Ann Arbor Business Monthly April 2016 : Page 1

BUSINESS MONTHLY • ann arbor • chelsea • dexter • manchester • milan • saline • whitmore lake • ypsilanti ann arbor area Volume 12, No. 2 April 2016 $2.00 “Downtown Is The Vibrant Heart Of A Remarkable Community.” By Duane Ramsey Downtown Ann Arbor continues to experience growth with continued commercial and residential development according to the Downtown Development Authority’s State of the Downtown Report for 2015. Downtown is home to approximately 1,800 businesses with 28,000 employees, representing 26 percent of the city’s total number of jobs. Downtown is considered a hub for information technology with more than 223 tech businesses and 2,489 employees, according to the DDA’s report. “Downtown continues to evolve. Today it is the community’s center for innovation and the new economy, the focal point for the local food movement, an oasis of locally owned retail shops and the place that 5,500 people call home,” said Susan Pollay, executive director of the Downtown Development Authority. “Yet with all its changes, much of what we love about downtown still remains. Downtown is the vibrant heart of a remarkable community,” she added. The demand for available space for of fi ces, housing and retail space downtown continues, Pollay said. The vacancy rate for of fi ce space downtown dropped to 2.1 percent in 2015, the lowest rate since 1993, according to Swisher Commercial’s annual vacancy report. The rapid growth of high-tech fi rms that want to be located downtown is the predominant reason for the scarcity of available of fi ce space. Eleven downtown buildings that had vacancies at the end of 2014 are now 100 percent occupied, according to Swisher’s report for 2015. The departure of Google this summer would leave 86,484 square feet of space available at the McKinley Town Center. However, most of it will not be vacant for very long. Local supply chain software fi rm Llamasoft will occupy 60,000 square feet of Google’s vacated space on two fl oors at the McKinley Town Center later this summer. The fi rm has hired 100 new employees over the past year and now has 220 located here. Toby Brzoznowski, co-founder and executive vice president of Llamasoft, said the fi rm has averaged 50 percent growth annually. The new space will give the company the room it needs to continue that growth, he added. Google’s departure represents a loss of 400 jobs downtown. Although Google INSIDE: A Path To Real Regulatory Reform: Decrease Michigan Licensing Burden – Page 4 People Power: 3 Ways To Preserve Your Most Valuable Asset – Page 5 What You Need To Know About The New Laws For Claiming Retirement Bene fi ts – Page 6 Small Business & The Internet By Mike Gould “Travels With Siri” – Page 8 Business Briefs – Pages 9-11 Susan Pollay, executive director of Downtown Development Authority. will be vacating its downtown of fi ces, the company will remain in the city by building a new campus at 2300 Traverwood on property owned by First Martin Corporation by the end of 2016. The University of Michigan is still downtown’s primary economic engine as its largest employer with 15,499 employees in 2015. U-M’s South Campus comprises 22 percent of the DDA district’s area. Washtenaw County has 1,372 employees and the City of Ann Arbor, 478 located downtown. DTE Energy is the largest corporate employer downtown with about 500 employees. IT fi rms Barracuda Networks has 250 employees and Llamasoft, 220 working downtown. Downtown Ann Arbor (Continued Page 3) Place Your Advertising Where Businesses Are Reading–– In the Pages of ann arbor area BUSINESS MONTHLY May 2016 Deadline is April 22 June 2016 Deadline is May 23 ann arbor area BUSINESS MONTHLY P. O. Box 460 Hamburg, MI 48139-0460 PRSRT STD US POSTAGE PAID ST JOSEPH MI PERMIT #335

“Downtown Is The Vibrant Heart Of A Remarkable Community.”

Duane Ramsey

Downtown Ann Arbor continues to experience growth with continued commercial and residential development according to the Downtown Development Authority’s State of the Downtown Report for 2015.

Downtown is home to approximately 1,800 businesses with 28,000 employees, representing 26 percent of the city’s total number of jobs.

Downtown is considered a hub for information technology with more than 223 tech businesses and 2,489 employees, according to the DDA’s report.

“Downtown continues to evolve. Today it is the community’s center for innovation and the new economy, the focal point for the local food movement, an oasis of locally owned retail shops and the place that 5,500 people call home,” said Susan Pollay, executive director of the Downtown Development Authority.

“Yet with all its changes, much of what we love about downtown still remains. Downtown is the vibrant heart of a remarkable community,” she added.

The demand for available space for offices, housing and retail space downtown continues, Pollay said.

The vacancy rate for office space downtown dropped to 2.1 percent in 2015, the lowest rate since 1993, according to Swisher Commercial’s annual vacancy report. The rapid growth of hightech firms that want to be located downtown is the predominant reason for the scarcity of available office space.

Eleven downtown buildings that had vacancies at the end of 2014 are now 100 percent occupied, according to Swisher’s report for 2015.

The departure of Google this summer would leave 86,484 square feet of space available at the McKinley Town Center. However, most of it will not be vacant for very long.

Local supply chain software firm Llamasoft will occupy 60,000 square feet of Google’s vacated space on two floors at the McKinley Town Center later this summer. The firm has hired 100 new employees over the past year and now has 220 located here.

Toby Brzoznowski, cofounder and executive vice president of Llamasoft, said the firm has averaged 50 percent growth annually. The new space will give the company the room it needs to continue that growth, he added.

Google’s departure represents a loss of 400 jobs downtown. Although Google will be vacating its downtown offices, the company will remain in the city by building a new campus at 2300 Traverwood on property owned by First Martin Corporation by the end of 2016.

The University of Michigan is still downtown’s primary economic engine as its largest employer with 15,499 employees in 2015. U-M’s South Campus comprises 22 percent of the DDA district’s area.

Washtenaw County has 1,372 employees and the City of Ann Arbor, 478 located downtown. DTE Energy is the largest corporate employer downtown with about 500 employees. IT firms Barracuda Networks has 250 employees and Llamasoft, 220 working downtown.

Wellness and Prevention has 150 employees and Bank of Ann Arbor, 140, leading a handful of firms with more than 100 employees located downtown. Small businesses continue to employ the majority of people working downtown, according to the DDA.

Many of the new, small and tech businesses are aided by Ann Arbor SPARK, an organization located downtown whose goal is to attract, develop, strengthen and invest in industries to help the entire region thrive.

The DDA estimated $3.2 million in local spending by new employees working downtown in 2015.

It may be hard to believe with all the existing restaurants and food businesses downtown that it is experiencing a growing foodie population. Ann Arbor residents spend 60 percent more than the national average on dining out and entertainment, according to the DDA’s web site.

An expanding downtown workforce continues to attract mixed-use commercial and residential development and create the demand for additional food, retail and service businesses. The DDA reported a total of 321 restaurants and retail shops are located downtown in 2015.

Dining represents 15 percent and retail, 13 percent of the make-up of downtown’s commercial business. Service businesses represent 24 percent, professional offices 22 percent, other offices 13 percent, financial, insurance and real estate 10 percent with remaining 3 percent miscellaneous.

The array of restaurants is stronger than ever and demand for retail space is at an all-time high. Most of the new businesses locating downtown in 2015 were restaurants and food businesses, reported the DDA.

Not only supported by employees working downtown, those businesses benefited from the 5,500 people living downtown in 2015, growing from about 2,500 residents in 2005 and expected to be 7,730 by 2019.

Downtown housing is comprised of 26 percent single family homes, 44 percent 2-9- unit buildings, 11 percent 10-19- units, 11 percent 50 units or more and eight percent 20-49 units.

Pollay believes the DDA has served as a catalyst for downtown’s rebirth over the past two decades. Its mission has been “to undertake public improvements that have the greatest impact in strengthening the downtown area and attract new private investments.”

The DDA is continually undergoing a wide variety of projects and programs to address the current needs and work toward improving downtown, according to Pollay.

The DDA’s projects for 2016 include:

• Grants for alternative transportation programs – improved transit service, bike amenities and the go!pass program

• Improvement project at the 4th & William parking structure

• Streetscape design in the South University area and Kerrytown

• On-going sidewalk repairs and tree planting

• Benchmarking downtown activity and vitality

• Support for downtown events with grants for special event meter bags, holiday lights, flower planting and more

Based on those DDA projects, it appears evident that parking and transportation are still major issues for downtown Ann Arbor.

“We always have more demand than parking spaces. We have to figure out different strategies to enable everyone to come downtown and enjoy it. We try to accommodate everybody who wants to come downtown with parking and transportation options. That’s where the art of running a parking system comes in,” Pollay explained.

The DDA admits that downtown has a lot of demand for parking. However, it also has an approach to addressing that demand that has proven to be remarkably successful, said Pollay.

The Fourth and William structure is the largest and oldest public parking facility downtown. The elevators are 30 years old and needed to be replaced to meet the needs of downtown employees, residents, shoppers and other visitors, according to the DDA.

A $5 million phased construction plan is underway to add a new, glass-enclosed stair tower with two high-speed elevators in the southwest corner closest to Main Street. The parking structure will remain open to both hourly and monthly parkers throughout the project, said Pollay.

Phase 2 involving the installation of the first new elevator is under construction. Phase 3 involving the addition of the second new elevator will begin after the Art Fair in July and be completed in fall of 2016, according to Pollay.

The DDA manages the public parking system downtown that includes four parking structures and all street parking with the new ePark meters.

Not only does the revenue from the DDA parking system fully sustain the system, but it helps fund a growing list of mobility improvement programs which also help to moderate parking demand. It also provided $3.5 million income to the city this past year, Pollay reported.

This past summer and fall, necessary maintenance work was performed in all four of the parking structures. The work included replacing and repairing concrete, sealing cracks, reapplying deck coating, painting and stair work that cost a total of more than $800,000 this year.

The DDA’s board renewed its funding commitment to the getDowntown Program, the go!pass, and enhanced transit services on routes 3 and 13 in partnership with the City of Ann Arbor and AAATA. The DDA has supported the getDowntown and go!pass programs for 10 years using revenues generated from downtown parking, according to its 2015 report.

The getDowntown Program helps downtown employees get to and from work by providing access to commuting programs and services, including go!pass.

Go!pass is an unlimiteduse transit pass available to employees working within the DDA boundaries. The DDA funds 90 percent of the cost for the pass making it available for $10 per employee.

Since 2009, the annual go!pass ridership has increased from 521,768 to 678,103, reported the DDA.

It is continuing the tree planting that began last fall, by planting an additional 60 trees downtown this spring, bringing the total trees planted to 115.

Downtown Ann Arbor is comprised of 42 square miles or 67 blocks, of which 39 percent is developable, according to the DDA. It includes nine historic districts, a floodplain, and four commercial districts.

The four downtown area associations within the DDA District including Kerrytown, Main Street, South University and State Street report their commercial districts are strong. These independent membership organizations represent the businesses and other interests in their neighborhoods.

Read the full article at http://digitaleditions.walsworthprintgroup.com/article/%E2%80%9CDowntown+Is+The+Vibrant+Heart+Of+A+Remarkable+Community.%E2%80%9D/2451723/297088/article.html.

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