Deloitte sheds large RenCen office for smaller WeWork space

[Lowell]

I found this announcement to be an ominous sign for commercial real estate, and perhaps downtown, likely an outgrowth of the remote Zoom-world working experiences spawned by the pandemic. Companies have learned that they don't need to bear the cost of big offices and workers enjoy the freedom from having to commute into them while productivity has been found to be as good, if not better.

I'm interested to hear what members of this forum's experiences have been in this regard. For my part I have had an office, have used WeWork style co-working spaces but absolutely needed neither, only needing a high speed internet connection, that any Starbucks or library now has, and a place to sit.

I spotted this in a Crain's email. The article is behind their paywall but I can't see much that could be added to the title, which seems to say it all.

[401don]

I have zero technical knowledge but I have been surprised that almost all of the bank employees at Toronto's corp. towers have been able to work from home. I would have thought security issues would have prevented a large number from doing so but I guess the firewalls are on their servers and not needed on individual pc's? You are correct that large numbers of employees will not return to offices.

[mkd]

Deloitte employees were rarely in the office even pre-pandemic. They were typically out working at their clients pretty much all of the time. The same goes for the other public accounting firms. Basically just support staff like IT and HR went in most days.

[stinkytofu]

The RenCen is screwed long term. I have zero clue how that'll ever get remotely full again.

Weirdly enough, I find this story to actually be a net-positive for downtown. No way was Deloitte ever going to bring all their employees in again [[weren't mandated before pandemic). If the same amount of folks will be coming downtown in a few years as now, much rather them be right off Campus Martius than stuck in the RenCen. Want more bodies walking around, buying stuff, etc. in heart of CBD.

[401don]

The RenCen is screwed long term. I have zero clue how that'll ever get remotely full again.

Maybe make one tower a vertical parking garage.
It will be interesting to see how quickly the block portion of the Hudson's site fills up also.

[kuuma]

I have a feeling the RenCen will be fine no matter what. It's just one business downsizing. As long as GM is in there anchoring it, and the hotel and convention apparatus going strong, it'll be ok. It's baked into the infrastructure of the city in a pretty deep way.

More perplexing to me is how the RenCen is still flanked by nothing but parking to the east and north, with no plans for that to change, despite developments rebuilding most of the other parts of downtown.

[Jason]

I think really the only unattractive part of the Ren Cen is that the floors are so small. If you need a decent amount of space you have to spread out over multiple floors. But I think for smaller businesses it's a pretty good option.

But the small floor plates are a good thing for the actual quality of the workspace. It's not a windowless cube farm, they're slender towers where everyone is close to a window with a view and natural light. The podium has a lot of amenities and conveniences. You're right next to the riverwalk, and you can get pretty much anywhere downtown quickly with the People Mover.

[stinkytofu]

I have a feeling the RenCen will be fine no matter what. It's just one business downsizing. As long as GM is in there anchoring it, and the hotel and convention apparatus going strong, it'll be ok. It's baked into the infrastructure of the city in a pretty deep way.

More perplexing to me is how the RenCen is still flanked by nothing but parking to the east and north, with no plans for that to change, despite developments rebuilding most of the other parts of downtown.

The thing is, a ton of space is taken up by GM and there are no plans that I know of to bring their folks back into the office fulltime. They will likely be a hybrid model basically forever. So while the building might be OK since space is technically leased, the retail will be dead and the place will be a ghost town.

Also, frankly, I've I'm a business looking to open an office in Detroit there is no frickin' way I'd go into the RenCen. It's awful, a fortress, and now a grave yard. I'd want to plunk my company right in the heart of downtown.

[Funaho]

My company, which is based out of the Southfield Town Center, always had a very liberal work from home policy, and since the pandemic most of us have not been in the office in over two years now. The office space is still available to use; we just have to go online and reserve a desk for the days we want to be there. I guess it's still a bit more popular with the creative/marketing folks to get together and plan, but my team [[software devs) would rather stay home. Hell even pre-pandemic we held our team meetings online anyway because we have out-of-state team members.

It sure has been nice not having to worry so much about my car the past two years. I can't imagine going back to a regular office life.

[Lowell]

Wow, great stories and perspectives. It staggers my imagination to think what the economic impact would have been had the pandemic struck in, say, 1990 or even 2000 rather than 2020, before widespread broadband internet. Zoom-like virtual collaboration would have been impossible and many businesses would have ground to a halt. As it was most hardly missed a beat.

Regarding the RenCen, I think it should be okay as it is my understanding that class one commercial real estate still has demand and companies that want to cozy up to GM would have interest in being there. I think the lower class buildings will be the casualties.

[Honky Tonk]

Wow, great stories and perspectives. It staggers my imagination to think what the economic impact would have been had the pandemic struck in, say, 1990 or even 2000 rather than 2020, before widespread broadband internet. Zoom-like virtual collaboration would have been impossible and many businesses would have ground to a halt. As it was most hardly missed a beat.

Regarding the RenCen, I think it should be okay as it is my understanding that class one commercial real estate still has demand and companies that want to cozy up to GM would have interest in being there. I think the lower class buildings will be the casualties.

Though there will always be a need for collaborating workspace, I think grand office buildings will go the way of the mega-malls.

[Richard]

I think at this point it has been an experiment where a lot of the details have been overlooked because of the pandemic.

For instance,your house is zoned residential,when you have a home office zoning kicks in and a percentage of your homestead exemption is removed when you in essence are using your residence as a commercial enterprise.

The debate is still ongoing as to pay scale depending on where the home office is located verses where the worker decides to locate.

It becomes 100% dependent on your local internet infrastructure,and the worker needs to be seriously a self motivated individual,most are not.

Then there is the social costs,I have a few friends that started the WFH in 2008 when the real estate crashed,they are basically hermits now.

The office was also an escape for parents from their children,now most that have kids and are doing the WFH keep the kids with them,increasing the stress level and distractions.

Companies are also starting the whole progress tracking aspect where they install logging programs on your computer and track everything you do.

Post pandemic there are companies demanding that the workers return to the office,many are refusing but to me anyways it is hard to deal with customer service over the phone,it’s a sterile process.

The biggest thing,if I was a company that employed strictly WFH,why would I pay the salary of an American worker when there are lots of other countries that have people with the same abilities but at 1/2 the salary,they also have internet.

You can offshore no different then tech support did.

You have a business that leases space,it gives you tax write offs that you will now lose and now that tax liability will be pushed on to the workers,because the local municipalities are not going to except that commercial tax loss that the office buildings generated.

Not to sound brash but there seems to be a big push for the workers to dictate to the employers on how they are going to operate,that usually does not end well.

Right now it is still in its experimental phase,amplified temporarily because of the pandemic,the government is slow moving,but once it catches up they will figure out how to capitalize on it and regulate it to the extent where it most likely will not even be feasible large scale.

The biggest thing governmental will be zoning,once you start allowing commercial in a residential you open the door,there is a reason they have not allowed it in the past.

Workers say that they are saving because they do not have to drive into the office,but have they figured out what the increased demand is on their house when they add an additional 8 hours a day in wear and tear,utilities etc.

There are also a lot of workers saying they are actually working more unpaid hours when WFH then they would be in a clock in clock out situation.

To many at this point it is like a new toy,once the novelty of it all wears off and the reality kicks in it may be a different situation.

When we look at cause and effect,here is a strange one for you.

Some cities are implementing a fuel usage charge or tax on vehicles,large SUVs and anything over a F150 is considered to be a high fuel usage vehicle subject to the tax,so now you WFH and your F150 is sitting in the driveway barely being used while you are paying a special tax for the privilege of it sitting there,are you going to keep it and what does all of this do to the highest profit line of the auto manufacturers?

If you are married,your spouse WFH do you really need 2 vehicles anymore,what is the economic impact on the state if you remove even 20% of the vehicles from the road,somebody has to pick up that loss,the states will not change their budgets.

[detmsp]

For instance,your house is zoned residential,when you have a home office zoning kicks in and a percentage of your homestead exemption is removed when you in essence are using your residence as a commercial enterprise.

Can we get a source for this? My company is run from a home office for years and no one has ever suggested that there might be any zoning or homestead exemption issues.

[hybridy]

Deloitte employees were rarely in the office even pre-pandemic. They were typically out working at their clients pretty much all of the time. The same goes for the other public accounting firms. Basically just support staff like IT and HR went in most days.

Can confirm. Most of the Big 4 have employees on site with clients doing audits - rarely in the office.

[Richard]

Can we get a source for this? My company is run from a home office for years and no one has ever suggested that there might be any zoning or homestead exemption issues.

WFH has been around for a long time but not at the extent where it is happening now,even to the point where some are moving many states away from the actual home office,so it flew under the radar.

All states and cities are different in the regulations so one really needs to find out what applies to them before they make that switch.

Most know I live in Tampa and when I first moved here WFH was considered as running a business from the house be it as an owner or employee of the business,so you had to get the permit or most case you just could not do it as it was considered running a business out of a residential zoning.

The state has now addressed it because of the pandemic,if it was not an issue they would have never had to address it.

Here’s the details on the new Section 559.955, Florida Statutes:

• Local governments may not enact or enforce any ordinance, regulation or policy or take any action to license or otherwise regulate a home-based business.

• A “home-based business” is one that operates from a residential property where an employee of the business lives in the residence. [[In addition, you can have up to two [[2) additional employees or independent contractors work out of the residence. The business can have remote employees that don’t work out of the residence.)

• A home-based business may operate from a location even if the area is only zoned for residential use.
• 
  https://thelegaldepartment.law/work-from-home/
• The key is how your local municipalities define WFH as we see in the past it was considered a home based business even if you were an employee of a business that was not based out of your house.
• 
  City’s make their money on permits etc. so when something becomes widespread,they by nature look to capitalize on it with another form of revenue streams.

You can take it a step further,the company you work for is a smaller company that says we are giving up the office space and everybody works from home now,that company still has to have a registered office and an occupational license in order to do business,if they put it at their house and the city does not allow for it,they can then shut them down,which effects all the workers downstream.

The point being is even as a worker that is switching to WFH you really need to check into if you can actually do it,even more so if you are looking at selling your house and moving to another state or city.

Like I mentioned in Florida,a lot have moved here based on the ability to WFH,the new law protects them whereas in another state they may not have those protections.

The ones moving here have northern based salaries that they would be hard pressed to command the same salary locally,considering they purchased properties at prices way outside of what a local salary would pay for,without doing a little research they could have been put in a sticky situation if they lost their job.

You see it also where many have moved into very rural situations where if they lost their WFH job and could not find another online,there is no way they would be able to find one locally.

It all sounds good but just be careful so it does not turn into a personal nightmare,it’s become popular and now on the radar.

[LongGone06]

Perhaps I'm just an old dog, but I preferred to work at the office and be "home" at home. I have been working remotely since March, 2020. While there clearly are some advantages, I have found that working from home erased any separation between work and home. I no longer feel that sense of getting away from work, be it ever so briefly, when I'm home.

At the office, I could work evenings and weekends when needed. At home, I now feel like I should be working evenings and weekends, regardless of the need. Also, I miss the interaction and collaboration with coworkers.

Again, I'm just an old dog. Younger workers tend to have different expectations, and want more flexibility.

[401don]

Perhaps I'm just an old dog, but I preferred to work at the office and be "home" at home. I have been working remotely since March, 2020. While there clearly are some advantages, I have found that working from home erased any separation between work and home. I no longer feel that sense of getting away from work, be it ever so briefly, when I'm home.

At the office, I could work evenings and weekends when needed. At home, I now feel like I should be working evenings and weekends, regardless of the need. Also, I miss the interaction and collaboration with coworkers.

Again, I'm just an old dog. Younger workers tend to have different expectations, and want more flexibility.

I'm retired now but I became friends with a lot people I met at work, even some from other locations within companies I worked for. Not sure how young people today casually meet people if they're not into something specific like bars, church, etc. I guess there's probably an app for that too.

[Ray1936]

Quick question....Is not "Deloitte" the left over of the old Touche-Ross efficiency company?

Touche-Ross came through the Detroit PD about 40 years ago and left it in a shambles.

[DTWflyer]

Yes Touche-Ross is one of several historical / legacy firms that merged together over the years to become Deloitte. Touche-Ross historically had a large presence in Detroit over the years.

Touche-Ross, then becoming Deloitte-Touche, and eventually just being generally referred to as "Deloitte" [[with the various other names being just legal entities) was one of the original tenants in Tower 600 in the Ren-Cen up through 2012. From the mid-90s through 2012 Deloitte has floors 3-10 & 13-14 in Tower 600. In 2012, they moved into the space in Tower 200 taking floors 24 & 35-39. Blue Cross-Blue Shield took over their former space in Tower 600.

Supposedly at the time, in 2012 they got an incredible deal on their space in Tower 200 and took over far more space than needed to utilize for future expansion as needed. However they never really fully utilized much of their space over the past decade.

Afterall they are in the client-service business, and as others have said, most of their client facing space, pre-pandemic was at client sites. Those that were in the office on a regular basis were non-client facing financial/IT/HR/service types, along with those people who worked on project for some of their other big clients located in the Ren Cen.
Even pre-pandemic a lot of people weren't in the office, and they never really grew their Detroit office. They were growing and expanding their office in other major cities, that frankly were bigger draws for recent undergrad and MBA grads from top tier schools. Detroit was a quasi-sattilite office for Chicago, and as the firm grew they moved away from a lot of their local/regional roots and a lot of stuff like project staffing and leadership went national and was location-agnostic.

No surprise they are leaving the Ren Cen.

The most common people pre-pandemic in the office where those who lived in downtown/midtown. And they used to complain a bit about how getting to the Ren Cen was a pain. At least the new location is most in the midst of things, and close the Q-line.

Regarding GM and the Ren Cen. Unfortunetely, outside of the executive leadership team, the majority of functions in the Ren Cen are some of the most likely to be able to work remote successfully - Finance, IT, HR, stuff. Plus so many of the people live way out the suburbs the bar is higher to get them to make the trek into downtown. This isn't unique to GM though. Its a thing facing every big city and every big company all over the nation.