Real Estate Insider: After mulling move to suburbs, Walbridge renews lease downtown3 min read
The central business district has avoided a blow.
Perhaps the worst-kept secret in Detroit commercial real estate was that construction giant Walbridge Group was seriously considering a move out of the city after more than a century headquartered here.
But after surveying no fewer than a dozen buildings in Detroit and Southfield, the Rakolta family’s company has agreed to stay in its One Kennedy Square HQ on Campus Martius Park in the heart of downtown.
Financial terms of the lease renewal deal were not disclosed, although John Rakolta III, president of Walbridge Group, said it is for all of the 51,000 square feet it presently leases with a term ending in April 2022 and that about 200 people work in its office. Those employees include those from Devon Industrial Group, which is a minority-owned construction firm in which Walbridge Group a minority ownership stake, and DFM Solutions, of which Lauren Rakolta is the majority owner. About 150 of the 200 are Walbridge staff.
“Ultimately, we’ve been headquartered in Detroit for 105 years,” Rakolta III said. “Walbridge has seen the ups and downs, the good times and bad times, and the resurgence the last decade and when it came to really considering whether we were going to move or not, we’ve always have been pretty consistent in our core values as it relates to loyalty. We are loyal to Detroit. We want to see Detroit flourish, and we want to continue to be part of that.”
Walbridge was represented by Southfield-based Advocate Commercial Real Estate Advisors. Southfield-based developer and landlord Redico LLC, which owns the 250,000-square-foot One Kennedy Square building at 777 Woodward Ave., represented itself in the deal.
Rakolta said his family’s company looked at Detroit buildings other than One Kennedy Square, which was built in 2006 and also houses OneMagnify, the company formerly known as Marketing Associates; a local Ernst & Young office; and other office and retail/restaurant tenants.
One economic factor in the decision matrix, Rakolta III said: Paying for parking for its employees downtown, which can be a six-figure expense or more every year for some companies, vs. free parking in the suburbs, and weighing that against how much it would cost to move to Southfield (or another suburb) and build out space there.
“There is definitely that tradeoff in today’s market,” Rakolta III said. “When you are looking at a buildout and what you’re getting charged for and what you’re not getting charged for, in broad terms, they are both competitive. The bottom line being, How far do you want to drive down the price for your footprint and your team members?”
Although there are some parking subsidies from the Detroit Economic Growth Corp. and the state offers others that could have been pursued, Rakolta III said the company opted against that.
“Ultimately, I owe it and the organization owes it to all our team members to explore the options,” he said. “We hadn’t gone out to the market since 2005 or 2006, and we don’t know what we don’t know. We ultimately owed it to those individuals to go explore and see what else is out there. … We underwrote moving and buildout. We were very conscious to do our process and talk to the stakeholders, have our team members do surveys and express their thoughts, and it’s very clear that staying in Detroit was what we ultimately wanted to do.”
Dale Watchowski, president, COO and CEO of Redico, said Walbridge has been in One Kennedy Square since it opened. He said Redico was “glad to get the lease extension and the term for the full suite,” and that they were “so happy to retain” Walbridge in Detroit.