Borders Group Inc. will be moving away from its South State Street headquarters after 40 years of business.

Borders spokeswoman Mary Davis wrote in a statement that the Ann Arbor-based company is looking for a new home for its headquarters several reasons.

“We have determined that our current headquarters does not serve the needs of our business going forward, and represents a cost that can be reduced,” Davis wrote. “Therefore we will be exploring opportunities to relocate our headquarters within the greater metropolitan Detroit area to a more cost effective location, mindful of our corporate employees’ commute and other factors.”

Ann Arbor Mayor John Hieftje said he would be sad to see the Borders headquarters relocate because of its local roots. Borders was established here in 1971 by brothers Tom and Louis Borders.

“I think there is something about Borders’s connection to the people here,” Hieftje said.

Borders Group Inc. filed for Chapter 11 bankruptcy protection in February and announced at the time that the company will be closing about 200 of its 642 stores across the country. The Borders store at the Arborland Mall on Washtenaw Avenue is one of the stores facing closure. As of Dec. 25, 2010, the corporation had about 19,500 total employees.

Borders Group Inc., which also owns Waldenbooks, had $1.28 billion in assets and $1.29 billion in liabilities as of Dec. 25, 2010, according to the February bankruptcy petition. During the company’s bankruptcy period, GE Capitol is loaning the corporation $505 million.

Despite the impending move, Davis wrote that no decisions about the new location have been officially announced, adding that it may remain in Ann Arbor, just in a different place.

“It’s been widely reported … that we are moving out of Ann Arbor. We have not announced that — the only thing we have said is we are exploring possible locations within the greater Metro Detroit area, which includes Ann Arbor,” Davis wrote. “The final decision about where the (headquarters) will ultimately physically be has not been decided yet.”

Hieftje said he isn’t concerned about the local economy, but more about people losing their jobs as a result of the possible move. He estimated that Borders has already gone from about 1,000 to 550 employees in the area.

“Economically, this is something we’ll handle,” Hieftje said. “It won’t really affect property taxes to any great degree.”

He added that he thinks losing the Borders store on East Liberty Street would have a slightly greater impact on the city’s economy. However, the company hasn’t mentioned any possible closing of the location.

“The Borders store is kind of an anchor, and we would like to see it stay there,” Hieftje said, adding that if Borders does decide to close its East Liberty location, another company would most likely move in promptly since it is a “prime space.”

— Daily Staff Reporter Brienne Prusak contributed to this report.

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