Barracuda Networks signs deal to move hundreds of jobs to ex-Borders offices in downtown Ann Arbor
Ann Arbor SPARK CEO Paul Krutko, Barracuda's Sean Heiney and Lindsay Snider, Ann Arbor Mayor John Hieftje, Bank of Ann Arbor CEO Tim Marshall and First Martin's property manager John Teeter.
Melanie Maxwell | AnnArbor.com
The Campbell, Calif.-based security firm, which employs about 180 workers at its operation at 201 Depot St. in Ann Arbor, signed a lease this month for 45,000 square feet of office space once occupied by bookstore chain Borders.
The deal is one of the largest commercial real estate leases in downtown Ann Arbor in recent years, and if Barracuda reaches its hiring goals, it could create more than 200 new jobs downtown.
“We’re hiring two people a week,” said Sean Heiney, Barracuda’s director of new product initiatives. “With the success and exponential growth we have, there’s no sign of us slowing down. We’re expecting at least 300 to 400 employees in this facility, but that’s not going to be capped.”
Barracuda signed a lease for the space on Maynard Street, which is located at the rear portion of the building that also previously housed Borders’ East Liberty Street store. Owned by First Martin Corporation, it’s located on three-floors and partly underneath the public parking garage.
The space was once used as the headquarters for Borders before the company moved to Phoenix Drive.
John Teeter, property manager at First Martin, said construction will begin Wednesday to transform the space into a high-tech, attractive office. The goal is to have Barracuda move in this fall.
That includes putting in windows along the Maynard frontage, completely redesigning the facade, building a small engineering data center, a training center, workout facilities, showers, break rooms with games, and 30 to 50 foot ceilings in some areas.
Heiney — who didn’t have an estimate on the exact cost of renovations — said the total investment will be around $6 to $7 million between the lease and improvements.
Key to that investment is a five-year tax abatement from the City of Ann Arbor totaling $85,150, and $1.2 million in funding the company expects to receive from the Michigan Economic Development Corporation’s business development program. Both initiatives were announced in a news release on Wednesday.
“The incentive is definitely a strong contributing factor for us,” Heiney said. “It’s nice to have community partners going along with us; it’s icing on the cake for us.”
Barracuda Networks is moving from its 12,000-square-foot office on Depot Street to 45,000 square feet in the former Borders building in downtown Ann Arbor.
Melanie Maxwell | AnnArbor.com
Barracuda is a privately owned firm that creates network security devices, provides email and web filtering products and phone system solutions, and monitors network attacks 24 hours a day, 7 days a week from its Ann Arbor office. It has more than 1,000 employees globally and does not report sales figures.
Fueled by growth in the information technology security industry, the company announced in June 2011 that it planned to create a “Silicon Valley-type campus,” likely in the downtown Ann Arbor area, that would employ 300 to 500 people and expand its footprint.
It currently occupies 12,000 square feet at its Depot Street office, and Heiney said the employees are “packed in like sardines.” It also only originally leased 40 parking spaces at the building.
After a year of searching for the right space — Heiney said they looked at more than 100 different locations — the iconic downtown Ann Arbor building was the most appealing. Both Ann Arbor SPARK and Colliers International’s Ann Arbor office worked with Barracuda on potential spaces.
First Martin purchased the 45,000-square-foot space on Maynard from Agree Realty Corp. in March. Because First Martin is Barracuda’s current landlord on Depot Street, the deal offered a smooth transition.
“We bought the space without this deal,” Teeter said. “But they’re moving to a space that’s four times bigger than their current space (with us). We’re excited to keep them as a guest and to have them downtown.”
Teeter said First Martin will now begin to market the 12,000 square feet Barracuda is vacating at the Depot Street building, which also houses planning and landscape architecture firm SmithGroupJJR.
Ann Arbor Mayor John Hieftje, Ann Arbor SPARK CEO Paul Krutko, Colliers’ Jim Chaconas and Heiney all said there was one aspect of the deal that was most critical: parking.
With the new 711-space public parking garage set to open next month on Fifth Avenue in downtown Ann Arbor, Hieftje said Barracuda was able to get access to all of the parking spaces they need at a discounted rate the Downtown Development Authority is offering.
The incentive, which applies to monthly permits, offers a $60-a-month savings for those who move over from the Liberty Square or Maynard garages. It’s also offered to new businesses that were not located in downtown before May 1.
Barracuda is hiring at a rate of two people per week, said the company's director of new product initiatives Sean Heiney.
Melanie Maxwell | AnnArbor.com
“This just wouldn’t have happened without the parking,” Hieftje said. “Without the parking, companies weren’t willing to talk to us about coming downtown.”
Heiney said Barracuda will pay for a parking space for each employee.
If Barracuda’s office reaches 400 or more employees, it would rank as downtown Ann Arbor’s largest private sector employer. As of last summer, Google employed about 275 workers at its sales office at the McKinley Towne Centre at Liberty and Division streets, though Google has long said it plans to have 1,000 employees eventually.
Krutko of SPARK said bringing this sheer concentration of people to downtown Ann Arbor will create ripple effects in the community.
“This will create a completely new generator of customers for downtown businesses,” he said. “For somebody interested in opening retail, to have a growing workforce here is an attraction.”
Chaconas of Colliers, who’s marketing the front portion of the building that housed the former Borders retail store, said it will also play a key role in the redevelopment of that two-story, 44,000-square-foot retail space — which was recently leased long-term by Detroit-area developer Ron Hughes of Hughes Properties.
“You look at what’s coming here with Menlo (Innovations), Google and Barracuda: that old Borders retail site is going to be almost as hot as the Michigan Book & Supply building. It’s not just students, we’re going to have employees that work here in a concentrated area.”
He said Barracuda bringing hundreds of employees to the building also will help drive the retail — not just restaurant — market in the area.
Heiney said Barracuda is hiring all types of different employees to work at the Ann Arbor office, including engineering, support, sales and customer service. Those interested in applying can visit http://www.barracudalabs.com/recruit/.
Although some business executives lately have talked about the difficulty of finding the talent to fill job openings in Michigan, Heiney said he sees “no signs of the talent drying up,” which is the main reason Barracuda targeted Ann Arbor to expand.
“The main thing here is it has smart people,” he said. “Ann Arbor is also definitely an easier sell for someone out of state to come to than most cities. I’m not sure if, say, we were based in Cleveland, that we could get people from Silicon Valley to move out there.”
Lizzy Alfs is a business reporter for AnnArbor.com. Reach her at 734-623-2584 or email her at lizzyalfs@annarbor.com. Follow her on Twitter at http://twitter.com/lizzyalfs.
Comments
Ellen Gomes
Fri, Jun 29, 2012 : 9:49 p.m.
Thank you for all the constructive comments and feedback. We are really excited to move into the new Maynard street location and wanted to share some additional information that addresses a few of the comments that we have received: Barracuda not only wants to work with the city of Ann Arbor to shift parking from higher demand locations, to more convenient locations, but it is also instituting a program, the "Barracuda Green Team", that provides incentives to employees that regularly use alternative methods of transportation, such as walking, bus and carpool. We are thrilled to have MEDC funding to invest into updating the iconic downtown location, creating a vibrant high tech community in downtown Ann Arbor. The MEDC funding has growth milestones, which are audited annually and ensure that we are meeting, and hopefully exceeding our agreed upon growth figures. Barracuda Networks does a lot more than just appliances these days, check out www.barracuda.com to see our latest innovative offerings across virtual appliances, hybrid cloud solutions, pure cloud services and private cloud options. The smart folks at Barracuda in Ann Arbor and back in California are working on lots more exciting things to come for our customers as well. We are moving fast! http://youtu.be/0esh_pYoVPY If anyone has any questions, comments or suggestions for Barracuda, I would love to hear from you at egomes@barracuda.com. We look forward to continuing to participate in Ann Arbor's great story. In it, we have found a home we are all excited about.
Soothslayer
Thu, Jun 28, 2012 : 1:28 p.m.
Everything in the industry is moving towards virtualized hardware & software based services, not appliance based. Enjoy your costly buildout, tax abatements & ensuing highly specialized vacant space. http://goo.gl/9GMCH
Brad
Thu, Jun 28, 2012 : 11:25 a.m.
And in a separate story today, Automobile magazine moves from downtown Ann Arbor. Why? Because of the parking. No comment from the mayor on that one.
eyesofjustice
Thu, Jun 28, 2012 : 9:03 a.m.
Alan has a good point.....
Ron Granger
Thu, Jun 28, 2012 : 2:22 a.m.
Congratulations to everyone at Barracuda. This will have a great impact on downtown Ann Arbor.
Joseph Welch's Ghost
Thu, Jun 28, 2012 : 1:53 a.m.
#David Admit error when presented with unassailable and contrary facts? I'm sure they will.
Brad
Thu, Jun 28, 2012 : 11:49 a.m.
OK, I'll stand corrected that parking was a big factor. But was it specifically due to the library lot? Would there have been insufficient parking in the new location without that? Would they not have moved then?
Lizzy Alfs
Thu, Jun 28, 2012 : 11:31 a.m.
Just to clarify: Sean Heiney said parking was the single biggest factor in their move there. Without the parking, the deal would not have happened, he said.
Brad
Thu, Jun 28, 2012 : 11:18 a.m.
I must have missed the part where Barracuda mentioned that the parking was even a factor.
Dug Song
Thu, Jun 28, 2012 : 12:56 a.m.
I was in the Barracuda office last week, and they are indeed packed in there like sardines (something like the old Facebook office, pre-IPO)! I remember when there as many boxes as people there, and look forward to seeing the kegerator in the new office. ;-) It's great to finally have a real tech anchor bringing energy, density, and business downtown. Kudos to the Barracuda team on their continued success! One day, the Jolly Roger will fly again downtown... http://www.flickr.com/photos/dugsong/71701751/in/set-1541555/
GoNavy
Wed, Jun 27, 2012 : 10:13 p.m.
Really? This is what we're getting? I'd just as soon see a hole in the ground filled with water. After all, ditch digging creates jobs, and considering the fact that we're giving Barracuda tax breaks, the ditch wouldn't cost the city much at all. Let the "rejuvination" of Liberty Street begin.
Kai Petainen
Wed, Jun 27, 2012 : 9:43 p.m.
Nathan beat you by 1 minute! This was posted at 2:30 and Nathan Bomey (formerly from A2.com and now he's at Freep) got his in at 2:29. HA!!! I sense some competition. Although Nathan would beat A2.com by 1 minute, I think Melanie's photo is better, as she has much better composition in her photo than the freep photo. I'm a fan of her photo skills. This announcement is cool news. It'll be nice to have someone at that building. Congrats and Welcome. Cool stuff, and great news for the local businesses. YAY! Question -- The folks at Barracuda are logical, so they'll understand this logical question: If I had a choice of parking at the parking lot right next to me, then why would I go to a parking lot that was a few blocks away from me? It's not clear to me, as to why the new parking lot was needed for this deal to happen. To me, I imagine that the convo went like this: "hey, we'll give you a deal on the building, but we need to look good on the new parking lot, so say some nice things about it, so make sure you park at the new lot". Deal? Good.
Kyle Mattson
Thu, Jun 28, 2012 : 12:33 a.m.
Kai- Melanie is off on vacation for the remainder of the week, but I'm sure she'd appreciated the sentiment as she posed and light the shot (the Freep photo was taken by a Spark employee). Cheers.
David Cahill
Wed, Jun 27, 2012 : 8:37 p.m.
This is terrific news! I expect those who criticized the new Library Lane parking structure will be "reassessing" their positions.
Brad
Thu, Jun 28, 2012 : 11:52 a.m.
Sorry, I'm wrong on that one. "Ann Arbor Mayor John Hieftje, Ann Arbor SPARK CEO Paul Krutko, Colliers' Jim Chaconas and Heiney all said there was one aspect of the deal that was most critical: parking." That's their story and they're sticking to it. But was it the Library Lane in particular?
Brad
Thu, Jun 28, 2012 : 11:15 a.m.
Why? Because the mayor says that was a factor? If you read the article closely you'll find no mention of that by Barracuda or anyone else. Well, other than in the comments by sympathetic "reporters" and the DDA.
Linda Peck
Wed, Jun 27, 2012 : 8:13 p.m.
This is fantastic news! Could not be better for the downtown campus!
bugmenot
Wed, Jun 27, 2012 : 7:33 p.m.
As a current Barracuda employee, I can tell you that the thing most of us male engineers are most excited about is getting into a property that has more than a 2 stall / 1 urinal bathroom!
markguy
Wed, Jun 27, 2012 : 9:17 p.m.
I am sure you'll miss Casey's, but you'll have lots more options. I imagine it was nice to stroll around Argo while thinking out a tough problem, but again you'll have options for that downtown. That looked like a great location to work. Bill Martin did a nice job fixing that place up. I doubt if it will stay empty long. Good luck in your new location. I'm thrilled to hear that this world class company is staying 'in town'.
smokeblwr
Wed, Jun 27, 2012 : 7:44 p.m.
After lunch that is probably crowded and conditions are less than ideal, if you know what I mean.
Nancy Shore
Wed, Jun 27, 2012 : 7:01 p.m.
We at the getDowntown Program are very excited to see another large employer downtown. These are the type of employees that usually take advantage of alternative transportation options, so I am sure that many of their employees will be biking, walking, and busing in addition to parking downtown. Although Google also provides parking for all of their employees, Google also has the highest bus ridership of any employee downtown and actively encourages their employees to give up their parking passes. So while parking is definitely a strong incentive to bring Barracuda downtown, I am sure the abundance of alternative transportation options also makes this a great place to locate. Welcome downtown!
hotpants
Thu, Jun 28, 2012 : 2:43 p.m.
i think people forgot about the underground parking lot that the city just built on fifth? not that far of a walk to work if one parks there..
Commoncents
Thu, Jun 28, 2012 : 12:58 a.m.
Nancy Shore is a real person ? I just thought it was SPAM that I got in my inbox every few days, haha. Nice!
Leah Gunn
Wed, Jun 27, 2012 : 8:52 p.m.
There are many more Park and Ride lots than the one on Miller. There is, for people coming from the South, a P&R lot at Pioneer High. Go to AATA's web site and check out the others. If you work downtown, you get a free bus pass (assuming your employer will cover the measly $10.00 per year cost), and the parking at the P&R lots is free. Therefore, cost = $0.00.
djacks24
Wed, Jun 27, 2012 : 8:46 p.m.
"So instead of driving straight into the city from the South Side, one should drive an extra 10-15 minutes to Miller, then an extra 20 minutes from the P&R on the bus?" This is such a pain. I recently turned down a higher paying position because of something like this, because to park any closer it would've cost a fortune. To all those that advocate this, maybe you should try it first if you don't already do it. I also thought it was going to be no big deal. I tried it one day to see what it would be like and almost instantly changed my mind. Then on top of everything else, being packed on a bus like sardines in this heat. The money they were offering wasn't nearly enough to spend an hour plus getting back and forth to work over a 13 mile one way trip. I'll take my current 11 mile, 15 minute (besides the occasional traffic backup on I-94) commute, thank you very much!
M
Wed, Jun 27, 2012 : 8:27 p.m.
@leaguebus: So instead of driving straight into the city from the South Side, one should drive an extra 10-15 minutes to Miller, then an extra 20 minutes from the P&R on the bus? If my choices were drive to town and deal with traffic, or be environmentally friendly and leave 40-60 minutes earlier, I think you know what most people would choose.
leaguebus
Wed, Jun 27, 2012 : 7:47 p.m.
M, it's 20 minutes downtown from the Miller park and ride. These people could also park at the P&r and ride their bikes back and forth. The AATA does great from the p&r's.
smokeblwr
Wed, Jun 27, 2012 : 7:44 p.m.
If people don't like driving into Ann Arbor then they can find a job in Pinckney.
M
Wed, Jun 27, 2012 : 7:24 p.m.
The biggest problem to this is commuter traffic. So many large-company employees live in the surrounding areas (Dexter, Saline, Pickney, Detroit, etc), that public transportation is useless. Parking is required for companies of this size, and while I'm sure there will be lots of Barracuda employees taking advantage, many will still commute, and that is the largest concern. You can't sell a space downtown without parking - it's impossible.
Lizzy Alfs
Wed, Jun 27, 2012 : 7:21 p.m.
Nancy, you're right. Many of the Barracuda employees already bike and bus to work and many still plan on doing that. The parking is provided as an option for all employees.
Tesla
Wed, Jun 27, 2012 : 6:43 p.m.
Awesome.
Alan Goldsmith
Wed, Jun 27, 2012 : 6:39 p.m.
"Key to that investment is a five-year tax abatement from the City of Ann Arbor totaling $85,150, and $1.2 million in funding the company expects to receive from the Michigan Economic Development Corporation's business development program." Will there be any vehicle for tracking and verifying actual job creation a year from now? If now, what will that be?
Ron Granger
Thu, Jun 28, 2012 : 2:18 a.m.
I guess it would be too difficult for you to verify that they need to file tax forms to claim the credits. They do. They don't get the credits if they don't do the hires.
TNB
Thu, Jun 28, 2012 : 12:04 a.m.
Alan has a good point, especially noting that "Google has long said it plans to have 1,000 employees eventually." 275 is a long way from 1,000 jobs.
Cash
Wed, Jun 27, 2012 : 10:37 p.m.
Corporate welfare defined.....five-year tax abatement from the City of Ann Arbor totaling $85,150, and $1.2 million in funding the company expects to receive from the Michigan Economic Development Corporation. If we gave that away to taxpayers with no way to measure the payback, I am sure people would talk. There needs to be a method to measure the value. Pretty simple.
Alan Goldsmith
Wed, Jun 27, 2012 : 8:26 p.m.
M: This was my question: "Will there be any vehicle for tracking and verifying actual job creation a year from now? If not, what will that be?"
M
Wed, Jun 27, 2012 : 8:12 p.m.
Barracuda has, in 4 years, employed on average an employee a week, and is now renting space for 300 more employees. What part of that is corporate welfare, and at what part is spending a little money to keep 400 jobs worth of tax money in the city? I know that there's cheaper places in Pittsfield / York Twp, so maybe this is a net good for the tax base.
Cash
Wed, Jun 27, 2012 : 7:58 p.m.
You make an excellent point. How many times have we been burned on that one? Corporate welfare is killing us, the taxpayers.