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Downtown Headquarters


Jippy

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I was sad when Gordon Foods (which is in the $10billion revenue range) doubled down, and built their palacial new headquarters in Wyoming a couple years ago :(.

I suspect their employees are thrilled to work there.  It's a beautiful building, not unlike the various ones sprinkled throughout the Chicago suburbs.

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More talk about the lack of a large corporate headquarters in downtown GR.

http://mibiz.com/news/real-estate/item/22999-gr-lags-peer-cities-in-attracting-downtown-corporate-hqs

It's interesting that Frey is talking about this.  I think his father started Foremost Insurance in downtown Grand Rapids, but as we know that ended up out in Caledonia, and they have since expanded multiple times on their property.  Insurance company corporate headquarters are great fits for downtown office buildings. 

Des Moines, a similar city in size to GR has had success in this area:

http://mibiz.com/item/23009-looking-to-the-outside-the-des-moines-example

 

 

Foremost Insurance was one of the anchor tenants in Centennial Park when it opened, at 28th and Kraft. I believe it was the big white ornate building. They then became partners in developing Kraft Lake Office Park out in Caledonia, where they built their new(er) headquarters. Because they have such a strong financial tie to that development is probably why they didn't look at relocating downtown when the big Farmer's expansion came. Plus, trying to find a new user for that corporate HQ would be difficult at best (look at the Steelcase pyramid).

I keep dropping suggestions to a certain large construction company that they should draw a bigger presence for Wolverine World Wide downtown, more than just the Grid70 team. But then again, how do they dispose of or sell their Courtland Township building, which is a long way out for a corporate HQ (it's only out there because Wolverine World Wide started in Rockford). I interviewed Blake Kreuger of WWW one time and he's very keen to talent attraction and the challenges they face (they're competing for fashion designers who could go work at Nike in Portland or in NYC or Miami).

This certain large construction company will have quite a large mixed use campus at the Baker Furniture campus on the riverfront. Not quite downtown but still, within biking/walking/kayaking distance.

 

 

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Foremost Insurance was one of the anchor tenants in Centennial Park when it opened, at 28th and Kraft. I believe it was the big white ornate building. They then became partners in developing Kraft Lake Office Park out in Caledonia, where they built their new(er) headquarters. Because they have such a strong financial tie to that development is probably why they didn't look at relocating downtown when the big Farmer's expansion came. Plus, trying to find a new user for that corporate HQ would be difficult at best (look at the Steelcase pyramid).

I keep dropping suggestions to a certain large construction company that they should draw a bigger presence for Wolverine World Wide downtown, more than just the Grid70 team. But then again, how do they dispose of or sell their Courtland Township building, which is a long way out for a corporate HQ (it's only out there because Wolverine World Wide started in Rockford). I interviewed Blake Kreuger of WWW one time and he's very keen to talent attraction and the challenges they face (they're competing for fashion designers who could go work at Nike in Portland or in NYC or Miami).

This certain large construction company will have quite a large mixed use campus at the Baker Furniture campus on the riverfront. Not quite downtown but still, within biking/walking/kayaking distance.

 

 

Right, but before that Foremost was headquartered in the Federal Square Building downtown. 

Speaking of Wolverine. Keen, one of their competitors, recently opened up a new headquarters in an old warehouse building in Portland.  I agree, WWW would be a great fit for a near downtown warehouse application.

 

Pearl_BLDG_Pre_OUTSIDE-351.jpg

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Amway did consider moving downtown in the early 1980s. They even bought the Keeler and People's buildings in preparation.

I'd love to see downtown filled with office towers - revive the Lyon & Ottawa plans, build one on Ionia across the street from the Kent County Courthouse, another at Monroe and Louis... but it seems like if anything, the demand for downtown office space is decreasing.

Recall the horrible vacancy rate at Bridgewater Place during the recession, 25 Monroe's struggles until Spectrum came along, the Waters Building eliminating much of their office space, 25 Jefferson switching from offices to apartments, and the plans at Fulton/Louis/Ionia stalling from a lack of interested tenants. Perhaps 12 Weston (and how quickly it fills up) will be a good litmus test of future demand.

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I'd love to see downtown filled with office towers - revive the Lyon & Ottawa plans, build one on Ionia across the street from the Kent County Courthouse, another at Monroe and Louis... but it seems like if anything, the demand for downtown office space is decreasing.

Recall the horrible vacancy rate at Bridgewater Place during the recession, 25 Monroe's struggles until Spectrum came along, the Waters Building eliminating much of their office space, 25 Jefferson switching from offices to apartments, and the plans at Fulton/Louis/Ionia stalling from a lack of interested tenants. Perhaps 12 Weston (and how quickly it fills up) will be a good litmus test of future demand.

I hadn't thought about it quite in those terms before, but come to think of it, you may very well be right.  While vacancy rates are down, a significant amount of space is currently offline, and some offline forever.  Waters took a huge amount of space offline. Then you have reportedly a lot of empty space at various CWD buildings that is not being advertised but is empty.  Is that counted as "vacant" then?  I wonder if the actual occupied square footage has gone up by any significant amount.  Anyone have numbers on this?   

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Amway did consider moving downtown in the early 1980s. They even bought the Keeler and People's buildings in preparation.

I'd love to see downtown filled with office towers - revive the Lyon & Ottawa plans, build one on Ionia across the street from the Kent County Courthouse, another at Monroe and Louis... but it seems like if anything, the demand for downtown office space is decreasing.

Recall the horrible vacancy rate at Bridgewater Place during the recession, 25 Monroe's struggles until Spectrum came along, the Waters Building eliminating much of their office space, 25 Jefferson switching from offices to apartments, and the plans at Fulton/Louis/Ionia stalling from a lack of interested tenants. Perhaps 12 Weston (and how quickly it fills up) will be a good litmus test of future demand.

 

A lot of commercial buildings in small markets like GR are beginning to go residential or hotel. In a class B space near downtown, you may only get $12 - $15 per square foot per year. Add in a kitchen and a bedroom and you can get $24+ per square foot as an apartment. Plus a 1000 square feet of office space may require you to somehow provide for 6 or 8 parking spaces for those office workers, whereas a 1000 sf apartment only requires 1, maybe 2. (FWIW, restaurants are the most intense users of parking spaces, even though it's generally for a very limited time)

I actually think that's why retail space in these newer mixed use projects are going for $24/sf, because it's the opportunity cost if it were residential space instead (but the city and many urbanists want to see ground floor retail). 

I guess my question is, what constitutes a corporate HQ's? How many people? Boeing in Chicago only has about 100 people in their downtown office, yet their shingle sign is quite prominent overlooking the Chicago River. Spectrum putting 500 people in 25 Ottawa is quite a large corporate presence. It might even be the biggest presence of one single company downtown. Even Plante & Moran on the riverfront doesn't have that many. 

 

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 I wonder if the actual occupied square footage has gone up by any significant amount.  Anyone have numbers on this?   

I came across a very bullish article about downtown office space from last week. It says we experienced "positive absorption" of about 75k square feet in the second quarter of 2015. I think that number is the net gain of leased space? Class B vacancy and overall vacancy have decreased throughout 2015, while Class A vacancy was down in the first quarter but slightly up in the second quarter. (Who left?)

It's possible that the amount of leasable space is decreasing and the raw amount of occupied space is increasing. E.g. (totally made up numbers) we've gone from 800,000 square feet out of 1,000,000 leased to 875,000 out of 900,000. If both numbers keep moving toward each other, we'll hit equilibrium eventually.

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I hadn't thought about it quite in those terms before, but come to think of it, you may very well be right.  While vacancy rates are down, a significant amount of space is currently offline, and some offline forever.  Waters took a huge amount of space offline. Then you have reportedly a lot of empty space at various CWD buildings that is not being advertised but is empty.  Is that counted as "vacant" then?  I wonder if the actual occupied square footage has gone up by any significant amount.  Anyone have numbers on this?   

I don't know about CWD space. We looked around recently and CWD didn't have a lot of space to offer us. I think 50 Monroe is being taken offline on purpose (speculation on my part) but I don't think they have much space available at our size (about 4000-5000 sq. ft). 

Joe

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  • 4 months later...

A glut of office space on the way downtown?

My takeaway from this article is that CWD is concerned about their inventory of older buildings downtown that have high vacancy rates, and that Franklin Partners Keeler project, and new construction (Warner Tower/Twelve Weston) may dilute their own market further.  

My questions is, why then did they buy so many of these older buildings if they are so concerned about the office market?   They knew Miller Johnson was on the way out of Calder Plaza when they purchased it.  The article also states that CWD is concerned about the movement of office tenants from one downtown building to another.  Didn't they basically push Huntington Bank and other tenants out of 50 Monroe to the Michigan Trust building in an effort to renovate 50 Monroe?  

CDW's Nick Kostner argues that the customer base has not grown downtown, but that's not true.  As the GRBJ points out Meritage, and Insight Global are new to downtown, as is the Spectrum IT department at 25 Ottawa. Spectrum also added their Human Resources dept., to Bridgewater. Downtown does need to continue the "new to market" tenant base to continue to be successful.

I think there will be a continued demand for downtown office space, renovated and new, but how much I don't know.  I do think that the Warner Tower will proceed, and provide additional needed new class A office space for those who want it.  I also think that 12 Weston will continue it's holding pattern.

I agree with Kostner that the north end of downtown has suffered, but it is, as he says, "seeing a comeback", i.e, the Rowe, MSU research center, Homewood Suites/the Waters, the Warner/Orion mixed use project, plans for Calder Plaza, and of course CWD's Calder Plaza building reno.

 

 

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Koster said, "We have a critical mass that is successful, and if we dilute that, the service level is suffering."  Having competition raises the level of service and quality of space.  If you cut back on service to tenants when there is competition then you are not going to lease space.  Some landlords grow the "pie tin" and also fill it up with pie.  It also seems to be the landlords that work with the brokerage community and deliver space that fits the need of tenants today that are filling up their buildings.  One company owning most of downtown is the fastest way to cause the service level to suffer. Let's hope people like John Wheeler keep raisng the bar downtown and the market stays a healthy competitive environment.  

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6 hours ago, mpchicago said:

A glut of office space on the way downtown?

My takeaway from this article is that CWD is concerned about their inventory of older buildings downtown that have high vacancy rates, and that Franklin Partners Keeler project, and new construction (Warner Tower/Twelve Weston) may dilute their own market further.  

My questions is, why then did they buy so many of these older buildings if they are so concerned about the office market?   They knew Miller Johnson was on the way out of Calder Plaza when they purchased it.  The article also states that CWD is concerned about the movement of office tenants from one downtown building to another.  Didn't they basically push Huntington Bank and other tenants out of 50 Monroe to the Michigan Trust building in an effort to renovate 50 Monroe?  

CDW's Nick Kostner argues that the customer base has not grown downtown, but that's not true.  As the GRBJ points out Meritage, and Insight Global are new to downtown, as is the Spectrum IT department at 25 Ottawa. Spectrum also added their Human Resources dept., to Bridgewater. Downtown does need to continue the "new to market" tenant base to continue to be successful.

I think there will be a continued demand for downtown office space, renovated and new, but how much I don't know.  I do think that the Warner Tower will proceed, and provide additional needed new class A office space for those who want it.  I also think that 12 Weston will continue it's holding pattern.

I agree with Kostner that the north end of downtown has suffered, but it is, as he says, "seeing a comeback", i.e, the Rowe, MSU research center, Homewood Suites/the Waters, the Warner/Orion mixed use project, plans for Calder Plaza, and of course CWD's Calder Plaza building reno.

 

 

 

There are still people downtown who have a "protectionist" mentality, bless their hearts. There are still tens of thousands of service professionals in the burbs that could be wooed downtown, not to mention the millions around the country (Insight Global is a good example). 

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