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Cadillac Place in Detroit’s New Center area can house 3,053 state office workers, but only 58% of those seats, or 1,784, are currently assigned, the lowest rate of eight non-Lansing office buildings.
More than three in five state of Michigan office employees continue to have a hybrid work schedule, a recent report from a global commercial real estate giant determined.
CBRE Inc., commissioned by the state with a contract for up to $500,000 early last year, released the report following eight months of study and analysis by the Dallas-based company on behalf of the state’s Department of Technology, Management and Budget.
It paints a COVID-19 pandemic-era picture of how the state is using the office footprint in its massive real estate portfolio that consists of close to 5,000 buildings totaling nearly 49 million square feet across Michigan, although only about 4% of that is dedicated office space. DTMB accounts for about one-quarter of that portfolio, with approximately 12.7 million square feet owned, leased or subleased.
Some Republican lawmakers have criticized Gov. Gretchen Whitmer’s administration for continuing to allow hybrid work policies that they say have harmed downtown Lansing businesses like restaurants and retailers that have for decades relied on the foot traffic that state employees bring.
And this spring, The Detroit News reported that DTMB had, citing security concerns, denied the newspaper’s records request for office badge swipe data for five random days in 2024 “to understand both the usage of state taxpayer-funded office buildings as well as the rate at which state employees were working in person, nearly five years after the COVID-19 pandemic.”
In addition, the study also determined that approximately 65% — 11,955 of 18,491 — of “seats,” or workspaces, in the buildings studied were assigned to an employee. That’s well less than the private-sector average of 80%-90%, CBRE says.
State workers on a per-employee basis are working in spaces that are 5%-20% larger than they should be, taking up about 209 square feet per employee compared to the recommended 175-200 square feet per public sector employee.
However, the state has been inching closer to that recommended number over the years, CBRE found. In 2017, the average office employee utilized about 235 square feet. And officials say it’s working toward getting to 150 square feet per employee.
For its part, the state says that even prior to the pandemic it was looking for ways to streamline its real estate footprint, shedding 54 leases totaling about 500,000 square feet for a cumulative lease cost savings of $21.6 million-plus, according to an introductory letter to the CBRE report from Michelle Lange, the director of DTMB.
“Prior to this space study and prior to the pandemic, it’s been a goal for DTMB and the state of Michigan to best utilize our real estate portfolio in the most efficient manner based on the operational needs of each of our agencies which are very vast,” Caleb Buhs, chief deputy director of the DTMB, said in an interview.
“DNR (the Department of Natural Resources) and Treasury have totally different things going on, so we are maximizing our own space if that makes sense and looking at reducing leases if that makes sense.”
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Grand Tower in Lansing has only 35% of its 1,336 office seats assigned, the lowest of any state building in the Capitol complex, according to a recent report by CBRE Inc.
House Speaker Matt Hall, R-Richland Township, was not available for an interview, although The Detroit News previously reported that he has been calling for the Whitmer administration to mandate more workers return to the office. Crain’s also requested an interview with CBRE.
Buhs said each state department determines how many days each week employees are required to be in the office. He also noted that hybrid work schedules can be important perks when recruiting talent for government work.
Michigan is far from the only state looking to streamline its real estate portfolio, CBRE says.
Others include Washington, where officials there are trying to reduce their office footprint by 30%; Ohio, which is trying to reduce space requirements by 32%; and Wisconsin, which is trying to reduce its footprint by 10% by 2030.
DTMB’s portfolio is also comparable to other state governments, CBRE says.
For the department, 62%, or about 7.3 million square feet, is owned, while a shade over 4 million square feet is leased, representing about 38%, and a little more than 376,000 square feet is subleased, representing less than 1%. Texas, for example, is approximately 70% owned vs. 30% leased, while Florida is about 60% owned vs. 40% leased. Illinois has a portfolio that is about 65% owned vs. 35% leased.
To compile the report, between March and September 2024 CBRE toured 12 buildings, analyzed certain floors in 11 buildings, reviewed badge swipe data for 29 buildings, interviewed 32 agency leaders, surveyed 26 space planning contacts and held four workshops with DTMB leaders, the report says.
Overall, the state has about 47,500 employees.
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