10 Things to Watch in 2022

If 2021 taught us anything, it’s that as soon as you BY  MICHAEL LEE declare a “new normal,” something will come around soon to demolish your assumptions. A year ago, as COVID vaccines made their way into production and into the rst arms, the world breathed a sigh of relief and looked forward to the pandemic’s end. But those hopes crashed into an increasing realization that the virus would continue to mutate, vaccine protection would wane and require booster shots, and that herd immunity was never going to happen. As we enter 2022, here’s a look at things to keep an eye on for Michigan businesses. But we’re taking a lesson from 2021 and staying away from making predictions.

BEAUMONT MERGER

We’ll nd out if the third time really is the charm as the mega-merger between hospital companies Beaumont Health and Spectrum Health works its way through regulatory approvals. The health systems earlier this year pushed back their hopedfor closing as the merger between the Southeast and West Michigan health care giants is scrutinized by regulators for competitive concerns. If successful, the merger would be the major business combination that Beaumont Health and its CEO John Fox have sought through two previous deals that fell through.

Bill Ford, chairman of Ford Motor Co., announces a new mega campus called Blue Oval City at the Kentucky State Capitol in Frankfort, Kentucky.

DOWNTOWN OFFICES

The future of work is still very much up in the air in downtown Detroit, where daytime foot tra c is still a fraction of what it was two years ago. “Return to work” plans have come and gone as COVID-19 has ebbed and owed, and it’s still far from clear whether o ce space usage will ever return to pre-pandemic levels. That has some real estate experts betting that downtown areas like Detroit’s that are heavily o ce space could see conversions of some of that space to residential uses. What shape that might take in downtown Detroit will depend much on the o ce space needs of Dan Gilbert’s family of companies, including Quicken Loans Inc.

FUTURE OF WORK

Speaking of o ces, that clarity we thought we might get in 2021 on the shape of the future workplace never came, and there still seems to be little agreement on what it will look like. There are companies now saying that their workforce is remote permanently, and others have plans to return to the o ce in 2022. The competing bene ts and costs of remote work will play out in what amounts to a societal experiment. Companies that get it right will have a big edge in the long run — whatever “right” turns out to be.

EV FUTURE

Ford Motor Co. got the immediate attention of economic development o cials in its home state by picking Kentucky and Tennessee as the home of an unprecedented $11 billion investment in electric vehicle manufacturing. There will be more to come as all the world’s automakers look to reshape themselves for an electri ed future. Michigan will be digging in to win investments from other automakers, including expected retooling by Detroit-based General Motors Co. Detroit is already home to Factory Zero, the electric vehicle plant at the “Poletown” site that will make EVs.

CANNABIS M&A

Michigan’s fast-growing cannabis industry is likely to be a hotbed of M&A deals as the early-”growth” companies hit a wave of consolidation. Bigger players are likely to seek to add scale to their operations and early investors will be looking to cash out. And because marijuana isn’t federally legal, companies have to cultivate and process it in the state in which they want to sell it. Once that infrastructure is built, bigger out-of-state players will be looking to buy in. We got a preview of what’s to come with Canadian weed company TerrAscend’s $545 million purchase of Ferndale-based Gage Cannabis.

UNICORN WATCH

Two companies in very di erent industries that have amassed multibillion-dollar valuations could be headed to the stock market this year. Detroit-based StockX, known as an online “stock market of things, especially sneakers, and Rochester-based OneStream Software both raised major rounds of capital helping to fuel their global expansions. Detroit billionaire Dan Gilbert, a major investor in StockX, has said an IPO could come this year. Last month, OneStream reportedly hired investment bank Morgan Stanley to advise it on its route to the public markets. The IPOs could draw more attention to Detroit’s startup scene.

MEDICAL MILE EAST?

An expansion of the health care presence in downtown Detroit is expected to start to ower this year. Henry Ford Health and Michigan State University sealed a deal for a broad partnership, more details of which are expected to come out this year. It’s likely to put a medical school campus in the Henry Ford footprint, and more developments could be on the way. As Henry Ford CEO Wright Lassiter III said at a Crain’s dinner during the Mackinac Policy Conference: “I would expect in a year or so we might have some public discussions about greater partnerships, not just between us and the Pistons, but between us and some other entities to develop and redevelop the space that today is a lot of asphalt that could contribute to medical innovation, it could contribute to urban renewal,” he said.

Justin Mupas demonstrates the authentication process for sneakers at the StockX authentication center in Detroit.

As of mid-November, steel had risen for several oors of the base of the tower being constructed on the former Hudson’s department store site.

MORTGAGE FUTURE

The rise of in ation might come home to roost in a place that isn’t immediately obvious: metro Detroit’s burgeoning mortgage industry. Rocket Companies and UWM Holdings Inc. have struggled to convince investors that they’re not that vulnerable to rising interest rates, keeping a lid on the stock prices for the companies, which are still new to the stock market. Rising public ire about in ation will pressure the Federal Reserve to act against prices. Traditionally, that action would include raising interest rates, which curbs the value of re nancing mortgages, a signi cant source of business for the companies. After an unprecedented period of mortgage rates in the low single digits, even a small hike in rates will make re nancing a bad deal. The companies have long said they have other levers to pull and other business lines that o set the risk. If rates rise, we’ll see how well that works.

HUDSON’S BUILDING

Detroit’s newest skyscraper, the long-in-the-works tower on the former Hudson’s department store site, has risen out of the ground, though some have expressed skepticism about the project, which has been scaled back from 70-plus stories to 49 stories now. Also still to be determined: exactly what’s next for the site of the former Wayne County “fail jail” on the edge of downtown after a joint project among Dan Gilbert’s Bedrock, New York City developer Stephen Ross and the University of Michigan fell through. Gilbert’s other major construction site, known as the Monroe Blocks, hasn’t seen much action on development planned there that was also part of a $618 million transformational brown eld grant from the state.

OMICRON

Perhaps no question mark looms as large here in the last month of 2021 than that of the recently discovered omicron variant of the coronavirus. At the time of this writing, much remained unknown, but the emergence of the virus with numerous mutations sent a chill through those expecting the economic and psychological recovery from the pandemic to be a straight line. Perhaps nothing will be as signi cant to the world next year than what is learned about this brand new question mark.