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Cooley Law move into Ave Maria space good news for office real estate market

Sarah A. Rigg By Sarah A. Rigg
on June 10, 2009 at 8:30 AM, updated June 10, 2009 at 8:46 AM
Paula Gardner
News this week that Cooley Law School will open this fall in northeast Ann Arbor creates an encouraging real estate story.

The school - which operates three other campuses in Michigan - will fill the soon-to-be-former Ave Maria Law School site on Plymouth Road.

The building, at 84,500 square feet, had been regarded as a major pending office vacancy in the city's normally strong north submarket. Yet that area - the city's second-largest, behind the South State area - posted a 6 percent vacancy rate at year-end 2008, according to Swisher Commercial, up from about 3 percent a few years earlier.

That 6 percent represents about 150,000 square feet - and adding the Ave Maria vacancy to that would have brought that rate up to just shy of 10 percent in that 2.4 million square-foot submarket.

Cooley Law School will open in the former Ave Maria Law School space.
But now Ann Arbor needn't worry about more large vacant space entering the slow commercial real estate market, thanks to the new tenant lining up a deal to occupy the space even before Ave Maria moves out.

And it comes at a time when landlords already are wondering how many leased offices the University of Michigan will pull into the former Pfizer space once that deal is completed.

Cooley will be leasing the building from Ave Maria, said President and Dean Don LeDuc, and it has an option to purchase it.

Moving into the Ann Arbor market makes sense for Cooley, and Ave Maria's departure for southwest Florida made it possible, LeDuc said.

"In one sense, it was something that we thought about for a long time," he said. "The trigger was Ave Maria announcing that it would move to Florida."

Demographics in Ann Arbor make sense for the law school, which also operates in Lansing, Grand Rapids and Auburn Hills with a combined operating budget of about $75 million for the new fiscal year, which includes funding for the Ann Arbor campus.

Proximity to U-M and Eastern Michigan University is high on that demographics list.

"Ann Arbor has always produced substantial amounts of law school applicants," LeDuc said. "And not all of them have been able to get into the U-M law school."

The economic climate is part of it, too.

"The economic challenges that come along are good for all professional schools," LeDuc said. "... (Law schools) do reasonably better in poor economic times."

Staffing will be made with existing faculty and some administrative shifts, with new hires eventually filling about half of the positions at the private facility. Cooley employs the equivalent of about 425 people.

The building was a perfect fit for Cooley, which didn't look at other sites - and wasn't about to, when the Catholic-based Ave Maria was in the Ann Arbor area, LeDuc said. Ave Maria just graduated 87 students in May and plans for the final campus move to be completed in July.

Two larger classrooms will allow up to 82 Cooley students to be enrolled in the three starting semesters: Fall, spring and winter.

That schedule, LeDuc said, "allows us to use facilities much more efficiently than schools that are much more traditional."

And the building itself is already in top condition for the school. Cooley doesn't plan facilities changes, beyond adding wireless Internet service throughout the building.

But the 9.58-acre property also gives it growth potential.

"There is room to expand it if demand is higher than we're planning on," LeDuc said.

Paula Gardner is editor of Ann Arbor Business Review. Email her at paulag@mbusinessreview.com.