M-Detroit-Troy-MI-LRG
CLIENT Molina Healthcare, Inc.
LOCATION Troy, MI
SERVICES Tenant Representation
Lease and Purchase Negotiations
Lease Administration
Work Space Optimization
Property Management
PROPERTY SIZE 160,181 SF Class “A” Office
FINANCIAL BREAKDOWN Total Savings of 46% over 10 years
PORTFOLIO SIZE 4,250,000+ SF Mixed Property Type

ACCOUNT OVERVIEW

Damian McKinney met Dr. C. David Molina, the founder of Molina Healthcare, in 1989 in Long Beach, CA. At the time, Molina Healthcare was occupying approximately 10,000 square feet of medical and office space. Today, McKinney manages this Fortune 500 Company’s real estate portfolio of over 4.25 million square feet and growing. McKinney Advisory Group proactively adds to Molina’s earnings through real estate brokerage as well as asset, project, and property management. McKinney Advisory Group provides comprehensive portfolio management services for Molina Healthcare ranging from site identification, lease and incentive negotiations, asset management, lease administration, CAM audits, financial reviews, strategic planning, and on-going tenant representation.

 

CHALLENGE PRESENTED

Molina Healthcare occupied a building in Troy, MI for over 14 years, and during this time experienced many expansions resulting in the leasing of an additional 50,000 square feet. As a result of the Affordable Care Act, additional growth is expected to occur in 2014. The building in which they were located would not accommodate the added growth anticipated. Further, Molina had interest in relocating from the suburban market of Troy to the urban area of downtown Detroit. McKinney commenced research to identify potentials with large blocks of office space available or becoming available in a timeline that would accommodate a relocation prior to the expiration of Molina’s current lease.

 

SOLUTIONS

McKinney Advisory searched for a building with large, efficient floor plates, and sufficient parking in Detroit, as well as Troy and other suburban Michigan markets that could accommodate Molina’s specific company and expansion requirements. McKinney performed extensive location searches in the surrounding areas and met with numerous property owners in each market. During the search, a building was located that was available for lease. Exhaustive financial analyses was performed on the Troy, MI site against various lease options in the downtown Detroit option. During the review process, the owner of the Troy opportunity offered to sell the vacant building rather than lease. McKinney quickly brought this opportunity to the attention of Molina. By providing a detailed lease vs purchase analysis, it quickly became clear that the purchase opportunity would lead to substantial savings. Molina was able to purchase the same Class “A” office building they were contemplating leasing at a 10-year savings of over $12,000,000.