Ann Abor Office and Retail Expansion

McKinley enlarges its vision for downtown Emerging complex would take up most of a city block Tuesday, January 16, 2007 BY TRACY DAVIS News Staff Reporter No one, at least within earshot of a reporter, uttered the G-word.

However, as McKinley officials talked Monday about plans for expanding McKinley Towne Centre into the nearby Liberty Square office building, it became clear that Google is just a piece, albeit an important one, of a much larger vision for an emerging retail/office/Googleplex that will take up most of a city block in downtown Ann Arbor.

Meeting with members of the Downtown Development Authority executive committee, officials with the Ann Arbor real estate company said it already has commitments from retail clients for storefronts it will build along East Liberty Street in the newly acquired Liberty Square.

McKinley CEO Al Berriz said the company might add several stories for offices on top of that existing one-story commercial space, which formerly housed a National City Bank branch.

The company also wants to build on the southern end of the alley on the west side of Liberty Square with a retail building. That alley, which runs between Liberty and Washington streets, is now jointly owned by the city and McKinley.

The only remaining obstacles to physically connecting all of the parts of the expanded McKinley Towne Centre are a small apartment building that stands between Liberty Square and the existing Towne Centre and holdouts by the owners of a couple of Liberty Street retailers.

Dan Kaplan of Varsity Management, an Ann Arbor-based apartment and house rental company, confirmed Monday he is in negotiations with McKinley to sell the apartment building at 418 E. Washington St., but declined to give any further details. "We are interested in helping them as much as possible because we think Google is a great thing for Ann Arbor,'' he said.

Owners of the properties that house a music and clothing store on Liberty Street told The News last week they had declined McKinley's offers.

McKinley officials see the Towne Centre and other nearby developments, including proposed condo and apartment buildings, as part of a radical change that will make the midtown area a destination rather than just a walk-though between Main Street and the State Street/University of Michigan campus area.

"We certainly have a whole lot of reasons we're interested in this corner,'' Berriz said. "This is truly the nexus between town and gown in Ann Arbor.''

Berriz said that the company is moving forward immediately to give Liberty Square a facelift. The northern half of the first-floor interior, fronting on Washington Street, has about 13,000 square feet of office space, while there is about 17,000 square feet of retail space fronting on Liberty Street.

The expansion plans will give McKinley plenty of room to court Google into keeping its local AdWords office at the Towne Centre. The Internet giant announced plans to locate a local office for its growing AdWords staff last July, and will call the Towne Centre home beginning this spring after moving from a location on Main Street.

The local AdWords staff could eventually reach 1,000 employees. Experts say that number of workers requires at least 200,000 square feet; Google only has 85,000 square feet leased at the primary Towne Centre building. McKinley now controls about 60,000 square feet of empty office space in Liberty Square and expanding the building would give them much more room.

Berriz declined to say who potential retail tenants might be. He said he has letters of intent, and that the site has generated a lot of interest recently among many retailers, including some who had given up on downtown.

The inevitable parking question also came up Monday morning - where would all the people who will live, work, and shop in an emerging corridor park their vehicles?

After the meeting and a tour of the facility, DDA director Susan Pollay said the seven-story, city-owned parking structure attached to Liberty Square was designed to have several more stories added to it.

News Business reporter Stefanie Murray contributed to this report. Tracy Davis can be reached at 734-994-6856.