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Sunday, 25 October 2015 22:00

GR lags peer cities in attracting downtown corporate HQs

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Jay Byers, president and CEO of Greater Des Moines Partnership Jay Byers, president and CEO of Greater Des Moines Partnership COURTESY PHOTO

GRAND RAPIDS — Visitors to Grand Rapids’ growing central business district will find no shortage of old and new office buildings filled with law and accounting firms, design-centered businesses and tech companies.

However, they would struggle to find a true corporate headquarters in the city core.

Most development sources say that’s because West Michigan’s major corporations long ago invested in campuses in suburban locales. Given those multi-million dollar investments in their existing locations, the local corporations are unlikely to uproot their operations for offices in the central business district.

The lack of corporate headquarters in the urban core of Grand Rapids, especially when compared to other peer cities, isn’t lost on long-time downtown advocate David Frey, one of three general chairs of Grand Action, a downtown planning group.

“It’s one of the few things we are missing,” said Frey, who also serves as chairman of the Grand Rapids-based Frey Foundation.“The city clearly needs more density and verticality, but it also needs more corporate flags flying in the city.”

Frey and others are quick to note that the Grand Rapids urban core, like many downtowns its size, features a multitude of service companies such as law and accounting firms, in addition to a growing base of technology companies, retail outlets and hospitality-related businesses.

Additionally, corporate stalwarts like Walker-based Meijer Inc., Ada-based Amway Corp., Rockford-based Wolverine World Wide Inc. and Steelcase Inc., which has its headquarters on the far south end of Grand Rapids on the border with Kentwood, all maintain a limited presence at GRid70, a coworking space developed by Rockford Development for design and creative-type workers.

Frey said he thought it would be somewhat unlikely, although not impossible, for one of the region’s major corporations to move some key executive functions to the downtown. Instead, he said it’s more feasible for a growing company or one coming from outside the region to make an investment in a downtown corporate headquarters.

“Change isn’t always easy,” Frey said. “I would say it takes a determined, far-sighted CEO with a supportive board to say there are some distinct advantages to being (downtown).”

NATIONAL SHIFTS

While downtown Grand Rapids may not be home to a major corporate headquarters, companies of all sizes and industries are choosing to invest in downtowns in cities across the U.S. The shift was spelled out in a June study by urban policy research group Smart Growth America, which looked at 500 companies from around the country that opted to base their headquarters in a downtown rather than in the suburbs.

[RELATED: Looking to the outside — The Des Moines example]

The reasons companies cited in the study for investing in a downtown headquarters included attracting and retaining talented workers, centralizing operations and being in closer proximity to customers and business partners.

“When deciding where to relocate, the companies included in this survey looked for things like walkable live/work/play neighborhoods, convenient access by a range of transportation options, the right office space, a welcome mat from the city, and a clean, safe neighborhood,” according to the report. “Towns and cities can proactively create the kinds of neighborhoods these companies want.”

Corporate attraction is not specifically part of Grand Action’s agenda but the organization has discussed it in the past, Frey said.

Additionally, downtown corporate attraction could also act as a catalyst in spurring the development of new grocery and convenience store options because they help the city reach a critical mass of workers and residents in the core city, according to leading economic developers and planning groups in Grand Rapids.

“It’s somewhat top of mind as a result of the GR Forward study,” said Kara Wood, the economic development director for the city of Grand Rapids. GR Forward is an ongoing, long-term planning study headed by Downtown Grand Rapids Inc. “Out of that study, it has been identified to seek new tenants for downtown. I don’t know of any reasons we couldn’t be home to corporate tenants.”

Wood added that the immediate downtown area still has plenty of office space and available developable land — mostly in the form of surface parking lots — that could be turned into headquarters.

A HUB FOR TALENT

While companies in the suburbs often cite cheap, ample parking and ease of access as reasons they stay outside of the downtown area, some organizations have become increasingly willing to deal with the challenges inherent to the central city.

As the Smart Growth America study points out, many companies now view being located in a downtown as a key component to their talent attraction and retention efforts.

That played out recently in Grand Rapids with Spectrum Health. MiBiz broke news last month that the health care system planned to consolidate 500 I.T. employees in approximately 80,000 square feet at 25 Ottawa Avenue SW, a building Franklin Partners LLC is renovating in the Arena South area of downtown. Spectrum Health employees are expected to begin moving in next month.

Approximately 75 of those employees currently are spread between two offices in the immediate downtown area, with the rest located in suburban offices.

For over a year, Spectrum Health executives had heard from the heads of their I.T. and development groups that the health system competed for workers with several of the area’s larger technology companies, said Chief Information Officer Patrick O’Hare, who serves as senior vice president of facilities.

“Their talent is in the downtown market and we are trying to attract similar talent,” O’Hare said. “I challenged some of my leaders because of issues with the downtown market in terms of parking and access.”

Over the course of several months, however, Spectrum Health leadership heard from the department heads that those challenges could be overcome and that a large move would assist in their talent attraction and retention efforts.

“The response was overwhelming,” O’Hare said of the executives’ reactions. “They encouraged us to look at alternative options — not what we thought of as traditional.”

To overcome the parking challenge, Spectrum Health will not offer any free parking spaces to its employees, but it seeks to take advantage of a parking cash-out program that gives money to employees who come up with their own solutions to get to work. Spectrum also plans to allow individual employees who choose not to use the cash-out program to opt into city-owned parking at a discounted, business rate.

“From the very beginning, it was like, ‘Let’s give a stipend.’ And if there are employees that want to ride their bike, they’re going to do parking six months a year and the other half they are going to ride their bike. Or they may live in the downtown area, take public transportation or they’re going to carpool,” O’Hare said.

The perceived challenges of moving large groups of employees into the downtown area from the suburbs have been cited for years, Grand Action’s Frey said.

Similar parking and employee security concerns came up about five years ago when health insurance provider Blue Cross Blue Shield of Michigan was in the planning stages to move 300 employees to the former Steketee’s Building on Monroe Center, Frey said. But executives at the insurer worked closely with the city and its various departments, as Spectrum Health did, and the move went through, he added.

“Neither (of the concerns) was an issue,” Frey told MiBiz.

Read 3187 times Last modified on Monday, 26 October 2015 16:33

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