Editor’s note: This article initially appeared at CrainsDetroit.com.
BY KURT NAGL
United Way for Southeastern Michigan is leaving the Bedrock-owned First National Building in downtown Detroit for The Platform’s Fisher Building in New Center.
Darienne Driver, the nonprofit’s president and CEO, said the corporate office move is being driven by “fiscal responsibility” and its mission of filling social service gaps.
“The Fisher Building really aligns with our mission in the way they are rebuilding New Center and bringing in the community,” she said Wednesday.
United Way plans to be operational out of New Center when its lease begins in March for 36,500 square feet on the fifth floor of the Fisher Building. Its space in the First National Building, which it has occupied for more than 10 years, totaled 42,000 square feet.
The new space will house the nonprofit’s 2-1-1 call center, which provides referrals for food, shelter and medical help. Employees will likely begin moving in February.
It has 185 employees at its downtown site. Driver said there are no plans to reduce staff as part of the move. Its lease in the Fisher Building is for 11 years.
Driver said United Way’s 10-year lease with Bedrock ended in November and was extended to March 2019. She said it was United Way’s choice to uproot.
United Way thought it was “important to find an area that was not only affordable but that helps us meet our mission,” she said.
How much more affordable it will be in New Center was not immediately known. A spokeswoman for United Way would not say what it paid at First National or is paying at the Fisher.
AJ Weiner, managing director in the Royal Oak office of JLL who handles leasing for the Fisher Building, said office rates are $22 per square foot per year, plus electricity. At that rate, the nonprofit will pay $803,000 per year in rent.
Bedrock has been quoting potential tenants rents of $26-$28 per square foot per year, meaning that for 42,000 square feet, United Way could have been paying $1.09 million to $1.18 million per year if it renewed its lease at those rates. United Way’s lease was signed before Gilbert bought the building in 2011 for $8.1 million, made improvements and increased rents, so the nonprofit’s lease would have been at a lower rate, perhaps in the high teens per square foot per year.
United Way has operated at a loss for the past two years. On its audited financials, it reported a $2.5 million loss for fiscal 2017 ended June 30 after a loss of $2.23 million in 2016. Its net assets/fund balances decreased to $55.9 million at the end of last year from $58.4 million the year before.
Farmington Hills-based Axis Advisors Inc. represented United Way in the deal.
United Way for Southeastern Michigan first established camp in Detroit at 1212 Griswold St. in Capitol Park after it was established in 2005.
“Its second and current home for more than 10 years at 660 Woodward in Campus Martius was acquired in 2008, during a time when both the streets and buildings in downtown were vastly less populated,” a United Way news release said.
— Crain’s reporters Kirk Pinho and Sherri Welch contributed to this report.