Stellantis Exploring Sale of Detroit HQ, Might Lease It Back: Report
Stellantis would have to bargain with the UAW for the ability to sell the site first, before leasing it back.
Stellantis could sell its massive headquarters in Auburn Hills, Michigan, and the United Auto Workers Union isn't exactly thrilled about it. However, the automaker seemingly doesn't have plans to completely skip town and leave its HQ in someone else's hands. Instead, The Detroit News is reporting that Stellantis is interested in a sale-leaseback deal, in which it sells the building and then leases back parts of it from the new owners.
It might sound counterproductive to sell your home and then become a tenant in it, but there are some real financial benefits to doing so—mainly, cash. Stellantis could net anywhere between $250 million and $500 million for the 500-acre property, according to commercial real estate firm Signature Associates. That large chunk of cash could be used for anything from investing in EVs to paying off debt, and then Stellantis would just lease whatever parts of the facility it needs afterward.
Stellantis is far from the only company (let alone automaker) getting involved in commercial sale-leaseback deals, especially after the pandemic. With such a large number of people working from home or on hybrid schedules, firms with large headquarters are paying for far more unused space than ever before. This is why some have turned to these leaseback deals, to only lease the parts of their buildings that they need.
The Auburn Hills HQ isn't just filled with white-collar executives. It also has an R&D facility and labs filled with unionized workers, which is why the UAW is concerned about a potential sale. In these sorts of sales-leaseback deals, the seller can usually dictate their terms and lock in lengthy leases before they even sell the place. But the amount of space Stellantis decides to rent will all depend on the number of employees it expects to keep on the payroll. Before Stellantis is allowed to do anything of the sort, however, it would first have to bargain with the UAW for the ability to sell the building.
"It will be our North America headquarters, but like everyone in the hybrid working environment, and looking at our overall footprint across the region, and specifically in the U.S., we have a lot of the building here in Auburn Hills that we're not utilizing today," said Mark Stewart, COO of Stellantis North America.
While Stellantis lacks a pure electric vehicle just yet, it has a few in the pipeline and hopes to have 25 electrified cars on the market by 2030. To do that, it's going to need large cash investments, which could drive it to sell and then lease back its own HQ.
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