Today in Detroit, Dan Loepp, CEO of Blue Cross Blue Shield of Michigan, will throw a big party to celebrate completion of the massive relocation of 3,400 workers from Southfield to Detroit, bringing total Blue Cross employment to more than 6,400 in five downtown buildings.
It’s a move that marks a remarkable change of fortune for the Renaissance Center and its chief occupant, General Motors, both engulfed in a sea of question marks just two short years ago.
“GM had just made the decision not to move headquarters to Warren,” Loepp recalled Tuesday, as he led me on a walking tour of the Blues’ campus, “but they had an enormous real estate problem on their hands.” RenCen towers 500 and 600 were near empty after HP bought EDS and moved people to Pontiac.
Loepp and Ed Whitacre, then GM’s post-bankruptcy CEO following the exits of Rick Wagoner and Fritz Henderson in 2009, sealed the Blue Cross lease deal for the two RenCen towers in mid-2010 over lunch at the Detroit Athletic Club.
“Now we can look back and know that GM was going to survive,” Loepp said, “but we didn’t know that at the time.”
Now the six RenCen towers are 93% occupied, a good outcome for landlord GM. “And it’s worked out terrifically for us,” said Loepp, who negotiated a sweet long-term lease that includes one-year free People Mover passes for workers dashing between meetings in the RenCen or the Blues’ headquarters tower a few blocks north at 600 E. Lafayette.
Other beneficiaries are mom-and-pop shops like Good People Popcorn, a 3-year-old gourmet popcorn shop, located along a Bricktown corridor that bustles with Blue Cross pedestrian traffic; and nearby restaurants Tom’s Oyster Bar, Opus One and others.
For Blue Cross, Loepp said the Detroit consolidation yields multiple benefits:
• $30 million in long-term real estate cost savings.
• A 20% reduction of office space in southeast Michigan, from 2 million to 1.6 million square feet.
• More efficient use of space with 220 square feet per employee, versus 180 before. “This office space is 4,000 times better than what we had in Southfield,” Loepp said as we looked out from RenCen towers at spectacular views of the Detroit River, Belle Isle and downtown. Employee contests were held to name conference rooms: In one area they’re named for the views out the window, Eastern Market, Campus Martius, Ford Field.
So far, Loepp said, Blue Cross employees relocated from the suburbs to downtown Detroit have been overwhelmingly positive about the move, with more than 90% approval in internal surveys. Blue Cross does pay for employee parking, but did not adjust wages for City of Detroit income taxes, because the company hadn’t previously differentiated compensation rates based on employee location. The firm’s Blue Care Network remains in Southfield, and Blue Cross also has an office in South Lyon.
The Detroit relocation caps a series of Blue Cross consolidations in urban cores of Michigan cities, beginning with the 2004 renovation of a downtown department store in Grand Rapids and the move of 242 Blues employees from suburbs there. Last year, Blue Cross moved its Accident Fund headquarters to a converted power plant in downtown Lansing.
In addition to improvements in its own workspaces, Blue Cross has replaced hundreds of streetlights in the neighborhood around its four main buildings in Detroit. It also has 145 people in the Penobscot Building.
“As a Detroit kid from the east side, I love being downtown,” said Loepp, “and everything I read says having critical mass in a big city core ends up having more impact and influence on a region than having it outside the region.”
Blue Cross has already had 152 employees apply for incentives under the Live Downtown program to buy or lease housing near work.
And at today’s event downtown, Blue Cross — along with other Live Downtown participants including Quicken Loans, Compuware, DTE Energy and Strategic Staffing Solutions — will announce a weeklong “Live Downtown Olympics” next month, in which the companies compete in events ranging from tug-of-war and volleyball to Detroit-themed Jeopardy and a battle of the bands.
All for charity, of course. And bragging rights.
By: Tom Walsh, Detroit Free Press