Ann Arbor real estate firm McKinley Inc. is preparing to list 85,000 square feet of office space for lease at its McKinley Towne Centre building downtown — the same space where Internet giant Google has its local offices.

McKinley CEO Albert Berriz said a large portion of the building will be available in May 2016 for companies to move in, and he plans to lease the office space to five different tenants.

“We’re going to essentially invite five companies to come in,” Berriz said. “At the same time, I also want these companies to be part of the fabric of the community. We want them to be tied into the community; we want them to give back to the community.”

The building is located on the northeast corner of South Division and East Liberty streets. McKinley purchased it in 2005 and then completed an extensive redevelopment, creating about 50,000 square feet of first-floor retail and about 150,000 square feet of office space.

It’s unclear what McKinley’s move to list the office space for lease means for Google – which opened its 85,000-square-foot AdWords sales office in the building in January 2008 – and Berriz declined to comment further on McKinley’s agreement with Google, citing confidentiality agreements.

A Google spokeswoman told The Ann Arbor News Wednesday that the California-based company is "definitely committed" to the Ann Arbor community, although she could not provide specific details on Google’s plan for its local operation.

Google's Ann Arbor office at the McKinley Towne Centre building has an outdoor deck.

In a statement to the The Ann Arbor News, Michigan Economic Development Corp. CEO Michael Finney said: "Based on our recent conversations with the company, Google is committed to Michigan and Ann Arbor."

Berriz said Google’s lease in the McKinley Towne Centre expires on April 30, 2016. McKinley has the right to start showing the space to prospective tenants on May 1, 2015.

Berriz said McKinley Towne Centre’s two other office tenants – Bodman law firm and Ann Arbor SPARK – will remain in the building, as will the first-floor retail tenants.

Google opened its Ann Arbor office with eight employees in September 2006, in a small second-floor office space above Vinology on South Main Street.

The company moved to the McKinley Towne Centre in 2008, promising to add 1,000 jobs over the first five years of its tenure in Ann Arbor. The company’s personnel growth slowed during the economic recession, and by 2012, the company had about 300 people working at the Ann Arbor office.

A Google spokeswoman said the Ann Arbor operation now has more than 400 employees.

In 2006, Google received approval from the Michigan Economic Development Corporation’s Michigan Economic Growth Authority (MEGA) board for a tax credit of up to $38.25 million over 20 years.

The tax credits are only provided to tax recipients if they can prove they hired employees at the rate originally promised. Google needed to reach its hiring goal of creating 1,000 jobs by 2011 to take full advantage of the tax breaks.

An Oct. 2014 report from the Michigan Economic Development Corporation shows Google was most recently approved for MEGA tax relief in 2007, when the company stated on an application it had 134 employees, and again in 2008, when the company had 224 employees.

The MEGA tax credit program was discontinued in 2011.

Berriz said he’s looking forward to reigniting McKinley Towne Centre in the building’s next phase.

He said he has several companies interested in taking over the entire 85,000-square-foot space at McKinley Towne Centre, but he wants to lease to five different tenants.

“I want to have five floor tenants,” he said. “Each one of these floors is really unique. We have an outdoor roof garden in one. …We have five very unique, very tailored opportunities for five significant companies to come in.”

He added: “I really want to bring in a diversified list of companies because quite frankly, it’s better for the community, it’s better for us.”

McKinley is also prepared to construct a 40,000-square-foot addition on the building, in an area currently occupied by a parking lot near the Colliers International office. Berriz said an addition would not disturb the building’s retail tenants or add more height to the structure.

Berriz declined to discuss rental rates at the McKinley Towne Centre.



Berriz views the impending changes at McKinley Towne Centre as a chance to expand downtown's growing tech community in the blocks stretching from the University of Michigan's diag down East Liberty Street to South Division. Together, companies such as Menlo Innovations, Barracuda Networks and PRIME Research employ hundreds in that area.

“We’ve got to build a stronger downtown. We’ve got to build a stronger business community that’s committed to the downtown,” Berriz said.

Berriz said there is a need for additional office space in the downtown area. He said companies are looking for space in the 20,000- to 25,000-square-foot range, but vacancies are limited.

According to Swisher Commercial's 2014 Office Vacancy Report, downtown Ann Arbor office vacancy fell from 9.78 percent in 2012 to 6.78 percent in 2013, spurred by growth in technology and software sectors. Vacancy rates downtown are among the lowest in the region.

McKinley’s Matthew Mason, senior vice president and managing director, plans to start marketing the McKinley Towne Centre office space for lease in the next several weeks.

Lizzy Alfs is a business reporter for The Ann Arbor News. Reach her at 734-255-2638, email her lizzyalfs@mlive.com or follow her on Twitter.