435,000-SF Blue Cross Lease to Increase Detroit’s GM Renaissance Center to 90 Percent Occupancy
- Jul 29, 2010
July 29, 2010
By Barbra Murray, Contributing Editor
In Michigan, Southfield’s loss will be Detroit’s gain now that Blue Cross Blue Shield of Michigan has committed to relocating to the 5.5 million-square-foot mixed-use GM Renaissance Center. The nonprofit healthcare insurance carrier will occupy approximately 435,200 square feet of the complex’s 2.3 million square feet of office space, bringing the office segment’s occupancy level up to 90 percent.
Blue Cross will lease the space from General Motors, owner of the Renaissance Center since the company acquired it to serve as the company’s global headquarters in 1996. The complex, which recently underwent a sweeping $500 million renovation, encompasses a 1,300-room Marriott Hotel encircled by four 39-story office towers. A five-story podium beneath the five buildings houses 165,000 square feet of retail space. As a result of the recent upgrade, the property also features a five-story glass winter garden, a 1,100-seat food court and a suspended glass walkway connecting the four office facilities. It will share the tenant roster with a bevy of businesses including Deloitte, national law firm Dykema Gossett PLLC, Hewlett Packard, insurance broker and strategic risk advisor Marsh Inc. and Urban Science Applications Inc., which maintains its global headquarters at Renaissance Center.
In 2011, Blue Cross will commence a phased relocation of approximately 3,000 employees from its current digs about 15 miles away in a four-building complex in Southfield at 11 Mile Road, which the organization plans to sell. The move to Renaissance Center will allow Blue Cross to form a multi-structure Detroit campus, as it already occupies office space at 500 and 600 Lafayette Boulevard and 441 East Jefferson Avenue.
The Renaissance Center lease agreement has its pluses–and minuses. Blue Cross anticipates that it will, over the long-term, save about $30 million in real estate costs. However, as the company’s office needs decreased last year with the acceptance of voluntary separation packages by numerous employees, it will be occupying 400,000 square feet less than it occupies currently, thereby potentially leaving a sizeable and much dreaded office vacancy in Greater Detroit. While the area’s office vacancy rate is leveling off, according to a second quarter report by real estate services firm Grubb & Ellis Co., it is still at a staggeringly high 25.2 percent.