The city of Detroit, Michigan, has been experiencing an economic and cultural rebirth since declaring bankruptcy in 2013. Billions of dollars have been invested in its revitalization, with some now calling Detroit “the most exciting city in America.” While the region is known as the center of the North American auto industry, it is also home to some of the top medical centers, corporations and universities in the nation.
This city’s resurgence makes the newest CoreCivic Properties acquisition a strategic addition to our portfolio of non-correctional properties acquired since 2017. Located just eight miles outside of downtown Detroit, this new addition is a single-story brick building that houses the Michigan Department of Health and Human Services (MDHHS). This government agency has occupied the 36,520-square-foot property for nearly 20 years.
Mike Grant, CoreCivic senior director of Strategic Development, has worked on all government-leased real estate acquisitions within CoreCivic Properties’ portfolio. On this acquisition, Grant identified the property, handled bidding during the auction, and has remained involved throughout other parts of the process.
“We’ve been actively working to expand our government-leased property portfolio,” Grant said. “The MDHHS asset, acquired on May 6, is attractive to our team because it has a long-term lease in place, it expands us geographically into a new state, and further diversifies the company. The asset is well-built and advantageously situated to serve its mission-critical, customer-facing government function.”
MDHHS recently extended its lease term through June 2028, with a six-year renewal option. The property is a build-to-suit project, meaning it was designed specifically for the purpose it serves. The design addresses customer service with ample parking as well as security needs for the tenants such as private key-card access for employees; two-person security desks; and a secure window-protected customer service area. For CoreCivic Properties, build-to-suit projects like this bring desired stability.
In turn, the agreement benefits our new government partner, the state of Michigan, because CoreCivic Properties brings the expertise of a large real estate entity focused exclusively on government-used properties.
Bringing our expertise to a new government partner
MDHHS provides opportunities, services and programs that promote a healthy, safe, and stable environment for Michigan residents to be self-sufficient. With 13 departments, residents there find assistance via services such as children’s special health care services, food and child care assistance, migrant services, cash assistance, health care coverage, Medicaid and emergency relief. MDHHS also oversees Michigan’s child and adult protective services, foster care, adoptions, juvenile justice, domestic violence and child support programs.
The building where this work has been accomplished since 2002 is in excellent condition. It was re-carpeted and re-painted at the beginning of this year. The CoreCivic Properties team already has plans to make additional improvements.
“As landlord, CoreCivic is responsible for the building itself as well as major systems, in addition to insurance,” Grant explained. “We will reinvest in the property to improve the surface parking areas and will bring our maintenance expertise to other challenges as they arise. The tenant is responsible for most onsite responsibilities, such as janitorial services and landscaping.”
Grant added that CoreCivic Properties is retaining the in-place property management team, which benefits both CoreCivic and MDHHS.
“Because the tenant is familiar with this property manager, the property sale can be relatively seamless from the tenant’s perspective,” he said. “Our past experience with this property manager gives us confidence in their capabilities and also enables us to more quickly integrate this property into our systems.”
The MDHHS building is the second state-leased office asset in the CoreCivic Properties portfolio, preceded by the Capital Commerce Center, acquired January 2018, in Tallahassee, Florida. CoreCivic Properties plans to continue expanding with both federal- and state-leased assets.