Ford Motor Company‘s impact on Dearborn endures with a new $1.2 billion plan to remake its offices into walkable campus areas over the next 10 years.
But some changes are more immediate: In the next year, the global automaker will reshape one of Metro Detroit’s largest malls when it moves a product planning center into a long-closed anchor store at Fairlane Town Center.
The move will be one of southeast Michigan’s largest office deals this year, affecting at least 2,000 employees. That Ford is also replacing retail space in a super-regional mall puts Fairlane at the forefront of U.S. real estate transformations.
While the deal at Fairlane is unique for Ford, but it’s also a sign of new, creative approaches to using space at U.S. malls.
That both are involved makes sense, according to people involved in the deal.
“Ford is planning a transportation campus,” said Chuck Bechara of Starwood Retail Partners, an affiliate of Starwood Capital Group, the $7 billion real estate investment company that acquired Fairlane in 2014 in a seven-mall, $1.4 billion deal.
“They’re converting their offices and their main facilities, slowly but surely, into a high-tech transportation and development hub,” Bechara said. “And Fairlane is in the middle of it all.”
Now the conversion of 240,000 square feet of mall space into office space is underway. About half of that is the two-story former Lord & Taylor store, with the rest inline former store spaces.
The renovations will accommodate about 2,100 Ford employees in new product development, Bechera said. That move comes as Ford begins a decade-long effort to consolidate 30,000 employees in 70 offices to two redesigned, high-tech locations in Dearborn, just west of Detroit.
Ford did not comment for this story. Details on the build-out were not available, but Dearborn officials said the mall’s zoning did not need to be changed for the office space.
“We’re excited that the mall will be given an interjection of energy with Ford’s plan,” said Mary Laundroche, director of public information for Dearborn.
The 1.5-million square foot mall was built in 1976 by the Taubman Company, which also developed Twelve Oaks in Novi, Briarwood Mall in Ann Arbor and Lakeside in Sterling Heights during that era. It has about 160 stores.
Starwood Capital Group reported acquired Fairlane for $102.2 million. Starwood, which owns malls in 16 states and operates them through its realty group, found the Fairlane sales per foot were around $335.
The Lord & Taylor had been closed since 2006. A Saks Fifth Avenue store also closed, and was demolished for restaurant space. Other anchors Macys, JC Penney and Sears still operate, but all three chains have been closing stores as department stores face profit pressures.
Bechera said Taubman did a great job with maintaining occupancy and a tenant mix, including adding a movie theater and additional restaurants. Despite that, Fairlane had reached a state of maturity in what he called “a mature market.”
“This was kind of the slow one, the one we took along with it,” Bechera said. “It turned out to be one of our shining stars.”
One reason is the steady sales increase, putting the average over $400 per foot today.
Another, Bechera said, is the Ford deal.
The lease, he said, “is really a lynchpin in the revitalization and, I think, solidification of our mall in the market.”
Now, he said, more investment into the property will follow.
Shoppers won’t find the office space obvious while in the mall. It will be integrated into a private setting for Ford, which will require security access to enter.
Meanwhile, one of the new Ford campuses will be to the east of the mall, across the Southfield freeway, near the existing Ford World Headquarters. Its presence is felt in the offices, hotels and restaurants that line the outer perimeter of the mall property.
“They’ve been our neighbor for many, many years,” Bechara said. “We’re proud to be partners with them.”
Bechara looks back to the Great Recession and Ford’s turnaround plan, during which the automaker didn’t take government money during the downturn. It moved from $12 billion in losses in 2006 to record pre-tax profit of $10.8 billion in 2015.
“Ford stood tall and came out stronger than ever,” Bechara said. “That parallels the mall and the mall’s success. We’re stronger than we’ve ever been.”