News that Borders now plans to relocate from its Ann Arbor headquarters can’t take anyone in Washtenaw County by surprise.

It’s clearly been just a matter of time before the downsizing bookseller had to shed its expensive ties to one of the largest office buildings in the region.

Photo by Lon Horwedel | AnnArbor.com

This corporate headquarters, at 100 Phoenix Drive, is located on the edge of the city and just south of I-94. At 460,000 square feet, the property has been dramatically underutilized for years.

The current headcount means the office contains the equivalent of 836 square feet for each person. That’s the size of many 2-bedroom apartments.

Earlier this year, Borders sublet 13,000 square feet to Recellular — but it's also reportedly continuing smaller-scale layoffs, so I’m willing to assume that ratio remains true today.

Now, with the chain in bankruptcy and shedding stores, the mission of the business is to “right size” itself. That’s likely to mean continued attention to staffing and facilities, as the entire operation is realigned into a business that — at least in theory — can operate profitably with a smaller retail footprint.

So it simply wasn’t plausible that the company — allowed to open leases as part of bankruptcy — would hold onto its existing headquarters lease.

But now, as Borders officials tell us that they’re considering options in Metro Detroit (which includes Ann Arbor, they stress) for their relocation, we all need to consider: Is this the end of Borders in Ann Arbor?

Many will say that Borders has been divorcing itself from its Ann Arbor roots for years, with today’s news only signifying the final split after a long separation.

But we also need to consider that the loss of jobs in the city would have a big impact. There’s the tax base: Even with the building’s value falling by one-third since 2009, the property generated $818,182 in property taxes in 2010. Borders also paid $242,478 in personal property taxes — again, an amount that conveys just how much the company doesn’t need the building anymore. The personal property tax assessment fell more than 50 percent from 2009, showing how much equipment and personnel just aren’t there anymore.

The company is saying that Ann Arbor and Washtenaw County remain among its options as it plans to relocate, but the local vacancy rate is lower (at about 14 percent) and the average leasing rate is higher (by $2 to $4 per square foot) than many locations in Metro Detroit, according to a recent Signature Associates report.

Meanwhile, some missing pieces of information remain: What will the final headquarters headcount look like? And what will that mean Borders will need for its corporate offices?

If the company stays in Washtenaw County, there aren’t many options —especially if the headcount stays above 500. However, that could change if the headcount drops or having every employee in the same building isn’t critical after the reorganization.

Some possibilities:

• Two former Borders headquarters. Remember when Borders had corporate offices in the former Tally Hall on East Liberty and also at 311 Maynard, adjacent to the downtown store? Both of those spaces are now on the market.

The Offices at Liberty Square is the latest incarnation for Tally Hall, and it’s now owned, managed and repositioned by McKinley. It’s listed for $14.50 per square foot per year, and about 29,000 square feet are available.

Meanwhile, the Maynard office has been empty since Borders left — and it’s still paying on the lease to Agree Realty, the landlord of the Phoenix Drive headquarters. We have to assume that the lease will be renegotiated, along with the downtown store, but today there is 48,000 square feet available — for the same $14.50 lease rate.

• State Street Business Park, where the 49,000-square-foot building at 5725 Hines Drive near State and Textile is listed for $11.50 per square foot per year. This is among the largest floor plates available in the “south” office market of Ann Arbor.

• Northeast Corporate Center and Northeast Plaza: The two buildings off Green Road have a combined 58,000 square feet available, each at $18 per square foot.

• 5200 and 5220 South State: These newer buildings in Pittsfield Township — home to Handylab, which is moving out — offer a combined 51,857 square feet for $12 square feet on a portion of it.

• Earhart Corporate Center, now home to Con-Way Freight, still has 49,895 square feet available at the corner of US-23 and Plymouth Road.

All of these possibilities represent some of the largest floor plates — outside of new construction — listed today in the market.

Another possibility that may not be worth ruling out: Remaining at 100 Phoenix Drive under renegotiated terms for a smaller space.

Landlord Agree Realty isn’t commenting on the situation, but that option could be best for the community, the company and the local real estate market.

The value of the building is diminishing, and Agree’s best move may be to turn it into a multi-tenant facility. Keeping the tenant for a while might be better than bracing for a 447,000-square-foot vacancy.

But with many still questioning whether Borders can survive bankruptcy for any length of time, a landlord exploring a move with the company also has to reasonably ask: At what point does the risk of a deal with Borders outweigh the benefits?

Paula Gardner is Business News Director of AnnArbor.com. Contact her at 734-623-2586 or by email. Sign up for the weekly Business Review newsletter, distributed every Thursday, here.