COULD GOOGLE BE MOVING OUT OF DOWNTOWN ANN ARBOR?

Original Story: freep.com

It's unclear whether Google plans to maintain its current downtown Ann Arbor office or is charting a move.

Internet giant Google has signed a lease for new office space south of downtown Ann Arbor as the company considers the future of its presence in the city's central business district.

Google signed a deal for 30,000 square feet of the South State Commons II building northeast of the corner of South State Street and Eisenhower Parkway in the Briarwood Mall area, said Jeff Harshe of MAVDevelopment Company. A real estate lawyer has experience assisting business clients with office space leasing contracts.

"I think it's an indication of the vibrant business climate in this area," said Harshe, who declined to discuss terms of the new lease. "My experience with them is they continue to grow, and they're good corporate citizens."

But a person familiar with Google's local presence but not authorized to speak publicly said the company has not yet decided whether to stay in downtown Ann Arbor. The person said the company needed the new office as overflow space to accommodate job growth.

It's still possible Google could renew or adjust its current lease. Google officials were not available to comment.

The company currently leases about 85,000 square feet of the McKinley Towne Centre office complex at the corner of Liberty and Division in the heart of downtown Ann Arbor. The office primarily handles sales for Google's AdWords search advertisements, its primary source of revenue, and had about 300 employees as of two years ago. Google AdWords marketing management can provide a solid foundation for business success.

McKinley Inc. CEO Albert Berriz said his firm plans to begin marketing Google's current space for lease starting May 1.

"We have not received confirmation from Google that they are staying or going," Berriz said in an email. "We simply can't wait any further."

The uncertainty raises the possibility that the company will move out of the city's central business district for the first time since opening the operation to much fanfare about a decade ago. There are few spots in downtown Ann Arbor for large private-sector office tenants.

Berriz said brokers will market the space for tenants who could take occupancy in summer 2016. Several prospective tenants have already expressed interest, he said, including one single user interested in leasing the entire space.

The company's new space is located on the third floor of an office that was specifically designed for employers that need high-speed Internet access. Google will share the building with Merit Network, the University of Michigan and Plante Moran.

The deal, first reported by MLive.com, could leave downtown Ann Arbor's Liberty Street technology corridor without one of its anchor tenants.

When the company announced about a decade ago that it was opening an Ann Arbor office, it received a windfall of positive publicity, and economic development leaders hailed the deal as a reflection on the region's economic vitality.

Gov. Jennifer Granholm's administration extended tax incentives to the company, which mapped out plans to add about 1,000 employees. But the company's job growth stalled amid the Great Recession.

Still, Google remains core to Ann Arbor's technology identity. Its colorful logo hangs atop the McKinley Towne Centre complex and the company remains a destination employer for University of Michigan graduates and other young professionals.

The company also maintains a separate office in Birmingham that handles automotive accounts.

Borders' Has Sold Former Ann Arbor Headquarters

Story first appeared on The Detroit News -

Price Not Disclosed; Buyer Asked For Confidentiality

The former Ann Arbor headquarters of defunct bookseller Borders Group Inc. has been sold to an unidentified buyer who requested a confidentiality agreement, the Ann Arbor office of Colliers International said Friday.

The development follows an October statement by the site's broker, Jim Chaconas, that the 330,000-square-foot campus for the former bookstore chain that liquidated and closed in 2011 would soon be sold.

The headquarters building and campus was listed for $6.9 million in early 2012, and Chaconas said in October that the prospective buyer came "pretty close" to that number.

Chaconas said then that he was working with three tenants to move into the property.

One would occupy all of the smaller, 87,000-square-foot building and others would share the larger, 243,000-square-foot building.

Because of the confidentiality agreement, it is not clear whether new tenants will move in or whether a new owner has bought the building and has different plans for the property.

Chaconas was not available for comment. In October, he said the site is large enough to allow tenants to expand and has more than 1,200 parking spaces.

Before Borders decided to liquidate in July 2011, it had 440 staffers at the corporate campus at 100 Phoenix Drive and occupied only a portion of a building.

The headquarters' former owner, Farmington Hills-based Agree Realty Co., defaulted on a $5.6 million loan in 2011. Colliers International was hired to handle the sale of the property after a settlement agreement was reached with Agree Realty.

Full Employment in Ann Arbor's Future

Story first reported from Detroit Free Press

Full employment -- when everybody who wants a job can find one in a reasonable time -- is something you'd expect to see in places such as North Dakota and Texas, not Michigan.

Ann Arbor is getting closer to this economic nirvana. Help-wanted signs have popped up in the windows of some of its crowded restaurants and bars, and the area's online jobs portal for high-skilled workers has nearly 900 job listings yet to be filled. In late June, the Web security firm Barracuda Networks announced plans to create 184 jobs in Ann Arbor for software engineers and other technical workers during the next three years.

With the lowest jobless rate in the state, 6.2% in June, the college town has rebounded from the loss of 2,100 Pfizer jobs and the demise of Borders' corporate headquarters. With a vibrant downtown, a Big Ten university and cultural activities such as this month's art fair, Ann Arbor is leading Michigan's economic recovery.

Ann Arbor is the new job growth center of the greater Detroit region, said Richard Florida, an economist at the University of Toronto's Rotman School of Management and author of the best-seller "The Rise of the Creative Class."

He said Ann Arbor resembles Austin, Texas, in the 1990s and Boulder, Colo., in the early 2000s. It tied for fourth place on his list of the top 20 creative metro areas in the country, behind only Boulder, San Francisco and Boston.

Stores and restaurants are full, and it all looks and feels affluent, said Donald Grimes, the co-author of a Washtenaw County economic outlook report and a senior research specialist at the University of Michigan's Institute for Research on Labor, Employment and the Economy.

It took Tyler Mettie just two weeks to land a part-time job after he stepped up his search efforts. On July 16, the 20-year-old Washtenaw Community College student started washing dishes at Tios, a Mexican café on East Liberty Street.

Ann Arbor's jobless rate plunged to a recent low of 5% in April. Along with the rest of the state, this rate has since increased because many people who previously had stayed out of the job market now are looking for work.

Economists say that Ann Arbor's rate of full employment is likely in the 4% range. For the country as a whole, full employment -- also known as the natural unemployment rate -- was 6% in late 2011, according to the Congressional Budget Office. In June, the U.S. jobless rate stood at 8.2%.

Full employment is the jobless rate that if you dip below it would spark inflation, said Heidi Shierholz, an economist at the Economic Policy Institute. It can never be 0% because there are always people changing jobs.

The labor market, however, can vary widely from one metropolitan area to the next. Just 33 miles to the east of Ann Arbor, the Detroit metro area has a jobless rate of 10.2%, the highest in the state.

What accounts for the difference? "The work force in Ann Arbor is far better educated than the work force in Detroit and the suburbs," Grimes said.

Donna Doleman, vice president of marketing, communications and talent at Ann Arbor SPARK, the area's economic development organization, said the Ann Arbor job market is thriving because it is diversified, with industries such as health care, software, life sciences and automotive research and development.

So far this year, employers have posted 1,737 jobs on SPARK's online jobs portal ( www.annarborusa.org/talent/jobs ), and 850 of these positions have been filled.

All of this is a turnaround from five years ago, when the pharmaceutical giant Pfizer announced plans to shutter its massive Ann Arbor research campus, a loss that Ann Arbor Mayor John Hieftje describes as similar to the closing of an auto plant.

A third of the 2,100 laid-off Pfizer workers wound up staying in Ann Arbor, and in recent years the University of Michigan has stepped up its efforts to transfer its technology to local businesses. The area is now home to dozens of start-up firms.

The tighter labor market means employers such as Terumo Cardiovascular Systems and ProQuest have had to become more proactive to find the talent they need.

Terumo, which makes heart-lung machines and other medical devices, has 35 positions to fill and has hired almost 200 workers during the last 18 months. To find experienced medical device workers, the company has participated in Michigan Economic Development Corp. recruiting events in Boston and northern California.

Like other companies, Terumo gets a flood of résumés when it posts any entry-level positions that require only a high school education. But for technical positions, DeLuca said they are happy to get 3 to 10 applications.

ProQuest, a research products firm, held its first-ever job fair at its Ann Arbor headquarters in mid-June to fill 20 information technology positions, including Java software developers and Oracle developers. The job fair drew 50 people, with the company choosing to do further interviews with 16 of them. So far, ProQuest has hired three people from this group, but it still has about 40 positions to fill in Ann Arbor..

High-skilled workers aren't the only ones in demand. Tios is struggling to find delivery drivers, who earn $6 an hour plus delivery charges and tips.

To be sure, Ann Arbor's jobless rate is still high enough that many people are searching for work for months, not weeks. Keely Ann Kaleski, 53, has been sending out résumés and going to job fairs and networking events since late May. The former software implementation and training manager now is targeting smaller companies and increasing her networking efforts.

The last time Kaleski had looked for work was in 2005, and back then it only took her a month to find a new job. "Everything is just taking a lot longer," the Ann Arbor resident said.

But Kaleski may not have to wait much longer to get hired. Economists expect the jobless rate in the Ann Arbor area will continue to decline. After all, before the recession, the area's annual unemployment rate hovered in the 4% range.

Grimes predicts that Ann Arbor will get to full employment, because universities tend to be very stable employers.

More Details: Ann Arbor's largest employers as of January 2012 for the metro area.

1. University of Michigan

2. University of Michigan Medical Center

3. Trinity Health

4. Ann Arbor Public Schools

5. ACH Saline (auto supplier)

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Big Business Deals Don't Mean Much

Story first appeared in AnnArbor.com.

Tax incentives, like the one Ann Arbor gave to Pfizer in 2001, often don’t result in the economic benefits local governments think they will, reports Michigan Capitol Confidential, a publication of the Mackinac Center for Public Policy, a free market think tank.

The article notes Pfizer got the $84 million tax abatement after suggesting it might leave town if it didn’t. Six years later, Pfizer announced it was leaving anyway.

As the Ann Arbor area struggled with the job losses at Pfizer as well as others wrought by the faltering economy, jobless rates rose from 5.5 percent in 2007 to 10.3 percent in 2009, the article notes. But the jobless rate now stands at 5.9 percent.

Community leaders say a coordinated response helped soften the blow of Pfizer’s leaving. The economic development organization Ann Arbor SPARK and its then-CEO played an integral role in organizing that response, local leaders said.

Eventually, the University of Michigan bought the site and has said it plans to have 1,700 workers employed there by the end of the year.

For more local and Michigan related news, visit the Michigan Business News Blog.

Opinion: Concrete Deal for DDA Parking Structure a Bad Taxpayer Deal

Ann Arbor / Tony Dearing

It looks bad and raises serious questions when a company managing construction of a major public project rejects a lower bid from a competitor and awards the work to its subsidiary.

So far, the answers provided have been unsatisfactory, including those from the Ann Arbor Downtown Development Authority.

The DDA is responsible for the underground parking structure being built on South Fifth Avenue, a project that has been dogged by questions about whether the structure is needed and what will be built on top of it.

The last thing the DDA and the city of Ann Arbor needed was the appearance of impropriety raised by having the construction manager give its own subsidiary Michigan concrete contracting company $22 million when a pre-qualified bidder said it was prepared to do the job for a half a million dollars less.

Granger Construction Co. of Lansing is crying foul after its bid of $21.5 million was rejected by Christman Co., the construction management firm hired by the DDA last fall. Christman also passed over the second-lowest bidder, Colasanti Construction, to give the work to its own subsidiary, and Colasanti is equally miffed.

In this tough economy, the competition among Michigan concrete contractors for a big-ticket project like this can be intense, and those who don’t get the work are likely to be disgruntled. But in this case, Granger has every right to be howling with outrage.

The bid in question was for complex concrete work to be done on an aggressive timeline, so there might be only a handful of firms in Michigan capable of doing the job. In general, experts say that prequalification means that all the firms are judged capable of doing the work. At that point, the price becomes primary, and the normal expectation - particularly when public funds are involved - is to go with the low bidder. It is rare that the low bid is rejected, and when two lower bids are rejected and the concrete construction manager awards the work to its subsidiary, that is virtually unheard of.

Christman has described Granger as inexperienced and said Granger “did not display an understanding of the project’’ that allowed Christman to have confidence in Granger’s ability to deliver the work. Granger finds that preposterous. Granger is a well-established firm with a good reputation that has done major concrete projects for the University of Michigan, Michigan State University and other public entities across Michigan. It may not have put its best foot forward in the bidding process, but its reputation and experience make it exceptionally hard to justify it being ruled out for this job.

Harder to accept, though, is the DDA’s rationalization for allowing this outcome. Susan Pollay, DDA executive director, has said she has no concerns about Christman giving the contract to a subsidiary and that the process was in the public’s interest. We could not disagree more.

When the DDA chose Christman as the construction manager, it got a guaranteed maximum price of $44.38 million from the company, and in turn, agreed to let Christman chose its subcontractors regardless of price. If the result is that the company can potentially add an additional $500,000 in cost to the project by giving itself the work, that is a bad deal for taxpayers.

The DDA did insist that Christman expand the list of qualified bidders, and did ask that the bids be opened in public, which wouldn’t have occurred otherwise. Those actions aside, the whole arrangement was set up in a way that gave the construction manager too much latitude and the DDA too little stewardship over the public dollars being spent.

We have spoken to many experts who find it hard to believe that a public entity would allow such an outcome, but this now appears to be a done deal. Because of the DDA’s autonomy on this project, we are not aware of any other entity that has the ability to step in after the fact and give this questionable bid award the level of review or scrutiny that the DDA failed to provide.

The guaranteed price committed to by Christman is a maximum, not a minimum, and whatever the final cost of the project is, we now know that it could cost $500,000 more than it might have if the pre-qualified low bidder had been chosen. The public deserved better.

Warren And Ann Arbor: A Tale Of Two Economies

Separated by 50 Miles but Worlds Apart, Michigan Cities Embody the State's Ailing Industrial Core and a Potential Road to Rebirth
Story from the Wall Street Journal

Michigan's economy is the worst in the country, dragged down by its dependency on an ailing auto industry. But in a lab at Accio Energy in Ann Arbor, engineers Dawn White and David Carmein are driving in a different direction.

They have built what they call an "aerovoltaic" device, a two-inch loop of piping that generates electricity -- without moving blades or turbines -- when air flows through it. The engineers' next step: linking a series of these loops into screens that they see eventually generating wind electricity where windmills are too big, dangerous or noisy to go.

Innovative companies like Accio are common in Ann Arbor, home to the University of Michigan, where a highly educated population has created a burgeoning economy, and a street-corner conversation can develop into a company and create jobs.

Michigan's economic future rests on making the state look more like Ann Arbor, and less like Warren, 50 miles to the northeast, where factory buildings and warehouses built on the riches of the Big Three auto makers bear signs saying they are "priced to sell." The latest blow came earlier this month, when Chrysler LLC shut down its two plants in Warren as part of its bankruptcy filing.

It won't be easy. Much of the Michigan economy has been shackled to Chrysler, Ford Motor Co. and General Motors Corp. Yet even after years of watching the auto industry decline, the state has struggled to free itself from dependence on the Big Three.

"The old economy made Michigan rich and it made its work force get wages and benefits that were beyond anybody's dream," says Donald Grimes, a University of Michigan economist who paid his way through college in the 1970s by working summers at Ford and GM plants. "There is absolutely nothing that is going to replace those jobs."

The divide between Ann Arbor, with a population of 116,000, and Warren, population 126,000, is large and widening. Ann Arbor's unemployment rate of 8.5% in March trailed the nationwide rate of 9% and was well below Michigan's overall rate of 13.4%, based on nonseasonally adjusted figures. By contrast, Warren's unemployment rate of 17.3% is among the highest in the state. The average family income in Ann Arbor was $106,599 in 2007, compared with $69,193 nationally and $60,813 in Warren.

That economic gulf wasn't always there. In 1979, the average family in Warren made $28,538 annually, not much below Ann Arbor's average of $29,840. But in the past 30 years, the U.S. economy has undergone a sweeping transformation that has benefited cities like Ann Arbor and hurt manufacturing hubs like Warren.

As transportation and communication costs fell, and countries like Japan and, now, China, increased their manufacturing capability, Michigan's advantages have faded. Those same forces of globalization benefited educated workers -- an area where Michigan largely fell short.

Except in Ann Arbor.

Over the years, the city developed the types of schools, cultural institutions and amenities that made it an attractive place to live and work. Google, whose co-founder Larry Page attended the University of Michigan, opened an Ann Arbor campus in 2006. About 70,000 people commute to this city, about 40 miles west of Detroit, each day.

Accio Energy got its start in 2007, based on plans two of the founders hatched at Zingerman's Deli, Ann Arbor's renowned gourmet-food destination.

Accio got some of the seed money for the three-person start-up from Mary Campbell, an area venture capitalist who met Ms. White in a running group. Jeffrey Basch, a former General Electric automotive development worker, is Accio's general manager. Ms. White met him while helping shuck corn at an organic produce company that Mr. Basch's wife, another former Ford engineer, started and Ms. White helped fund.

In Warren, which has the largest concentration of auto workers in the country, job transitions are more difficult to make. Just one in five of Warren's workers between the ages of 25 and 64 holds a bachelor's degree or higher, a relic of the days when a college degree wasn't necessary to find a job that paid well. By comparison, three-quarters of Ann Arbor's work force has at least a college degree.

"I got out of high school and went right into it," says Arthur Kupiec of the Chrysler job he started in 1972, when he was 18. "Back then, jobs were all around and the economy was booming."

Mr. Kupiec worked at Chrysler's truck plant in Warren until last year, when he took an early retirement package. "Believe me, I didn't want to leave, but I said, 'You know what, I have to get something while I have something,' " he says. "I'm only 55 years old, and I'm just at home putzing around."

Ann Arbor's burgeoning start-up culture hasn't fully shielded it from the economic downturn. The city's shops and restaurants are a weekend destination for many in Michigan, but with the state in trouble, they have seen business drop.

And despite Ann Arbor's educated work force, employers here find Michigan's reputation as a failing manufacturing economy can deter potential hires from moving to the state.

At HandyLab, an Ann Arbor firm that makes a DNA-analysis device, Chief Executive Jeffrey Williams says he has had a hard time finding Ph.D.-level workers with highly specialized skills. His company, which has doubled to roughly 60 employees in the past year, has 10 job openings.

"It's definitely gotten much harder with all the stigma around Detroit," he says. "Somebody tries to pigeonhole us as Detroit, we say, 'No, it's Ann Arbor, it's a completely different environment.' "

In another blow to Ann Arbor, Pfizer Inc. in 2007 announced that it was closing its research facilities in the city, where 2,100 people worked. But unlike idled auto workers, who often find there is no market for the manufacturing skills they have honed over the years, Pfizer's researchers generally found work elsewhere.

While some of America's once-dominant industrial centers, including Pittsburgh and, a generation earlier, New York City, have been able to make the transition away from a manufacturing-dependent economy, others, such as Cleveland and Buffalo, have floundered. Warren, for its part, does have well-trained engineers and designers -- GM's technical center is there -- and Wayne State University is building an advanced technology education center in Warren. Web design, internet marketing, and Michigan SEO companies thrive in a strong tech sector.

Meanwhile, with the automotive industry's latest troubles, more people in Michigan are breaking with the past and coming to see a college education as an economic necessity.

Treashure Banks, 20, is studying business at Macomb Community College and working at the school part time. She still isn't sure what sort of company she wants to work for, but there is one thing the Detroit native has always been clear on when contemplating her future career.

"It was never automotive, never," she says. "We need to have some new ideas. We need something new."