Michigan to cut offices in Lansing, whose downtown area is struggling amid a pandemic

Downtown Michigan is experiencing a slowdown during the pandemic after companies moved office workers from home to work, where most are left. And with the state health department’s recent Emergency Health Ordinance expanding the requirement for businesses to limit the number of office workers, that slowdown – affecting communal park revenues, central business district shops, and nearby restaurants – is spreading affects – now for another six months.

In Lansing, however, the situation is more acute as the downtown area relies on a single major employer: this is Michigan state’s office hub, which occupies 3.3 million square feet and was home to 13,000 workers prior to the pandemic. And until the pandemic, she rented another 1 million square feet from private landlords that housed even more office workers.

While struggling companies that have lost up to 90 percent of their sales wait for thousands of government employees to return to the office, far fewer government employees will be there every day once the pandemic subsides.

Officials this spring are assessing the state’s total office space needs, already canceling leases, relocating some offices and reducing office supplies.

The result, said Brom Stibitz, director of the Michigan Department of Technology, Management and Budget, will be “a drastic reduction in the state’s footprint.”

“We know our needs for facilities will change,” he said.

The state has two goals when it comes to its Lansing office space, Stibitz told Bridge Michigan: realigning the space to accommodate the likelihood that thousands of state clerks could keep part-time work from home and reducing state costs for rented office space.

With an estimated 25 percent of the state-owned offices in Lansing, the outlook scares downtown boosters. Office space prior to the pandemic was at least 15 percent, and commercial real estate agents say it is already approaching 18 percent and is likely to continue to rise.

The state “is the biggest employer down there,” said Scott Ellis, executive director of the Michigan Licensed Beverage Association and owner of MichiGrain Distillery, located a few blocks northeast of the Capitol.

“The devastation of downtown if they don’t return to office work will cripple downtown Lansing.”

The decision of the state

A year ago, it would have been unlikely for any of the 3,000 employees in the state’s Department of Transportation, Management and Household to want to work from home three days a week.

However, Stiblitz said companies have changed the way they view employees who work from home, as has the state.

After more than a year with very few workers returning to Michigan’s offices, department heads expect working from home to become a common practice for some government employees, Stibitz said. Now it’s up to his division as the procurement team for Michigan-operated facilities to figure out what this means for the offices themselves.

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