DETROIT-Though he’s left the district, former Detroit Schools Emergency Manager Robert Bobb has left another legacy, as the district has started its move out of controversial leases at downtown buildings owned by the Farbman Group. In late 2009, Bobb began publicly questioning leases and office condo purchases in four buildings owned by Farbman, though attorneys quickly shut down the public inquiry.
Early this past decade, Farbman bought up a few buildings in the downtown New Center area, including the Fisher, Albert Kahn, Lothrop Landing and New Center One buildings. The school district soon after leased floors in the buildings, and purchased several floors in the Fisher for almost $25 million, later adding another $17 million in renovations to the space.
Now, the district said in a statement that it has begun a 60-day process of vacating all the Farbman leased space. The move will consolidate what is now on 12 floors in four buildings into seven floors in the Fisher, and into other currently owned district space. “All functions will move to space that DPS owns,” the district said.
The district is moving out of 98,400 square feet of leased office, reducing annual rent obligations by $1.8 million, according to the statement. The district will incur one-time relocation costs of about $1.3 million. A Farman spokesman declined to comment.
Current Emergency Manager Roy Roberts said in the statement that the reduction can be completed because of reduced staff efforts in the past few years. “Just as importantly, this allows for better communication and workflow among departments, many of whom either never saw each other or spent time moving across several buildings,” he said.
The move opens up nearly 100,000 square feet of leased office in a downtown that doesn’t need any assistance in raising its vacancy rate. The current CBD vacancy is around 33.6%, according to a Grubb & Ellis third quarter report. Almost the entire year’s positive absorption has been from Blue Cross Blue Shield moving 400,000 square feet from the suburban submarket of Southfield and into downtown.
The trend of large companies moving downtown is still going strong, and local powerhouse Dan Gilbert is still buying up office buildings. However, according to a Marcus & Millichap third quarter report, a glut of dark office space downtown still needs to be absorbed, which will take several years to move the market close to the national average.
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