General Motors’ return to work could help downtown restaurants and stores
Downtown Detroit is about to experience a jolt that will help bring it closer to where it was before the COVID-19 pandemic began.
With General Motors Co.’s decision revealed on Friday to bring its workers back to the office three days a week by the end of the year, the city’s central business district can expect perhaps a few thousand people – the precise number is not known – to occupy the Renaissance Center on a semi-regular basis in the future.
For the past two and a half years, the Detroit-based automaker’s downtown workforce in the RenCen, the region’s largest office complex, has been largely out of office, leaving them absent from participation in the larger economy of the central business district which depends on the workers’ office.
Restaurants, cafes, pharmacies and retailers – to name a few – have felt the pinch caused by work-from-home policies in a city center dominated by office space, of around 17 .9 million square feet which, before the pandemic, was occupied by some 70,000 workers compared to just 6,200 full-time residents.
With GM returning later this year, these types of businesses not only within RenCen, the city of Detroit within a city, but also across Jefferson Avenue should see a positive ripple effect.
Eric Larson, CEO of the Downtown Detroit Partnership, said Friday evening that about 20% of downtown office workers are in their offices on Mondays and Fridays, while about 60% are on Tuesdays, Wednesdays and Thursdays, for an average of about 45% overall. .
“Having a major employer commit to bringing employees back, even with flexible working, goes a long way to supporting businesses and the overall health of downtown,” Larson said, noting there is a multiplier effect. unknown since people will come downtown to meet GM workers, triggering additional business for restaurants, cafes and delis, for example.
Still, the magnitude of the rise is unknown, says Dennis Archer Jr., managing partner of Central Kitchen + Bar on Woodward Avenue. The restaurant has reduced hours and if they can make the lunch staff work they would consider reopening for that. It’s open for happy hour and dinner Wednesday through Friday, and brunch and dinner Saturday and Sunday.
“It’s hard to make a prediction based on a formula if 2,000 people come to work, that’s going to result in a 3% increase in gross revenue for the week,” Archer said.
“GM is opening up downtown for lunch business, I don’t know what effect that will have on distance and other lunch options within RenCen limits,” Archer said Saturday. “These will benefit our happy hour and dinner audience. More relevant to us would be a hybrid or full return of these downtown businesses within 4-5 blocks: Ally, Rocket, Chase , who are closer to us and coming back hybrids. and full-time for us in Central would have a bigger impact. But common sense, the more people working downtown, the better.”
Before the pandemic, GM had 5,000 employees in RenCen buildings, though it’s unclear how many will return there a few days a week when the company implements its policy, which reverses the so-called framework of “Work Appropriately” adopted earlier in the pandemic. An email was sent Saturday morning to a GM spokesperson for additional details.
Paul DeBono, who is vice president of brokerage and customer services for Detroit-based real estate firm Beanstalk Real Estate Solutions, said GM’s decision provides “the kind of clarity a lot of people have been waiting for.”
“It’s no secret that restaurants struggled during the pandemic due to low physical occupancy downtown and they were largely reliant on office traffic for lunch,” DeBono said. “They’ve had truncated menus or closed sections of their restaurants and I think that will help them.”
GM joins other major employers in implementing a hybrid work policy.
Rocket Companies Inc., with its offices in a constellation of buildings downtown, is staggering its workforce and also rotating days and days at home. Blue Cross Blue Shield of Michigan is mostly hybrid, but some come Monday through Friday. DTE Energy Co. is also hybrid.
The city of Detroit itself is back to pre-pandemic operations and policies for its office workers, who make up about 25% of its total workforce, said John Roach, director of media relations for Mayor Mike Duggan, more early this month. But there is a flexible option for office workers to mix up their schedules if they receive approval from their supervisor and HR, Roach said.
A survey carried out last month by Gallup indicates that approximately 70 million people across the country are able to do their work remotely, and that approximately 49% work in hybrid, while approximately 29% are fully remote and 22% are in the office five days a week. . At the start of the pandemic in May 2020, according to Gallup, up to 70% of the nation’s workforce that could work from home was exclusively remote.
GM’s return to RenCen also brings a semblance of normalcy to the region’s largest office complex, which has been hit hard during the pandemic.
Deloitte LLP, which had 102,000 square feet in the upper levels of one of the 39-story skyscrapers, fled for about 35,000 square feet of WeWork space in the 1001 Woodward building owned by Dan Gilbert.
Michigan’s Blue Cross Blue Shield has moved some of its operations out of one of the buildings in the non-GM RenCen complex.
Beyond that, the additional manpower will also help the city’s bottom line by an unknown amount. Detroit estimates that it loses $50 million a year in tax revenue due to remote work, according to the DDP.
A broader effort has sought to pivot the city center from its office-centric composition to a more mixed composition, with more residential offerings. Federal pandemic relief funds have been distributed to the DDP and others to fund parks initiatives and residential redevelopments, and federal legislation has been introduced that would incentivize the conversion of outdated office buildings to different uses like residential or hotel spaces, for example.