Ann Arbor SPARK signs lease to expand its downtown offices

U-M recently signed a deal with McKinley to move TechArb to a 3,200-square-foot space at McKinley's The Offices at Liberty Square, a miniature office park of sorts located in the former Tally Hall space on Washington Street.

That move left empty offices right next to SPARK on the fourth floor of the McKinley Towne Centre, which also houses Google and law firm Bodman.

SPARK negotiated with McKinley to sign a new, expanded 10-year lease for its existing space and the old TechArb space, SPARK CEO Paul Krutko said in an interview. The economic development group separately operates business incubators on Liberty Street in downtown Ann Arbor, Michigan Avenue in downtown Ypsilanti and Plymouth Township. SPARK currently leases 3,250 square feet in space.

Krutko said the additional space is necessary to house new employees SPARK expects to hire as a result of a recent influx in funding from the Michigan Economic Development Corp. The group's lease was set to expire in about 14 months.

SPARK received $10.8 million for three programs, including $9.17 million for the Michigan Pre-Seed Capital Fund, a pass-through investment program in which SPARK invests in early-stage companies throughout Michigan with oversight from the state's 15 SmartZones.

The group — a nonprofit that gets about one-third of its operating budget from local tax dollars and the rest from local universities, municipalities, businesses and individuals — also got $1.05 million to form a new initiative called the Michigan Angel Fund. In that program, SPARK will recruit rich private investors to pool about $2 million in cash that can be invested in very early-stage startup companies.

SPARK is also expecting to get new personnel paid for by the MEDC but collocated in Ann Arbor.

Krutko said SPARK needs space to house the MEDC workers and new staff members who will be hired to run the Michigan Angel Fund.

McKinley CEO Albert Berriz agreed to provide SPARK's space at a below-market rate as a gesture of the company's support of SPARK's activities, Krutko said.

"He believes in what were doing and he’s willing to make that available to us at a discounted rental rate, so we’re very pleased about that," Krutko said.

As part of the 10-year lease, McKinley will knock out a wall to connect SPARK's existing offices with the old TechArb space. The company will also conduct other renovations, including construction of some closed-off offices, in a two-month process expected to start next week.

(Editor's note: AnnArbor.com Executive Vice President Laurel Champion serves on Ann Arbor SPARK's Executive Committee.)

Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.