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HAP to move Southfield operations to United Shore’s Troy building

Health Alliance Plan of Michigan will be the new occupant of the United Shore Financial Services building in Troy.

The Detroit-based nonprofit health plan announced it will move 1,100 employees and contractors from its building in Southfield at 21700 Northwestern Hwy. to 1414 E. Maple Road, a building being vacated by United Shore as it moves to a new headquarters in Pontiac later this year, according to a Friday evening new release.

HAP is subleasing its 180,000 square feet of space in the 275,000-square-foot Troy building from Detroit-based Henry Ford Health System, its parent company. It will remain in its buildings in Detroit and Flint.

That’s a 16.7-percent smaller footprint than it has at its building in Southfield, where it leases 216,000 square feet.

In November, HAP laid off 169 employees after contract talks broke down with three large employer groups last year — Ford Motor Co. salaried employees, an unspecified contract with Chrysler Corp. and one with the Michigan Public School Employees Retirement System were not renewed.

“Not only do we currently have more space than we need in Southfield, but it isn’t space that can be easily reconfigured to meet our needs,” Terri Kline, president and CEO of HAP, said in the release.

“The new facility offers us greater flexibility and opportunities for better collaboration — not just among internal teams, but also with our customers and business partners. In this era of non-stop change, insurers need to be nimble and able to adapt to the ever-changing needs of our members and other stakeholders. The Troy space allows us to do just that by creating efficiencies, which in turn helps position HAP for future growth and expansion. This is an exciting time for HAP.”

For the first nine months of 2017, HAP earned $7.55 million in net income, down 81.5 percent from $40.8 million in net income for the same period in 2016, according to the Michigan Department of Insurance and Financial Services. Total revenue for the same period declined only 5.5 percent to $1.38 billion from $1.46 billion, DIFS said.

It’s not known whether the move will save HAP money. The asking rent at the Southfield building is $12.95 per square foot per year, plus electricity costs, according to CoStar Group Inc., a Washington, D.C.-based real estate information service. The asking rent in the Troy building is $18.28 per square foot per year, plus all utilities, according to CoStar.

The employees are expected to begin moving into the United Shore-owned building — which it bought for $3 million in 2012 — the fourth quarter, with the process completed in the first quarter next year, according to the release.

HAP’s Northwestern Highway building is owned by New Jersey-based Arnosa Properties, which paid $5.6 million for it in 2014, according to CoStar.

United Shore announced last year that it would relocate into a building occupied by Hewlett Packard Enterprise, now DXC, on South Boulevard and spend $80 million moving more than 2,100 employees there this summer. (DXC employees are in the process of moving to Auburn Hills.)


Posted By: Crain’s Detroit Business on February 23, 2018.  For more information, please click here to read the source article.

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