County. “Activations in the common area are the holy grail of the industry,” said Miller. “Our guests want more options, so we’re continuing to invest in dining and entertainment.” High-end grocery chains like Whole Foods Market are also snapping up empty slots in malls and

shopping centers, said Ward, offering patrons healthier and more diverse meal options than the food courts of yore. Supersized gyms of the Planet Fitness and LA Fitness variety are similarly designed to transform malls into destination hubs, while Ward said he expects the enclosed malls of the past to become more outward-facing. “Not a big, dark rectangle, but more like a Main Street atmosphere with easy entrance into restaurants and stores,” he explained. “It feels more like a downtown shopping experience.” The Pinecrest mixed-use district in Orange Village is a veritable neighborhood of shops, restaurants, offices, apartments and hotel space, said Corsi. Managed by Fairmount Properties, Pinecrest offers a “live, work, play, but stay” vibe where visitors can take morning yoga, have lunch, see a movie, then round out the day with dinner and drinks. “That doesn’t exist at a mall today,” Corsi noted. “Malls have an opening and closing time with nothing to do afterward. Just look at the tenant mix between an outdoor and existing mall.” For Corsi, the issue comes back to too much supply for not enough demand. “Malls will be redefined over the next five to 10 years,” he said. “You have to offer more than just a shopping mall with kiosks and shoestores.”

CUSTOM PUBLISHING SECTION

CORPORATE GROWTH AND M&A Don’t miss the chance to be part of this special section detailing the latest trends in the market, produced by Crain’s Content Studio – Cleveland in partnership with the Association for Corporate Growth, Cleveland chapter.

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November 25, 2019 | CRAIN’S CLEVELAND BUSINESS | 13

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THE LIST

Banks

Ranked by Northeast Ohio deposits NORTHEAST OHIO DEPOSITS (MILLIONS)

EMPLOYEES WORLDWIDE (FTE) 6-30-2019 HOLDING COMPANY

MAIN LOCAL OFFICE

6-30-2019

6-30-2018

% CHANGE

LOCAL OFFICES

Huntington National Bank 200 Public Square, Cleveland 44114 800-480-2265; huntington.com

$20,503.2

$19,152.9

229

14,998

Huntington Bancshares Inc. Columbus, Ohio

Sean P. Richardson, Cleveland regional president

KeyBank NA 127 Public Square, Cleveland 44114 216-689-3000; key.com

$19,326.3

$19,173

0.8%

114

17,284

KeyCorp Cleveland, Ohio

Beth E. Mooney, chair, CEO, KeyCorp

PNC Bank 1900 E. 9th St., Cleveland 44114 888-762-2265; pnc.com

$13,697.3

$13,537.2

1.2%

118

51,608

PNC Financial Services Group Inc. Pittsburgh, Pennsylvania

Pat Pastore, regional president

Citizens Bank 1215 Superior Ave., Cleveland 44114 216-277-5326; citizensbank.com

$10,756.2

$9,548.8

12.6%

18,085

Citizens Financial Group Inc. Providence, Rhode Island

James M. Malz, president

JPMorgan Chase Bank NA 1300 E. 9th St., Cleveland 44114 800-935-9935; chase.com

$8,711.2

$8,562.3

1.7%

200,771

JPMorgan Chase & Co. Cleveland, Ohio

Rudy Bentlage, executive director, commercial banking; market executive, Northeast Ohio

Fifth Third Bank 600 Superior Ave. E, Cleveland 44114 216-274-5533; 53.com

$5,567

$5,290.8

5.2%

19,734

Fifth Third Bancorp Cincinnati, Ohio

Joseph D. DiRocco, regional president, Northeast Ohio

U.S. Bank 1350 Euclid Ave., Cleveland 44115 216-623-9300; usbank.com

$2,726

$2,707.6

0.7%

70,769

U.S. Bancorp Minneapolis, Minnesota

Alan Zang, president, Northeast Ohio market

Home Savings Bank 275 W. Federal St., Youngstown 44503 330-742-0500; homesavings.com

$1,897.1

$1,802.5

5.2%

494

United Community Financial Corp. Youngstown, Ohio

Gary M. Small, president, CEO

Farmers National Bank of Canfield 20 S. Broad St., Canfield 44406 888-988-3276; farmersbankgroup.com

$1,705.3

$1,378.1

23.7%

422

Farmers National Banc Corp. Canfield, Ohio

Kevin J. Helmick, president, CEO

First National Bank of Pennsylvania 55 Public Square, Cleveland 44113 800-555-5455; fnb-online.com

$1,360.4

$1,281.9

6.1%

4,142

F.N.B. Corp. Pittsburgh, Pennsylvania

Jeffrey S. Bechtel, regional market executive; president, Cleveland region

Chemical Bank 3900 Park East Drive, Suite 300, Beachwood 44122 216-706-3709; ChemicalBank.com

$1,313.5

$1,404.2

-6.5%

3,155

TCF Financial Corp. Detroit, Michigan

James R. Lynch Jr., regional president, Ohio

Middlefield Banking Co. 15985 E. High St., Middlefield 44062 440-632-1666; middlefieldbank.com

$963.9

$865.1

11.4%

198

Middlefield Banc Corp. Middlefield , Ohio

Thomas G. Caldwell, president, CEO

Civista Bank 100 E. Water St., Sandusky 44870 419-625-4121; civista.bank

$770.8

$730

5.6%

436

Civista Bancshares Inc. Sandusky, Ohio

Dennis G. Shaffer, president, CEO

First Commonwealth Bank NA 1100 Superior Ave., Suite 1365, Cleveland 44114 800-711-2265; fcbanking.com

$713

$646

10.4%

1,438

First Commonwealth Financial Corp. Indiana, Pennsylvania

Jane Grebenc, president; George Moy, senior vice president, regional president for northern Ohio

Cortland Savings and Banking Co. 194 W. Main St., Cortland 44410 330-637-8040; cortlandbank.com

$577

$558

3.4%

162

Cortland Bancorp Cortland, Ohio

James M. Gasior, president, CEO

Wayne Savings Community Bank 151 N. Market St., Wooster 44691 330-264-5767; waynesavings.com

$379.3

$351.3

100

Wayne Savings Bancshares Inc. Wooster, Ohio

James "Jay" R. VanSickle II, president, CEO

Andover Bank 600 E. Main St., Andover 44003 440-293-7256; andoverbankohio.com

$311.5

$285.2

9.2%

Andover Bancorp Inc. Andover, Ohio

Stephen E. Varckette, president, CEO

Portage Community Bank 1311 E. Main St., Ravenna 44266 330-296-8090; pcbbank.com

$280.3

$273.8

2.4%

Portage Bancshares Inc. Ravenna, Ohio

Richard J. Coe, CEO

Consumers National Bank 614 E. Lincoln Way, Minerva 44657 330-868-7701; consumersbank.com

$263.4

$230.3

14.4%

138

Consumers Bancorp Inc. Minerva, Ohio

Ralph J. Lober II, president, CEO

CFBank NA 28879 Chagrin Blvd., Woodmere 44122 216-468-6113; cfbankonline.com

$231.3

$190.8

21.2%

105

Central Federal Corp. Fairlawn, Ohio

Timothy T. O'Dell, president, CEO; Mark Nykaza, Northeast Ohio market president

Farmers Savings Bank 111 W. Main St., Spencer 44275 330-648-2441; fsb-spencer.com

$205.3

$208.7

-1.6%

Thomas W. Lee, president, CEO

Peoples Bank NA 24400 Chagrin Blvd., Suite 200, Beachwood 44122 216-910-0550; peoplesbancorp.com

$188.8

$203.4

-7.2%

918

Peoples Bancorp Inc. Marietta, Ohio

Cindy Crotty, executive vice president, north region president

Independence Bank 4401 Rockside Road, Independence 44131 216-447-1444; theindebank.com

$170.3

$171.2

-0.5%

Independence Banccorp Independence, Ohio

Christopher W. Mack, chairman, CEO

CNB Bank (dba ERIEBANK) 7402 Center St., Mentor 44060 440-205-8100; eriebank.bank

$166.8

$155.9

571

CNB Financial Corp. Clearfield, Pennsylvania

Wesley Gillespie, regional president, Northeast Ohio

Hometown Bank 142 N. Water St., Kent 44240 330-673-9827; ht.bank

$164.8

$162.3

1.6%

Hometown Bancorp Inc. Kent, Ohio

Michael A. Lewis, president, CEO

Commercial & Savings Bank 91 N. Clay St., Millersburg 44654 330-674-9015; csb1.com

$164.6

$148.6

10.8%

174

CSB Bancorp Inc. Millersburg, Ohio

Eddie Steiner, chairman, president, CEO

RANK

TOP LOCAL EXECUTIVE

RESEARCHED BY CHUCK SODER: CSODER@CRAIN.COM

Get 40 banks, net income and historical deposit data in Excel. Become a Data Member: CrainsCleveland.com/data

Financial data comes from fdic.gov. This list excludes banks registered as savings institutions. It includes deposits in 15 counties: Ashland, Ashtabula, Cuyahoga, Erie, Geauga, Huron, Lake, Lorain, Mahoning, Medina, Portage, Stark, Summit, Trumbull and Wayne. Send feedback to Chuck Soder: csoder@crain.com. 14 | CRAINâ€™S CLEVELAND BUSINESS | November 25, 2019

P014_CL_20191125.indd 14

11/21/2019 1:49:48 PM

Coming soon ...

NEO

From Page 1 After World War II, prejudices against people from southern and eastern Europe began to fade, opening up the suburbs as an option, at least for them, DeBlasio said. That growth pattern isn’t unusual. Aside from New York City, most large cities didn’t successfully and significantly grow beyond their initial footprint, noted J. Mark Souther, professor of history at Cleveland State University. Instead, by the 1920s, most cities became ringed by suburbs. That certainly held true in Cleveland. Cleveland’s suburbs began to take root in the early 20th century as the city became “uncongenial” for some residents, said John Grabowski, associate professor of history at Case Western Reserve University and senior vice president at the Western Reserve Historical Society. Just what that meant varied by family. Some sought to escape the smoke of the city, while others were displeased by the immigrant and migrant groups moving in. That coincided with the introduction of electric streetcars, and then automobiles, which made commuting possible. After World War II, the growth of the highway network and the ubiquity of cars — as well as the mortgage rates allowed by the GI bill — contributed to the continued growth of the suburbs, Grabowski said. But segregation in Cleveland didn’t start with suburban flight, said Ned Hill, professor of economic development at Ohio State University. Hill is also a professor emeritus at Cleveland State and former dean for the university’s Maxine Goodman Levin College of Urban Affairs. “The whole time I was in Cleveland — remember, this is a city I dearly love — I never looked at Cleveland as a city. Cleveland is a series of villages,” Hill said. The city’s industrial history contributed to its segregated nature. Often, groups of immigrants or migrants from Southern states would live in housing within walking dis-

This is the first of a two-part series on the development of Northeast Ohio. Next week, Crain’s speaks with local government and economic development leaders about what they’re doing to bridge the divides, as well as why that work is important.

“There’s a legacy of disinvestment and racism that is very spatially driven,” he added.

The role of politics

This Cleveland Press photo shows pedestrians moving through traffic on Euclid Avenue near East 6th Street in 1930. | CLEVELAND MEMORY PROJECT

tance of large manufacturers. The practices of redlining and indexing mortgage risk by ethnicity, not just by race, played a role in where different groups settled in the city, Hill noted. There were similar practices, such as deed covenants, in suburbs like Shaker Heights, designed to keep Jewish populations out. That “hierarchy of ethnicity” deeply shaped Cleveland in “fundamental ways,” Hill said. That segregation remained when people started moving out to the suburbs. Like many northern industrial cities, as people began shifting to the suburbs, they moved in “migration routes,” Hill said. In Cleveland, there are migration paths from the Collinwood and Glenville neighborhoods out to Euclid and Mentor; from Fairfax and Hough to Cleveland Heights, Shaker Heights and Orange; from Ohio City and Detroit Shoreway to Lakewood, Bay Village and Westlake. It’s human nature to stay in more familiar areas, maintaining relationships and keeping near the stores and churches and other institutions people already know, Souther pointed out. That means communities tend to move incrementally over time along certain corridors.

The lasting impact of segregation Souther has been at Cleveland State since 2003. As a lifelong Southerner prior to that move, he was surprised by the extent of the racism present in the region, having long thought of it as a Southern problem. When he was looking for a place to live, he encountered a lot of advice about where he should and shouldn’t move. He said many people are still “mentally mapping” a racial geography of the region into existence. “While there have been 50 years worth of fair housing efforts by various organizations, and while technically people can buy wherever they can afford to live, there are other things that continue to channel people,” Souther said. One of those factors is housing prices. Areas such as Euclid and Collinwood possess more of what Souther called working-class housing, as a lot of primary industry had been located there. And redlining has left a long shadow. Areas where it was practiced still see higher instances of infant mortality, lead in the water and food deserts. It wasn’t a direct cause, Souther said, but there is a correlation.

Hill attributes the divisions between the city of Cleveland and its suburbs to a combination of longterm, systemic racism and shortterm political decisions. On the latter factor, he pointed to the different approaches Cleveland and Columbus took over the years to their water and sewer systems. Columbus implemented what Hill called a “policy of annexation.” Municipalities outside of Columbus had to be annexed in order to get the lower-cost city sewer and water services. If if there was a major commercial development, the municipality had to be annexed. By the time Cleveland was looking to grow its water and sewer system, it was already surrounded by a number of independent municipalities. That made the idea of annexation more difficult, Hill said. Instead, Cleveland expanded its water and sewer system to any municipality willing to pay.

Where we are today All of this has left Northeast Ohio’s cities and suburbs with, at times, some pretty strong political divides. Nationally, larger metros today tend to be places that attract people with Democratic leanings, said Stephen Brooks, associate director of the Ray C. Bliss Institute of Applied Politics at the

University of Akron. That includes younger people and those seeking jobs that require higher education. Beyond the well-established difference in urban and suburban voters, though, Northeast Ohio’s geography complicates elections. Brooks offered Franklin County as a counter-example. A decade ago, Franklin County was a “battleground” between Democrats and Republicans, he noted. “Today, it is not,” he said. That’s in part because a lot of the former right-leaning Franklin County residents have moved to more distant suburbs of Columbus, with many actually living outside the county now.

“THE WHOLE TIME I WAS IN CLEVELAND — REMEMBER, THIS IS A CITY I DEARLY LOVE — I NEVER LOOKED AT CLEVELAND AS A CITY. CLEVELAND IS A SERIES OF VILLAGES.” — Former Cleveland State dean Ned Hill

Northeast Ohio is a bit different, because its cities are closer together. There’s only so far people can move into the outskirts of one city before they bump into the suburbs of the next one, Brooks said. Akron, for example, has Cleveland to the north and Canton to the south. That geography is one of the things that makes Northeast Ohio unique: the way it condenses urban, suburban and rural environments in such a small space. That’s a big part of its past and its present, and whether it’s viewed as a challenge or an opportunity could have big implications on the region’s future.

AWARDS

Here are the 2019 recipients of the Crain's C-Suite Awards; event is Dec. 5 BY CRAIN’S STAFF

in the six categories:

Crain’s Cleveland Business, at an event on Thursday, Dec. 5, will honor 17 top Northeast Ohio C-suite executives for their contributions, community commitments and outstanding professional performances. Since 2017, Crain’s has honored C-suite executives at an end-of-theyear ceremony. The 2019 Crain’s CSuite Awards executive class will be profiled in the Dec. 2 issue of Crain’s and celebrated at the Dec. 5 event at The Westin Cleveland Downtown. The event runs from 6-9 p.m. Go to the events page of CrainsCleveland. com to register. The event’s presenting sponsor is Bank of America. Top officers will be recognized in six categories: Cleveland champion; chief executive officer (CEO or top officer); chief operating officer (COO); chief financial officer (CFO); chief marketing officer (CMO); and chief information officer. Here’s a list of this year’s recipients

CHAMPIONS • Sari Feldman, retired executive director, Cuyahoga County Public Library system • Randell McShepard, vice president of public affairs and chief talent officer, RPM International Inc. • Bernie Moreno, founder of Blockland Cleveland and chairman of Ownum CEO • Lourenco Goncalves, chairman, president and CEO, Cleveland-Cliffs Inc. • Eric Gordon, CEO, Cleveland Metropolitan School District • Tricia Griffith, president and CEO, Progressive Corp. • Kevin Martin, president and CEO, ideastream • Mark Masuoka, executive director and CEO, Akron Art Museum • Gina Vernaci, president and CEO, Playhouse Square Foundation

CHIEF OPERATING OFFICER • Kevin von Keyserling, co-founder and chief strategy officer, Keyfactor • Chris Salata, COO, Industrial Commercial Properties • Uday Yadav, president and COO, Electrical Sector, Eaton Corp.

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AKRON NONPROFITS

Commons Akron teams companies, students to foster innovation Multiweek program tackles specific business-related challenges BBY KAREN FARKAS

Northeast Ohio college students are helping local companies solve business challenges in an innovative multiweek program. The Commons Akron Innovation Accelerator program is an initiative of EDGE, a nonprofit economic development organization in Independence that works with midsize companies. “Universities love it because it complements what they do on campus,” said Chris Keller, director of innovation and entrepreneurship at EDGE. “Companies love it because usually they have a relationship with one or two schools, or one professor. In this program, they get motivated and creative students.” The four-week program, held twice this year, is modeled after The Commons, a nonprofit initiative developed five years ago by the Greater Milwaukee Committee. Students in more than 55 Milwaukee-area high schools and colleges work with more than 50 businesses and organizations to tackle problems. Keller began investigating The Commons through his connection with Milwaukee that began several years ago, when the Burton D. Morgan Foundation in Hudson asked EDGE to serve as the administrator for its Scalerator NEO program to help midsize companies grow. The Scalerator program was created in Milwaukee. Keller said he received a lot of support to establish a pilot Commons program in Akron.

How does it work? The Commons is a collaborative partnership between universities, businesses and mentors. It is designed to attract students, who gain real-world experience and would perhaps decide to stay in Northeast Ohio after graduation. Keller asked officials at 12 public and private colleges to recruit students of all ages and majors. Four types of students are targeted: hipsters (creative skills), hackers (technical skills), hustlers (sales/marketing skills) and handlers (project managing/organizing skills). Large and small companies interested in connecting with young innovators were sought. Business mentors, who would work with the students, were also recruited. The program this year was supported by the Richard J. Fasenmyer Foundation and the Harvard Business School Club of Northeast Ohio. Keller contracted with The Commons in Milwaukee, which led the programs at the Bounce Innovation Hub in Akron. Everyone attends a kickoff weekend from 10 a.m.-4 p.m. on a Saturday and Sunday. Company leaders

and mentors are assigned to a group of students, who represent the four types of skills. They discuss how to approach a challenge assigned by facilitators. Group members communicate once a week via the Slack messaging platform. On the fourth Sunday, each group presents its findings to a panel of judges. The challenges in the two pilot programs were: “How will artificial intelligence (February program) and the Internet of Things (October program) impact our business operations or enhance the customer experience?” Keller said the companies that participated in the pilot programs included Akron Children’s Hospital, Consolidus, FirstEnergy Corp., Goodyear Tire & Rubber Co., Main Street Gourmet, the J.M. Smucker Co. and the Timken Co.

“UNIVERSITIES LOVE IT BECAUSE IT COMPLEMENTS WHAT THEY DO ON CAMPUS. COMPANIES LOVE IT BECAUSE USUALLY THEY HAVE A RELATIONSHIP WITH ONE OR TWO SCHOOLS, OR ONE PROFESSOR. IN THIS PROGRAM, THEY GET MOTIVATED AND CREATIVE STUDENTS.” ——Chris Keller, director of innovation and entrepreneurship at EDGE

When Smucker recruits at universities, it targets programs for specific jobs, said Judd Freitag, director of strategy and M&A for the company. “This was really intriguing for us,” he said of The Commons. “It is a different set of students that are not in the traditional talent-acquisition pipeline.” The company participated in the fall pilot program, with students from varied backgrounds and majors. Freitag’s group studied how to better engage with pet owners interested in purchasing Smucker’s pet foods. The group’s solution was to use cellphone technology — perhaps with a QR code on the pet food — to allow customers to learn about the ingredients and how that product could help. “It was so energizing to work with the students,” Freitag said. He lauded the structure of the program, which focuses on the problem and how to solve it and gives students the opportunity to work with mentors and business leaders. “The (final) pitch is something

Team Main Street Gourmet, which includes students from the College of Wooster and Walsh University, works with its business mentor, Ben Trent, second from left, at the Commons Akron Innovation Accelerator program last spring at the Bounce Innovation Hub in Akron. | CONTRIBUTED PHOTO

realistic, pragmatic, innovative and different,” he said, adding that Smucker plans to participate again in 2020.

What did students think? Students from seven universities — Baldwin Wallace University, College of Wooster, John Carroll University, Kent State University, Stark State College, the University of Akron and Walsh University — attended the first two pilot sessions. Sixteen students participated in February and 20 in October. Keller said his goal is 40 students per session. “What I really love about this program is that it always comes with a challenge and grinds your gears in a positive way,” said Lauren McKown, a Kent State senior who participated in both programs. “The environment is extremely supportive with mentors helping, and you learn along the way.” McKown, an entrepreneurship major who is going to return to school in fall to study neuroscience, said she learned about the program from a professor. In the first session, her group helped Consolidus, which sells branded products, to develop a better customer service program. She said it was a learning process for both the students and the company. In October, her group worked with Goodyear on ways to make the tire purchasing process easier. “We designed a tire sensor that would connect to an application downloaded on a phone,” McKown explained. “The target market was college commuter students who need a little more education to buy tires.” McKown said she left the program with good real-world skills and knowledge of how to be a better entrepreneur.

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CLASSIFIEDS To place your listing in Crain’s Cleveland Classifieds, contact Suzanne Janik at 313-446-0455 or email sjanik@crain.com BUSINESS FOR SALE

BUSINESS FOR SALE

For Sale: Repair & Service Business - Successful Forklift Business far west side greater Cleveland area for sale. 110 clients use this business. National Business Brokers Inc 440-774-4400

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REAL ESTATE

The next pilot program will be held Feb. 29-March 29. Edge is seeking additional companies to participate as well as students from all 12 colleges. Keller said the program has attracted students of all ages, including adults, and many nonbusiness majors. Interested participants can get more information at tinyurl.com/ CommonsAkronProgram or contact Keller at Chris@edgef.org. November 25, 2019 | CRAIN’S CLEVELAND BUSINESS | 17

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PEOPLE ON THE MOVE

To place your listing, visit www.crainscleveland.com/people-on-the-move or for more information, please call Debora Stein at (917) 226-5470 or email dstein@crain.com.

CONSTRUCTION

LEGAL

NONPROFITS

Project Management Consultants LLC

McCarthy, Lebit, Crystal & Liffman

Taft Stettinius & Hollister LLP

Western Reserve Land Conservancy

Project Management Consultants congratulates Alex Previts on receiving his Certified Public Accountant certification. Alex graduated with his Master of Accountancy degree from Case Western Reserve University and joined PMC in January 2019. As a Financial Analyst, Alex works with the PMC Team to secure and manage public and private financing options for development projects and to attract incentives for corporate clients that are expanding or relocating in Ohio and across the country.

McCarthy, Lebit, Crystal & Liffman Co., LPA is pleased to welcome Kyle P. Graham to the firm as an associate attorney in the practice areas of Taxation, Trusts & Estates and Business & Corporate. Graham was sworn in by the Ohio State Bar Association on November 12, 2019.

David Haba joins Taft as an associate in the Real Estate group. He focuses his practice on the representation of regional and national commercial real estate clients in transactions related to the acquisition, disposition, leasing and development of real property. David received his J.D., cum laude, from The Ohio State University Moritz College of Law in 2019. He earned his bachelor’s degree, cum laude, in criminal justice studies from the University of Dayton in 2015.

NONPROFITS LEGAL

Womankind Maternal and Prenatal Care Center

FINANCIAL SERVICES

Equity Trust Company Casey Roberts has been named Equity Trust’s Chief Business Development Officer, leading the organization’s sales and marketing efforts. He has over 25 years of financial services experience dedicated towards leading sales teams and developing integrated marketing programs within various retail investment services organizations such as Santander and Citizens Bank.

Jared Saylor has joined Western Reserve Land Conservancy— the largest local land trust in Ohio— as Director of Communications and Public Relations. Saylor is a veteran communications strategist with a successful track record of planning and implementing communications campaigns on environmental issues. He most recently served as VP of Communications for Defenders of Wildlife in Washington D.C.

McCarthy, Lebit, Crystal & Liffman McCarthy, Lebit, Crystal & Liffman Co., LPA is pleased to welcome Adam L. Glassman to the firm as an associate in the practice areas of Real Estate & Construction, Business & Corporate, Mergers & Acquisitions and Litigation. Glassman was sworn in by the Ohio State Bar Association on November 12, 2019.

HEALTH CARE

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Ulmer & Berne LLP Ulmer is pleased to announce the addition of Counsel David E. Schweighoefer to the firm’s respected Health Care Practice Group. David provides counsel to a wide array of clients in the health care industry, regarding the full spectrum of their unique business and regulatory needs, and helps them achieve their overarching business objectives. He received his law degree from the Cleveland-Marshall College of Law at Cleveland State University.

Womankind is pleased to welcome Maggie Lallo as Executive Director. She brings a wealth of knowledge of fundraising, relationship building and social service management to the organization. Womankind offers free prenatal care and other vital support services to women and their families in Northeast Ohio. Maggie’s passion and enthusiasm will help guide Womankind into the future. Maggie received her Master’s in Nonprofit Administration and Leadership from Cleveland State University.

LEGAL

NOMS Healthcare Taft Stettinius & Hollister LLP Allison N. Smith joins Taft as an associate in the Health Care & Life Sciences and the Mergers & Acquisitions groups. She represents hospitals, physician groups and related entities regarding the regulatory, transactional and business aspects of health care law. She assists in the sale, purchase and leasing of health care assets, including nursing homes, senior housing facilities and physician practices. Allison received her J.D. from Case Western Reserve University School of Law in 2019.

NONPROFITS

Western Reserve Land Conservancy Elizabeth Sords has joined Western Reserve Land Conservancy— the largest local land trust in Ohio— as Manager of Urban Forestry. An ISAcertified arborist, she will play a vital role in the organization’s efforts to preserve, maintain and increase our local tree canopy. Sords will lead community forestry initiatives and serve as a primary forestry expert for the Land Conservancy.

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

Myeroff had been working out of his home, building custom furniture and river tables (tables with colored-epoxy resin that runs down the middle). When it came time to grow the business, he wanted a city that was “business-friendly.” “I just knew that this was one of the areas I wanted to be in,” he said. “The vendors were here, the access was good and the city was kind to small businesses.” Under Sellers, the development department has become more responsive to business and quick to resolve issues. “People like doing business with people that understand the mission,” the mayor said. And that mission has changed for most inner-ring suburbs. Back in the day, Sellers said, deals basically fell into cities’ laps and they didn’t have to chase business. “Brokers came from Kansas City and said, ‘We are going to build Randall Park Mall,’ and the city said, ‘Great!’ ” he said. Sellers applies the “meet the people where they are” strategy to create opportunities for corporate growth. The plan was to attract or secure anchor institutions like Heinen’s, Cleveland Clinic and Sherwin-Williams, which has an automotive paint division in Warrensville, while also chasing after new deals. Warrensville Heights offers the traditional tax breaks, TIFs, CRAs and Storefront Renovation subsidies, and 90% of the city is in an Opportunity Zone. Those incentives can spur development if used correctly. However, DuVal emphasized they do not automatically bring in new business, so for the past seven years, the city’s strategy has been to acquire, clear and hold commercial property until an opportunity arises. This year, six large tax-abated projects matured, and those businesses remain and contribute to the tax base. “We were investing in that (with the idea that) at some point, 10 years from now, that company would still be standing here and our payoff would come at that point,” Sellers said. “All those deals we did early on, the tax abatements are falling off and those companies are still standing right here.” Sellers made other investments with an eye on the long term. When Randall Park was abandoned, values along Northfield Road, which runs past the site, plummeted, hurting the city as a whole. The city purchased commercial property on Northfield, knowing that business opportunities eventually would materialize. That vision has been realized at the Amazon fulfillment center, where the impact of thousands of new jobs — coupled with a minimum-wage increase from $8.50 an hour to $15 an hour, prodding other companies to follow suit — cannot be overstated. What was once a dilapidated eyesore on the city’s border has now revitalized that area. “I would have to imagine that the Amazon in North Randall has helped in terms of housing and employment, and is hopefully driving economic development for them,” said Brian Hall, senior vice president at the Greater Cleveland Partnership and executive director of its equity and inclusion division. The city’s rebound was not based on a cookie-cutter approach, and Warrensville Heights is no carbon copy of any other city. Sellers said making sound decisions is key, along with not resting on one’s laurels. “You can’t stop,” he added. “You can’t slow down. And once you accomplish something, you have to go and pick up in another area.”

18 | CRAIN’S CLEVELAND BUSINESS | November 25, 2019

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SOURCE LUNCH

Pam Wright

crainscleveland.com

Publisher/editor Elizabeth McIntyre (216) 771-5358 or emcintyre@crain.com Group publisher Mary Kramer (313) 446-0399 or mkramer@crain.com Managing editor Scott Suttell (216) 771-5227 or ssuttell@crain.com Sections editor Michael von Glahn (216) 771-5359 or mvonglahn@crain.com Creative director David Kordalski (216) 771-5169 or dkordalski@crain.com Web editor Damon Sims (216) 771-5279 or dasims@crain.com Associate editor/Akron Sue Walton (330) 802-4615 or swalton@crain.com Assistant editor Kevin Kleps (216) 771-5256 or kkleps@crain.com Senior data editor Chuck Soder (216) 771-5374 or csoder@crain.com Editorial researcher William Lucey (216) 771-5243 or wlucey@crain.com Cartoonist Rich Williams

As the partner at Sikich in charge of the nonprofit vertical in Akron, Pam Wright gets to know the nuts and bolts of the area’s nonprofits. She heads up nonprofit audits for the firm and reports back to the board and finance committee to make sure they understand on a detailed level what their finances look like and what the sustainability of the organization is. She’s been focused on the nonprofit industry for the past several years. A board member herself for several local nonprofits, Wright enjoys getting to work with these organizations for their missions and figuring out how, as a finance person, she can help them fulfill those missions. As the holiday season arrives — typically a critical time of year for fundraising efforts — it’s important for nonprofits to reach out to the community, Wright said. “They really need to get out — and most do a good job of it — but you have to get out and tell your story, and be able to have your reach go to the right audience,” she said. Crain’s sat down with Wright to discuss her work. This conversation has been edited for clarity and length. — Lydia Coutré ``Talk to me about the work that you do with nonprofits within the firm. Within the firm, I head up the audit side of the nonprofit vertical. So that means we go out, a team of us — there’s usually three per audit engagement — and we go out and do the audit, which takes about a week in the field and then probably another month to wrap up in the office. But what I really like more about working with the nonprofits is just their mission. It’s the mission. I love to hear about the mission of all the nonprofits in the area, and how our work as an auditor, which is sometimes viewed as the evil, you know what I mean, it has to be done. It’s just something that has to be done. We like to go in and actually help them with their mission. ``When you’re going in and doing the audits and helping them, what’s the most common thing you end up having to address? We look at the return on controls and help them to make sure that they have key controls or, what I always say, to make sure that their controls are working, are implemented and designed effectively, that you’re not going to see your name on the front page of the Akron Beacon for fraud. When we go to the board, that’s what I tell them. I said, “You’re going to see financial statements here. That’s history. That’s back. It’s three, four months gone; you’ve looked at these.” But more importantly, what you should ask and be aware of is that your accounting department controls in place are designed and implemented effectively. When I sit on a board, that’s what I ask.

``And do you sit on any boards currently? I do. ``What are those? I sit on Project GRAD, Battered Women’s Shelter — I just got elected to the vice president of that — and then, Child Guidance and Family Solutions. And I’m the treasurer of Project GRAD. ``How do you get involved in these boards and why do you stay involved in them? Again, you know, a lot of these are kind of near and dear to my heart. Child Guidance is a mental health agency. And it’s working with children and helping children so that they can focus in school and so that they can better their lives. And the Battered Women’s

THE WRIGHT FILE Best place she’s visited Anna Maria Island and Naples in Florida Favorite TV show “Law & Order” Skill she wishes she had Singing Best advice she’s received Her mother told her, “Don’t be afraid to move.” (Geographically, career or otherwise)

Shelter is a great organization helping women and men and elderly that need a place to live, a temporary place to live to get their lives back on track. ``From your perspective, both on the boards and your work at Sikich, what are the biggest challenges facing nonprofits today? Funding. Funding is the biggest challenge, barrier, obstacle that everyone’s facing. And more from, I would say, the federal funding — it’s the unknown. You get it one year, but it’s not guaranteed the next year, and so you always have to be almost like one step ahead of them to make sure you have other revenue streams coming in for sustainability. So that’s the biggest challenge. But if that funding’s not there or if it’s reduced, then you have

LUNCH SPOT Rubber City’s Remarkable Coffee & Cafe 526 S. Main St., Akron The meal One had a vegetarian chicken sandwich, and the other had a turkey sandwich with chipotle sauce. The vibe This small cafe at the entrance of Akron’s Bounce Innovation Hub offers drinks and a selection of soups, salads and sandwiches. The bill $17.40 with tip

REPORTERS

to be able to look at your expenditures and be able to effectively reduce those. And that’s hard, that’s hard to do. It’s extremely hard to do because a lot of that — most of these are salary-driven. They’re people-driven. So that’s the biggest expense. So you’re affecting other people’s lives and families’ lives. ``Beyond the audits, what are the other services that Sikich offers? So Sikich is a CPA, IT firm with 45% of our firm is CPA, 45% is IT and the remaining 10% are advisory services, and that being HR, marketing, investment banking, public relations, wealth management. So the great thing about that is that then we have other services to offer to help our clients out. And not just the nonprofit world, all of our clients. But in the nonprofit world, HR and IT always fall on the CFO. And that is just a high risk — and it’s budgetary reasons. So we’re able to go in with like HR and assist them at a relatively decent cost to them. Because HR is a high-risk area: If you don’t understand all the laws and regulations, you could put the organization at risk. ``We talked a little bit about the biggest challenge, which is funding. What do you see as the biggest opportunities that nonprofits have? I think the biggest opportunity is collaboration, and you’re starting to see that. I’m seeing that with the Battered Women’s Shelter working with Akron Urban League on some services. And especially, I think, in this area, you know, I speak to the Akron area, there really are a lot of different organizations working together.

THE WEEK WELCOME BACK: Dr. James Merlino was named Cleveland Clinic’s chief clinical transformation officer, a newly created position. Merlino begins in the post Dec. 1 and will oversee the Office of Patient Experience, Enterprise Quality & Safety and the Office of Continuous Improvement. He’ll report directly to Clinic president and CEO Dr. Tom Mihaljevic. Merlino is returning to the Clinic, where he was a colorectal surgeon, chief experience officer and associate chief of staff from 2009 to 2014. For the past five years, Merlino has been at South Bend, Ind.-based Press Ganey, most recently serving as chief transformation officer. HISTORIC GIFT: University Hospitals Rainbow Babies & Children’s Hospital received a $34.5 million gift from

an affiliate of ElmTree Funds of St. Louis, a private equity investor. Mohr paid $52 million for the complex in late 2017. Mohr said it negotiated an extension with the process control unit of the Milwaukee-based corporation to 13 years from the three years remaining in 2017.

Merlino

Whitehead

the UH Rainbow Babies & Children’s Foundation, a supporting organization of the hospital, to help ensure continued access to care close to home for Northeast Ohio children. It is the largest gift in the hospital and

foundation’s histories. GOOD DEAL: Mohr Capital, a Dallas real estate firm, sold the huge Rockwell Automation Inc. complex in Mayfield Heights for $61 million to

CHANGE AHEAD: The Fund for Our Economic Future will head into the future with a new president. The funder alliance announced that Brad Whitehead, 59, plans to step down as president, a position he has held since the Fund’s inception in 2004. The Fund said a “careful succession planning process is nearing completion,” and that it expects to announce the next president by early 2020. Whitehead in March will move into the role of senior adviser of special projects.

Stan Bullard, senior reporter, Real estate/ construction. (216) 771-5228 or sbullard@crain.com Jay Miller, Government. (216) 771-5362 or jmiller@crain.com Rachel Abbey McCafferty, Manufacturing/energy/ education. (216) 771-5379 or rmccafferty@crain.com Jeremy Nobile, Finance/legal/beer/cannabis. (216) 771-5255 or jnobile@crain.com Kim Palmer, Government. (216) 771-5384 or kpalmer@crain.com Dan Shingler, Energy/steel/auto/Akron. (216) 771-5290 or dshingler@crain.com Lydia Coutré, Health care/nonprofits. (216) 771-5479 or lcoutre@crain.com ADVERTISING

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Crain’s Cleveland Business is published by Crain Communications Inc. Chairman Keith E. Crain Vice chairman Mary Kay Crain President KC Crain Senior executive VP Chris Crain Secretary Lexie Crain Armstrong Chief Financial Officer Robert Recchia G.D. Crain Jr., Founder (1885-1973) Mrs. G.D. Crain Jr., Chairman (1911-1996) Editorial & Business Offices 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 (216) 522-1383 Volume 40, Number 47 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for the last week of December, at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2019 by Crain Communications Inc. Periodicals postage paid at Cleveland, OH, and at additional mailing offices. Price per copy: $2.00. Postmaster: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, MI 48207-2912. 1 (877) 824-9373. Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, MI, 48207-9911, or email to customerservice@crainscleveland.com, or call (877) 824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax (313) 446-6777.

November 25, 2019 | CRAIN’S CLEVELAND BUSINESS | 19

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