Bill Martin's real estate portfolio: Cause for concern in Ann Arbor?
Bill Martin's retirement announcement Wednesday renewed some Metro Detroit interest in the fact that the outgoing University of Michigan athletic director owns Ann Arbor office space - and leases a lot of it to U-M.
The latest example: The Detroit News reports today under the headline "Bill Martin's continuing U-M ties include $5.4M in rent."
In Ann Arbor's real estate circles, Martin and his ties to U-M are periodically brought up by those wondering whether he gets preferential treatment. It's one of those cyclical conversations that seems to ebb and flow based on how much business other landlords are getting from U-M.
Today the News reports Martin's company - First Martin Corp. - leases over 250,000 square feet of space to U-M, according to records.
Lease data from U-M was also the basis of a Crain's Detroit Business report earlier this year when that publication took a look at U-M leases. And Ann Arbor Business Review has looked at data about local U-M leasing over the years.
Aside from being one of the largest U-M lease holders in town, First Martin is also the largest private landlord here: It has over 1 million square feet of office space in a portfolio that includes historic - and not-so-historic - downtown buildings and new construction on Depot Street.
Any analysis of Martin and his U-M leases also needs to note the proximity of much of his property to North Campus. The Traverwood complex, for example, is home to various offices that U-M seeks to locate on Plymouth Road. Attributes of the property include easy parking access and proximity to US-23.
Martin's 31 properties aren't the only ones in town with those qualities: The largest U-M landlord is Domino's Farms, located just east of US-23 and north of U-M's East Ann Arbor Medical Center.
And on the south side of town, Oxford Co. leases substantial space to U-M, which targets the I-94/State Street corridor for other office needs.
Martin owns other properties U-M has leased. One example is the building at the corner of South U and South Forest, where the University of Michigan Museum of Art set up temporary exhibits while its major renovations closed that building to visitors.
Longtime Ann Arborites will remember that building as the home to Bicycle Jim's restaurant - which for a time was above a Community News bookstore. Many in town also will recall that a Tower Records used to occupy another nearby building on South University - one owned by Oxford that now houses U-M offices.
U-M dominates the Ann Arbor real estate market - it's one of the most active, credit-worthy tenants a landlord could hope for. And the landlords who have relationships with U-M work hard to keep them.
In 2004, many landlords expressed concern when U-M hired a real estate broker to audit its leases. Every lease was scrutinized to determine whether the billed square footage was accurate, whether the space was being utilized, whether the rate was at market. At the time, U-M leased 1.1 million square feet in Michigan, representing $25 million in payments per year. That 1.1 million total hasn't changed over the years.
To put Martin's deals in context, based on that 2004 data, he's got about 23 percent of U-M's leases and about 20 percent of its lease payments. And two other landlords in Ann Arbor are keeping pace with his company's total volume of business with U-M.
All of the deals First Martin signs with U-M have been approved by the Board of Regents. Details on those deals have been posted online - and reported in the Ann Arbor media - for years.
After his retirement, we'll lose that glimpse into the deals.
And competing real estate brokers and landlords will wonder whether Martin will lose any access he may now have to leases written with companies other than his own. That, too, has been among the complaints in real estate circles: If Martin is a U-M employee, they ask, then can't he see what kind of potential deals other landlords are cutting?
The raw data doesn't conclude there are missteps.
But we can keep watching the U-M lease totals beyond Martin's retirement to see if changes occur.
Paula Gardner is Business Director at AnnArbor.com, where she covers real estate and development. Email her or call her at (734) 623-2586. Sign up for the weekly Business Review newsletter here.
Comments
Vivienne Armentrout
Sat, Oct 24, 2009 : 5:01 a.m.
Thanks for the reporting. I agree that this was a useful backgrounder. I didn't see it as an attack on either Mr. Martin or the UM.
rightmind250
Sat, Oct 24, 2009 : 12:02 a.m.
Hey Paula, I am glad you are trying to educate the uneducatable people of A2 and Michigan. I guess they do not care that there tax dollars have lined this man's pocket. No wonder the auto industry failed. This state has become the poster child for welfare and unemployment and gold ol Bill is fat and happy. Have a good life!
Paula Gardner
Fri, Oct 23, 2009 : 4 p.m.
JoAnn, Thanks for your note and your insight as a former tenant of First Martin. I know that many people in Ann Arbor agree with you. I do believe that the numbers do show, over time, that Bill Martin's dealings with U-M have not been alarming. That was not part of original coverage that we saw this week... but I also believed it was worth writing about here, since it was a regional discussion about part of our local community.
JoAnn Barrett
Fri, Oct 23, 2009 : 1:01 p.m.
Slow news day? Reporting on conjecture? Why the inflammatory title when your article says "The raw data doesn't conclude there are missteps." When your sentence is untangled, the truth is that the largest landlord in Ann Arbor has a track record of business dealings that when scrutinized carefully have revealed success based on a brilliant mind, the ability to seize opportunities, to deal honestly and directly with the trickiest of situations without flinching. As the former owner of a local business, I was a tenant of First Martin for 14 years. I was also the tenant of 3 other large landlords. No one could compare with the honesty, the level of service and cooperation my business received from First Martin. Bill Martin is respected world-wide for the same traits that I benefitted from, and that the University of Michigan has benefitted from in rebuilding its athletic department. It is his reputation for dealing honestly and in a straightforward manner that has earned him the loyalty of his tenants, his associates, his coaches, his peers. If your article is simply a response to questions the Detroit News brought up, why lend support to their false issues? Why not follow the Bill Martin recipe for doing business: be direct and straightforward, tough, honest and fair.
Paula Gardner
Fri, Oct 23, 2009 : 11:09 a.m.
rightmind250, Please don't miss the fact that U-M has made this public info. Every single regents agenda that has included a U-M deal in a First Martin building includes the fact that Bill Martin is a U-M employee, and then details on the lease (including terms and build-out costs) are included. As of a couple of years ago, that information is online. Before that, it was included in paper packets. and Cash, some local media have reported this over the years - including me, going back to about 2005. Also, on an ongoing basis, real estate writers at Business Review have mentioned various deals in some detail in the former "Square Footage" column that we did when we were a print publication. I believe the difference here is that many in Ann Arbor know Bill Martin first as a real estate developer and these deals have been incremental over time. His company's first deal with U-M was decades ago (the 1970s, I believe). We've seen his lease deals with U-M grow over that time, but in recent years the amount has been fairly steady (even as the who and where of the specific deals change). That's true, too, for the other top landlords that lease to U-M.
rightmind250
Fri, Oct 23, 2009 : 10:41 a.m.
I agree. Uof M should have made this public knowledge. Lining the pockets of the AD? What about the academic fiasco with RR and UM. I think the University has some real credibility issues here.
Cash
Fri, Oct 23, 2009 : 7:21 a.m.
I think it's a negative that the local media NEVER reported on this until the Detroit News did their article. The "rah rah UM" stuff has it's place, but I smell a cover up. If there is nothing wrong with what has been going on.....why the complaints over making it public knowledge? If it's all legit, making it public should be applauded.
azwolverine
Thu, Oct 22, 2009 : 10:11 p.m.
Wow, first the Freep broke an article that everyone piled on, now the News. I think every paper in the state of Michigan is trying to bring down the University...not. Some people find this newsworthy, some may not. Fortunately we can have it presented to us and decide for ourselves what to make of it. Hmmm...sounds kind of American to me.
Mike D.
Thu, Oct 22, 2009 : 4:07 p.m.
Interesting article. And one of the first where I've seen comments complaining about facts being reported.
braggslaw
Thu, Oct 22, 2009 : 3:10 p.m.
Thank you for the information. I for one would like to be aware of any conflict of interest. UM receives 100's of millions of dollars of state tax money, there should be accountability.
leathercouch
Thu, Oct 22, 2009 : 12:43 p.m.
I only pile on the writers because while they say they are just putting it out there so the people who read it have more substance there is still a very large underlying tone. the ending is classic. "...The raw data doesn't conclude there are missteps. But we can keep watching the U-M lease totals beyond Martin's retirement to see if changes occur." like i said before Rosenburg journalism at is finest...they havent done anything wrong YET, but we are going to dig until we find something.
bellhelmet
Thu, Oct 22, 2009 : 12:13 p.m.
If there was some filter against pointless kvetching Rust, your comments might not get posted. Commenters have a right to pile on the writer. And should.
KJMClark
Thu, Oct 22, 2009 : 11:57 a.m.
Actually, I wasn't aware that Bill Martin was still Athletic Director. I thought that was over long ago. Obviously, I don't care at all about sports. I've lived in Ann Arbor since 1986, in the North Campus area most of the time, so all of this isn't as obvious as some people think. I walk by many of those First Martin buildings each week. I do wonder what will happen to them when the University moves into the former Pfizer space. Thanks for the article.
lumberg48108
Thu, Oct 22, 2009 : 11:54 a.m.
"Today the News reports Martin's company - First Martin Corp. - leases over 250,000 square feet of space to U-M, according to records." C'mon Paula... more than or less than for numerical values! "Over" or "under" are places of geography!
Paula Gardner
Thu, Oct 22, 2009 : 11:25 a.m.
Actually, it was the Detroit News that wrote the first article about it today. But, in my opinion, it didn't contain enough information for people to reasonably conclude whether there IS any impact of Bill Martin's leases with U-M.
leathercouch
Thu, Oct 22, 2009 : 11:15 a.m.
then why stir the pot? why now? why not last month when it was exactly the same scenario? this has rosenburg journalism written all over it. congrats paula you are the first to break the non-story.
Paula Gardner
Thu, Oct 22, 2009 : 10:52 a.m.
MB111, That's actually why I thought it was important to weigh in on the discussion - with some details of what I've learned over my time covering real estate here. There's some sense of "discovery" of this outside of Ann Arbor, but readers need a little more context to determine whether there is something concerning or notable in the situation. People who have watched the agendas over time and look at the proportion of leased space to the lease costs for Martin's space don't see much cause for alarm.
MB111
Thu, Oct 22, 2009 : 10:42 a.m.
Paula, why is this news? This has been known for over 10 years. It is common knowledge that the U is the largest tenant in the City. Is it not expected that the City's largest tenant leases some space from the City's largest landlord??
Ann Arbor Andy
Thu, Oct 22, 2009 : 10:30 a.m.
Part of the reason U-M bought the Pfizer buildings was that it could move some of the leased places there - such as from Martin's Traverwood complex where some pathology labs are located. I wonder if this will lessen U-M's dependence on Martin's leases very much? And will it leave Martin with vacant space in a Plymouth Rd corridor with so much vacant office space currently it seems?