Is there a demand for more office space in downtown Ann Arbor?
The new Barracuda Networks office in downtown Ann Arbor could accommodate about 400 employees comfortably, said general manager Guy Suter.
Daniel Brenner | AnnArbor.com
After scouring the local office market for more than a year, Barracuda signed a deal for 45,000 square feet of space on Maynard Street in Borders’ former offices.
But the move — which more than tripled Barracuda’s Ann Arbor office — isn’t necessarily long term.
“This is enough for us in the immediate term,” said Barracuda general manager Guy Suter. “But we’re in a situation where we’re hiring one to two people per week.”
“I’d love to think when we need 100,000 square feet and have 1,000 employees that we can still be downtown, but the path isn’t 100 percent clear,” he continued. “(The space) we ended up with was the only thing we could have done.”
Ann Arbor real estate agents and landlords agree: the office market downtown is tight and it can’t support many large expansions right now.
Of downtown’s roughly 1,700,000 square feet of office space, less than 170,000 square feet is available, according to Swisher Commercial’s 2012 vacancy report. And real estate agents say that vacancy rate is even lower as several companies are negotiating deals for space, including Prime Research's recent deal for 16,000 square feet in the former flagship Borders store.
Most of the available space, said Neal Warling of Jones Lang LaSalle, consists of small offices.
“We just can’t find enough space for larger users,” Warling said. “Anything above 5,000 square feet is getting really hard to find in one location, and that’s a function of two things: there hasn’t been a lot of larger building development downtown and those buildings are largely full.”
Real estate listings show that one of the only downtown vacancies more than 15,000 square feet is at 111 North Ashley Street.
The first-floor of 111 North Ashley is one of the only large floor plate office spaces available in downtown Ann Arbor.
Joseph Tobianski | AnnArbor.com
That makes finding a large chunk of space downtown a challenge for businesses, and companies like Barracuda and Menlo Innovations have thought outside the box in order to expand downtown.
“We found something unusual and we were willing to go the extra mile to make that unusual space work for us,” said Menlo CEO Rich Sheridan. Menlo tripled its office space last year when it moved into 17,000 square feet in the basement floor of the former Tally Hall building.
“I’ve worked out in the fringes of town in office parks…for us, we absolutely love being downtown. The type of business we are and just our spirit and energy; we wanted to be in the vibrancy of the downtown area,” Sheridan said.
Does downtown need more office space?
The idea of new office construction downtown is being tossed around by Ann Arbor’s Downtown Development Authority as part of its Connecting William Street plan. The DDA, encouraging private redevelopment of several city-owned properties, is suggesting mixed-use buildings with a focus on office as one development possibility.
The Ann Arbor DDA's plan for redeveloping five city-owned properties shows mixed-use development, including possible office, residential and lodging uses.
SmithGroupJJR
But is that figure really plausible?
No large floor plate office buildings have been constructed downtown in more than a decade, said developer Ed Shaffran. Over time, the available space has been mostly absorbed, but he still questions whether downtown needs large floor plate office development.
“We’re Ann Arbor. Who is coming into town that needs this space?” he asked. “I don’t see that many big floor plate users coming to downtown.”
Swisher Commercial’s Mike Giraud agreed, saying: “We’re talking (30 percent) more office space over the next 10 to 12 years when nothing has been built since the 1990s.”
Although Giraud said the supply is low and downtown could use large floor plate space, he said there are only so many big companies circling the market.
“There have not been a lot of big, corporate clients downtown,” he said. “Google was looking for a large chunk of space, and certainly Barracuda. But there hasn’t been a lot of office users downtown looking for more than 10,000 to 30,000 square feet.”
“The question is, if you build it, will they come?” he asked.
How far off is new office construction?
As the real estate market struggles to recover, developers remain wary and it can be difficult to get financing for projects — especially for office buildings.
McKinley CEO Albert Berriz said Ann Arbor is experiencing a student housing boom because returns are higher and that’s a safer bet for developers. However, new office construction downtown is expensive and it would result in high rental rates for businesses, he said.
“The cost to construct a new building in the downtown (is high), and the rents that would justify that construction don’t exist in the market,” he said.
Office rates downtown vary, but rent typically doesn’t exceed $25 per square foot. Rental rates at a newly constructed building could reach $30 to $40 per square foot, Berriz said. Factor in the cost of parking, and operating a business downtown becomes too pricey for many companies.
“It’s too expensive (to build) right now,” said Jim Chaconas of Colliers International. “The rents have not caught up to what it would cost to make any money on building an office building.”
Berriz — whose McKinley Towne Centre building downtown is fully occupied — said most companies are likely to look outside of downtown for space before paying high premiums to be downtown.
The south side of Ann Arbor, for instance, has a 15 percent vacancy rate and several large floor plate availabilities.
“I still think there are companies that are leasing space in the Briarwood Mall area that have said to themselves, ‘sure, we’d love to be downtown, but we’re not willing to pay to be there.’ At what point are you willing to pay twice the rent?” Berriz said.
Shaffran, a developer who owns several buildings downtown, said what makes the most sense for a developer is to pre-lease a building before it’s constructed.
“You would need a commitment today (from a tenant) if you were going to build a 100,000-square-foot building,” he said. “I think it would be a safe assumption that you need to probably get 60 percent of that pre-leased to get a real commitment from a financial institution.”
Susan Pollay of the DDA said the group is being contacted “all the time” by developers and companies interested in the city-owned lots downtown. Inquiries are coming from local, regional and national players, she said.
But she recognizes constructing an office building is still a challenge and it could be several years before the market is right.
“It’s probably three to four years before the rents will hit a point to justify new construction,” she said.
Staring the development discussions now is important, she said, because it takes a long time for city processes to work.
“The office market is going to take some time,” she said. “It will be there, and certainly, as big pieces of downtown are getting signed up with new leases, the vacancy is dropping.”
The Connecting William Street plan also suggests mixed-use development downtown should include active ground-floor use and incorporates residential units. The land consultant hired by the DDA, Todd Poole, called office construction by itself a “risky proposition” right now.
Lizzy Alfs is a business reporter for AnnArbor.com. Reach her at 734-623-2584 or email her at lizzyalfs@annarbor.com. Follow her on Twitter at http://twitter.com/lizzyalfs.
Comments
cindy1
Thu, Jan 24, 2013 : 11:35 p.m.
People on this thread may (or may not) be interested in Michael Shuman's talk here next Tuesday: http://www.annarbor.com/business-review/community-capital-forum-with-economist-michael-shuman-and-more/ He is a member of BALLE (Business Alliance for Living Local Economies). http://bealocalist.org/about-us
Craig Lounsbury
Thu, Jan 24, 2013 : 5:11 p.m.
'I'd love to think when we need 100,000 square feet and have 1,000 employees that we can still be downtown, but the path isn't 100 percent clear," according to my math that's more than 2 football fields minus the end-zones. Since Ann Arbor is not a big city like Chicago or New York or (fill in the big city name) with buildings that run vertically maybe a business that big is better off on the outskirts of town.
timjbd
Thu, Jan 24, 2013 : 9:31 p.m.
Yeah, that 100,000 sq. ft. number is nonsense. I'm sure someone loves the idea of collecting rent on that figure ($42 p/sq ft or whatever) but it's a siren song.
Craig Lounsbury
Thu, Jan 24, 2013 : 6:36 p.m.
I understand your point but its still problematic. I looked up that old farmer jacks on Washtenaw its little over 1/2 that 100,000 square feet. The KMart that is there is only 98,000 feet to get a perspective. Thats a lot of square feet. 1000 people in one building is a lot of people. If the city wants density then they better start approving much taller buildings which they aren't going to do. Too much NIMBY-ism for that to happen. The city officials don't know what they want. They are often at odds with themselves. I will predict that if Barracuda Networks ever gets to wanting 100,000 square feet and 1000 employees they will somewhere other than downtown.
ManA2
Thu, Jan 24, 2013 : 5:47 p.m.
Craig - the problem we have is the city decided on density some time ago. We've spent big dollars buying a greenbelt and building a mass transit system. If we then don't build the density downtown those dollars spent become largely pointless.
Tom Whitaker
Thu, Jan 24, 2013 : 4:25 p.m.
Looking at the above photograph of Barracuda's new office space, it's little wonder why they're consuming such a huge amount of square footage. It looks like they're using about 1000 SF per employee. And this is what people are calling "urban density?" If we're going to be diverting funds away from our schools, roads, police and fire, and other essential government functions to give to businesses with the intent of increasing downtown density, shouldn't we at least expect them to be more efficient in how that money is used? If being located downtown is such a huge recruiting tool for businesses and totally worth the extra costs, as Mr. Sheridan gushes, then why are we paying businesses to locate there? Talk about having your cake and eating it too....
moveover2012
Thu, Jan 24, 2013 : 3:45 p.m.
It is Cheaper in YPSILANI for a business to survie..the landlord doesnot raise the rent/Lease every year..see you here , we have lost of students that need to support samself...
LiberalNIMBY
Thu, Jan 24, 2013 : 3:31 p.m.
Thanks for the article. One suggestion: it may be a good idea to track down and quote some of the large-company CEOs that have expressed interest in relocating downtown, rather than quoting current property owners who may not want to see shiny new office space come on line. But really, all of this is moot. Between the NIMBY hippies and the "existing downtown hotel owner" pressuring council members into not allowing anything to be built, my bet is that council will see fit to sit on their hands (AKA, "get more input") for a few years anyway. Why risk ticking off the crazies?
timjbd
Thu, Jan 24, 2013 : 9:22 p.m.
They don't release those names because they are fictional. The DDA makes money when big buildings are built. The bigger the building, the more they make. No buildings, no money.
ManA2
Thu, Jan 24, 2013 : 5:44 p.m.
There are many. The DDA's consultant spoke to them. Can't imagine why that information wasn't released.
Veracity
Thu, Jan 24, 2013 : 5:29 p.m.
LiberalNIMBY, Susan Pollay of the DDA would have quickly and loudly announced the names of any CEOs and companies that express interest in owning or leasing space in the massive highrise offices and commercial spaces being proposed with the Connecting Williams Street plan. As is said, "Silence speaks volumes!"
Linda Peck
Thu, Jan 24, 2013 : 3:16 p.m.
This sounds like a gear-up for the big high rises to be built downtown. Just sayin.
timjbd
Thu, Jan 24, 2013 : 8:46 p.m.
It would be more like a mini-Oklahoma City. The core of the downtown is all 10-20 story buildings and it completely clears out of people at 5pm.
Veracity
Thu, Jan 24, 2013 : 5:24 p.m.
Yes it does. If you do not wish to have Ann Arbor's skyline becoming a mini-Chicago or mini-New York City skyline then contact your City Council members (two for each ward) and complain.
Steve Bean
Thu, Jan 24, 2013 : 2:47 p.m.
"It's probably three to four years before the rents will hit a point to justify new construction," I think it's actually more likely to be 4-5 years before construction costs come down to the necessary range. Deflation is underway, and all prices will fall. That's not to say that more large spaces are needed or will be built. I forget which company it was that I read about recently (on the west coast, I think) that has found that companies of more than 250 employees or so become less efficient, so they've broken into small units. I wouldn't be surprised if that caught on, and demand for large office space disappeared altogether.
timjbd
Thu, Jan 24, 2013 : 8:45 p.m.
"Small, Gritty and Green" by Catherine Tumber: http://tinyurl.com/aa2ebcg How do you get those Amazon-version tiny URL's?
Kyle Mattson
Thu, Jan 24, 2013 : 6:43 p.m.
Great book recommendation there Fordie. I would also recommend that anyone interested in downtown related discussions check out this book, I just started reading it this week and it's very interesting: http://amzn.to/10OtPWv
Fordie
Thu, Jan 24, 2013 : 3:23 p.m.
Malcolm Gladwell's "Tipping Point" put that number at 140. That had been found to be the number of employees at which people stopped thinking in terms of accountability to their colleagues and thought instead about being accountable to the bureaucratic machine of their employer.
Brad
Thu, Jan 24, 2013 : 2:18 p.m.
Working downtown - are the benefits worth the extra hassle and cost?
ManA2
Thu, Jan 24, 2013 : 5:42 p.m.
Yes. I know quite a few companies that are on the outskirts of town, that would pay some premium to move downtown. Recruiting young talent is far easier if they can be downtown than in a more suburban setting like around Briarwood or Domino's Farms. And by the way...tax base.
Veracity
Thu, Jan 24, 2013 : 5:21 p.m.
Lizzy Alfs - What specifically are the advantages of downtown in regards to recruiting and customer development. At a recent DDA informational forum about its Connecting Williams Street plan a young man complained that his family, which included children and a dog, would not establish residence downtown because of the lack of children play areas and dog-friendly parks. David Koziol - Can you describe the benefits of living downtown that are important to you and why do you think your team enjoys being downtown?
Tom Whitaker
Thu, Jan 24, 2013 : 5:10 p.m.
This is very strong anecdotal evidence that government incentives are not necessary to attract businesses to downtown. Let's instead use that money for our schools, roads, police and fire, parks, and other government functions that improve the quality of life for all of us, which will only make our town more attractive to businesses.
Dave Koziol
Thu, Jan 24, 2013 : 4:15 p.m.
Arbormoon believes very strongly the benefits of being downtown are worth the extra cost. Our team really enjoys being downtown.
Lizzy Alfs
Thu, Jan 24, 2013 : 2:57 p.m.
Here is a quote from Rich Sheridan that I didn't use in the article: "There's no question we're paying a premium for being downtown. I just consider the benefits..recruiting, customer development. The cost (of being downtown) is trival compared to that."
Kellie Woodhouse
Thu, Jan 24, 2013 : 2:14 p.m.
Very interesting Lizzy. "No large floor plate office buildings have been constructed downtown in more than a decade, said developer Ed Shaffran." -- I wouldn't have guessed this. It seems like a building is always going up in Ann Arbor, but then again I guess its almost always luxury student housing.
Veracity
Thu, Jan 24, 2013 : 5:13 p.m.
Kellie, Be careful of preconceptions as they can prejudice one's writings.
Veracity
Thu, Jan 24, 2013 : 2:01 p.m.
OFFICE SPACE DEMAND IS ARTIFICIAL AND NEW CONSTRUCTION RISKY PART 2 (Continued) The following notes are more cautions from the respected developers and real estate experts who are quoted in the above article: Swisher Commercial's MIKE GIRAUD: "We're talking (30 percent) more office space over the next 10 to 12 years when nothing has been built since the 1990s.....there are only so many big companies circling the market...there hasn't been a lot of office users downtown looking for more than 10,000 to 30,000 square feet. JIM CHACONAS of Colliers International: It's too expensive (to build) right now..... The rents have not caught up to what it would cost to make any money on building an office building. McKinley CEO ALBERT BERRIZ said Ann Arbor is experiencing a student housing boom because returns are higher and that's a safer bet for developers. However, new office construction downtown is expensive and it would result in high rental rates for businesses ..... and the rents that would justify that construction don't exist in the market.... most companies are likely to look outside of downtown for space before paying high premiums to be downtown.... there are companies that are leasing space in the Briarwood Mall area that have said to themselves, 'sure, we'd love to be downtown, but we're not willing to pay to be there.' At what point are you willing to pay twice the rent? Also SHAFFRAN said what makes the most sense for a developer is to pre-lease a building before it's constructed. "You would need a commitment today (from a tenant) if you were going to build a 100,000-square-foot building," he said. "I think it would be a safe assumption that you need to probably get 60 percent of that pre-leased to get a real commitment from a financial institution." Susan Pollay of the DDA has not stated that any company was willing to pre-lease before a building is constructed. The demand for new office space is insufficient to justify construction downtown.
yua
Thu, Jan 24, 2013 : 5:47 p.m.
Re: the claim above that AA will only grow by 1.7% over the next 20 years--that is SEMCOG's estimate for the entire SE MI area. Ann Arbor's population will no doubt behave rather differently than this 7-county average. In fact, Ann Arbor has already grown by 1% from 2010 to 2011 alone, and will almost certainly also show growth from 2011 to 2012 once we get those census figures this summer.
timjbd
Thu, Jan 24, 2013 : 1:56 p.m.
I think people would have an easier time with the idea of larger buildings being built if the proposals did not all contain the same drab glass and concrete boxes. If the designs were more classical/timeless with traditional materials and less discount, neo-starchitecture, the folks might be more welcoming. Also, bringing back the small businesses that have been long since priced out of downtown is what's needed to spark vibrancy. Diversity of small businesses, not just restaurants. Large construction only further solidifies the fact that they cannot afford to be downtown anymore. Think more Nichols Arcades or Kerrytown (with better architecture) and fewer 301 E. Libertys.
Tom Whitaker
Thu, Jan 24, 2013 : 4:08 p.m.
This is an excellent argument for making the downtown design guidelines mandatory, and to make them tougher in terms of quality of materials used. At a minimum, premiums granted to developers that allow them to add more square footage ought to be directly tied to their compliance with the design guidelines. Long after these developers have cashed in and left town (if they were ever here in the first place), Ann Arbor's residents will be living with their "products." If the market is as hot as claimed, then the profits will still be there for a quality building, and a quality building is more likely to be maintained and then renovated or adapted as markets shift---say from student to retiree housing---in the future.
timjbd
Thu, Jan 24, 2013 : 2:47 p.m.
By the way, I, too, like that proposed building on Detroit St. I think that (appears to be) perfectly in character with the surroundings. It can be done and when it IS done, people will support it.
timjbd
Thu, Jan 24, 2013 : 2:45 p.m.
Developers favor big box development because that is the cheapest way to build. Just meet the absolute bare minimum requirements, throw it up as fast as possible, get out of town. The rental rates remain constant no matter how cheaply the building is constructed. They (developers) don't have to look at it every day. They just count their money back home in Greenwich, Conn. No profession has done more to deface and degrade the country from sea to shining sea than real estate development. Building in the downtown should be very carefully considered but it is not.
Kyle Mattson
Thu, Jan 24, 2013 : 2:25 p.m.
Interesting point Tim- A recent example in support of this could be the 3-story development on Detroit Street that won approval in the fall: http://bit.ly/aadc-544d My take is that this type of construction can drive up cost in a heartbeat particularly with larger buildings so the more basic box/glass style is what is favored by developers.
ManA2
Thu, Jan 24, 2013 : 1:53 p.m.
The whole long term plan for Ann Arbor - including the green belt and the strengthening of mass transit - is for more density downtown. Over time, that is absolutely going to need to include more office space. My sense is that the apartment/condo market may have gotten a little ahead of the office market for the moment. We will see as the balance of the apartments come online in the next 24 months. And we do need a first class business hotel downtown. The need for the conference center isn't quite as clear, but unless the Campus Inn is ready to spend the money to gut their space, we need an alternative.
Steve Bean
Thu, Jan 24, 2013 : 9:44 p.m.
Wow, I actually wrote "mute" instead of "moot". :-{
ManA2
Thu, Jan 24, 2013 : 5:39 p.m.
Good discussion! Kafka - you are so right on the embarassment of our hotel situation for recruiting. I've experienced it. I know of many, many instances where people are staying out of town - the Westin at the airport, Inn at St. John's - or in people's homes because we're embarrassed by what we can provide here. It would be a big gain for downtown restaurants if we could probably house more folks. And it doesn't need to be a "luxury hotel". I'd take a good solid Westin. I've seen the vacancy rates you've listed Veracity. The issue with them is that it isn't one big general vacancy rate. There simply is no "product" hitting that market in Ann Arbor and there is a very big market for it.
Veracity
Thu, Jan 24, 2013 : 5:05 p.m.
First, Ann Arbor does not need increased density or a downtown hotel or another 100,000 square feet of office space in order to be successful. Ann Arbor is already a multiple award winning city revered by many who know her. Part of the ambiance is the ability to walk around it without feeling claustrophobic or overwhelmed as one would walking the downtown streets of New York City or Chicago. SEMCOG predicts that Ann Arbor and Southeast Michigan itself will grow by only 1.7% over the next twenty years which translates into another 1300 new Ann Arbor citizens. The stagnant growth should hardly be a stimulus for more tall apartment buildings or condominiums. Much of Ann Arbor's recent growth is related to the University and its few spinoffs. With the University adopting austerity and completing its population of the North Campus Research Center, fewer new university employees can be anticipated. Regarding the need for a luxury hotel downtown, be aware that average hotel occupancy in Ann Arbor has risen only to 62.5%, although that figure is the best for Michigan. Valiant Partners defunct hotel/conference center plan required an average 75% occupancy and a nightly room rate of $199 in order to break even financially. By comparison Hawthorne Suites in Northeast Ann Arbor offers two bedroom suites for $169 per night and one bedroom suites for $119 per night (DISCLAIMER: I get no personal gain by mentioning this hotel chain). Besides free on-site parking, Hawthorne Suites offers free shuttle service to anywhere in Ann Arbor. Other similar hotels surround Ann Arbor. Chuck Skelton, a local authority on hotel and hospitality services in Southeast Michigan did a detailed feasibility study of the Valiant Partners proposed hotel and conference center which led to an erudite document revealing inadequate business prospects that would not support the hotel and conference center. His document can be accessed and downloaded as a PDF. Conditions have not changed since his report.
Kafkaland
Thu, Jan 24, 2013 : 3:18 p.m.
I fully agree with the need for more high quality office space and the business hotel. If you want to attract top firms downtown (and I'd love to see a big-name law or accounting firm with a specialization in high-tech or IP, for isntance), you can't tell them to set up shop first at the edge of the city and wait for somethign to become available. The vacancy rates are already low compared to other cities, so I think a case can be made for build it and they will come, perhaps in the 100,000 sq.ft. range. Getting an RFP for the development of the 4th-street Y-lot out would be a good starting point o make something happen. And the business hotel is even more desparately needed - the Campus Inn is becoming a bit of an embarassment for hihg-end recruiting, customer visits, etc. I know even one venture capital person who sets up shop at Starbucks whenever he visits town to meet with entrepreneurs etc. We can do better than that.
Steve Bean
Thu, Jan 24, 2013 : 3:03 p.m.
Lizzy, I don't think that office space naturally follows increased population--if that's what you mean by "increasing density". Just one possibility is that all urban areas increase in population, with more people working in their local area. That would result in a shift in demand, not an increase. Another factor is increasing telecommuting. Another might be a shift to smaller company units (as I described in another comment) that in turn leads to higher use of existing, smaller spaces. And Kyle's point probably outweighs all of this. Kyle, yes, I think our city is out of sync. We're adding downtown infrastructure after world peak oil, well after what was likely peak Michigan population, and heading into a financial deflation and subsequent economic depression (which will lead to further population declines and world population peaking not in 2050 or even 2035, but closer to 2025). However, it's difficult to tell at this point if Ann Arbor will be one of the few places that is attractive enough through the coming depression to make the 'out of sync' point mute or possibly disprove it.
Kyle Mattson
Thu, Jan 24, 2013 : 2:18 p.m.
I'd counter that thought Lizzy with the fact that many of the larger employers in the region are located outside the downtown area and the high cost of constructing downtown office space is significantly higher than those outlying areas. The housing construction downtown as of late has been orientated toward students not professionals so it is not increasing that demand, hence we have the conversation of parking needs to serve employees driving into downtown vice versa. All that considered I would posed this question to readers: Do you think the evolution of downtown Ann Arbor is 'out of sync'?
Lizzy Alfs
Thu, Jan 24, 2013 : 2:08 p.m.
You raise a great point about the increasing density downtown. As the density increases, additional office space will be a natural demand.
Veracity
Thu, Jan 24, 2013 : 1:27 p.m.
OFFICE SPACE DEMAND IS ARTIFICIAL AND NEW CONSTRUCTION RISKY PART 1 Some of the demand for office space downtown is artificially created, prompted by Ann Arbor government financial incentives that give away any direct financial benefits to the city. For instance, Barracuda's move into new and larger quarters on Maynard Street is more financially beneficial for itself than the city of Ann Arbor. A Ryan Stanton story at annarbor.com reported that, on October 1, 2012, "The Ann Arbor City Council voted 9-0 Monday night to approve a five-year abatement for Barracuda as it prepares to move into a portion of the former Borders building downtown." Also "The Campbell, Calif.-based network security firm is receiving tax breaks on nearly $1.7 million worth of real property improvements and equipment, according to a memo from City Assessor David Petrak." And, finally, "The Michigan Economic Development Corp. also is providing a $1.2 million incentive to assist with the company's relocation." (Quotes from http://annarbor.com/business-review/barracuda-networks-tax-breaks-win-approval-from-ann-arbor-city-council/?cmpid=mlive-@mlive-business-a2) Governmental generosity with tax payer money does nothing to balance budgetary payments nor provide funds for government services in need. Also note these cautions from the following respected developers and real estate experts who are quoted in the above article: ED SHAFFRAN: No large floor plate office buildings have been constructed downtown in more than a decade. Over time, the available space has been mostly absorbed, but he still questions whether downtown needs large floor plate office development. (CONTINUED)
Steve Bean
Thu, Jan 24, 2013 : 2:41 p.m.
Veracity's comment raises the question of why an abatement was granted if more widespread demand exists (per Susan Pollay's quote).
Veracity
Thu, Jan 24, 2013 : 2:24 p.m.
Ben Freed - ...and during those 5-9 years how much money does the city lose?
Ben Freed
Thu, Jan 24, 2013 : 1:36 p.m.
Veracity... Note that the abatements you talk about are limited. They do help companies offset cost of moving in the short term, but then they go away, usually in 5-9 years. Now, we can still debate whether they should be used or not, but they are not permanent breaks that allow the companies to reap while the city gets nothing.
ChrisW
Thu, Jan 24, 2013 : 12:28 p.m.
Parking is really a key issue. We're looking for a small space downtown for 5 workers, but the closest parking is blocks away and $100/month per employee. That raises the cost 30%. Very hard to justify.
timjbd
Fri, Jan 25, 2013 : 4:48 p.m.
Nancy, my company subsidizes my public transport use 100%. They used to subsidize parking for everyone then saw the light. I hope I never have to commute by car again.
Nancy Shore
Thu, Jan 24, 2013 : 3:33 p.m.
@Ben and @Lizzy, thanks so much for pointing out our program. ChrisW, most small downtown employers can't afford parking for their employees, but at $10/year per employee, they can afford a go!pass, which allows unlimited transit to the downtown among many other discounts. We have had employers tell us this is a valuable benefit that allowed them to come downtown. While using the bus isn't for everyone, many people are pleasantly surprised to find how easy it is to get to work downtown using the bus, even if they are coming from further away. All of the information in on our website: http://getdowntown.org/
Steve Bean
Thu, Jan 24, 2013 : 2:38 p.m.
Parking costs are more appropriately placed on the employee rather than the business as it's the employee who chooses where to live and work and how to commute (if at all).
Lizzy Alfs
Thu, Jan 24, 2013 : 2:06 p.m.
@ChrisW: I've heard the same sentiment from other business owners. That's why many companies are utilizing the Go!Pass as an alternative way to get downtown. Still, I know many people drive their cars to work and parking can certainly be an issue if it's not provided by your employer.
Nicholas Urfe
Thu, Jan 24, 2013 : 1:43 p.m.
When people choose to drive and park cars downtown, someone must pay for the space those cars are parked on. It should be the business, not taxpayers. That is $3.33/day, and is inexpensive. If that breaks a business model, then it was never viable.
Ben Freed
Thu, Jan 24, 2013 : 1:34 p.m.
Have you thought about talking to the DDA or Get Downtown? They have some solutions they might be able to help you with such as parking deals and GoPasses.
sellers
Thu, Jan 24, 2013 : 12:41 p.m.
Agreed - smaller companies have a larger issue with the rental and parking than larger companies may have. I am away of several who park and ride/bike into the office and if you look at the park and ride lots around the permitters of the City they are utilized.
sellers
Thu, Jan 24, 2013 : 11:56 a.m.
There are two reasons companies move to the south state street, north side plymouth road, or the Jackson ave locations, size and money. Read through historic annarbor.com stories, and you will see companies like Barracuda, MyBuys, and Arbor who sought downtown locations and have to move out of downtown or cram themselves until space was available.