Traverse City Record-Eagle

Archive: Tuesday

December 11, 2012

Michigan cutting back on office space

State leases five million square feet

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LANSING (AP) — The state of Michigan plans to accelerate efforts next year to cut costs by reducing the amount of office space it leases and consolidating government employees in buildings it owns.

Employees in the state-owned Constitution Hall and the Mason Building were recently notified via newsletter about $24 million in renovation plans that will at least temporarily relocate most or all of them, the Detroit Free Press reported Monday.

Work that's expected to start in January is part of the early steps in a cost-cutting plan that would reduce the 5 million square feet of office space the state leases by up to 1.5 million square feet. The state has 7.1 million square feet of office space in buildings it owns.

Phil Jeffery, chief deputy director of the Department of Technology, Management and Budget, said it hasn't been determined what major commercial leases will be terminated to fill the extra capacity in the state-owned Constitution Hall and Mason Building.

"I'm not in favor of leaving a blighted spot in the middle of the city of Lansing," Jeffery said. "We don't necessarily want to get out of an entire building and leave it vacant."

Lansing Mayor Virg Bernero said he has been briefed several times on the state's plans and believes the end result will be more state employees moving into state-owned buildings in Lansing from leased space outside the city. He said the city is working with the state.

"While there may be some tax revenue implications associated with the moves, we expect that gains in city income tax revenues will help offset any losses in commercial property taxes," Bernero said.

A state study released earlier this year said Michigan could save millions of dollars by reducing the size of employee work areas and consolidating space. The state's workforce has declined over the past decade, leaving as much as 30 percent of space underutilized.

Just under 1,000 state employees now work in Constitution Hall, Jeffery said. Once about $7 million in renovations are completed in 15-18 months, the building will be able to accommodate up to about 1,900 employees. Some employees will get smaller cubicles.

The Mason Building will be vacated during its $17 million renovation. About 560 people now work in the Mason Building and it will accommodate at least 850 afterward.

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