August 31, 2017 City Council Regular Meeting
Motion to Approve Lease for Office Space at 1375 Chatham Parkway

Staff is seeking approval to lease 36,538 square feet of office space located at 1375 Chatham Parkway to relocate personnel from the Gamble Municipal Building (GMB) and the Broughton Municipal Building (BMB), should Council vote to declare the buildings surplus and available for sale. The lease space consists of the entire second floor of the facility, plus some additional space in an adjoining connected facility as well as rack space in the building's computer server room. The space is fully furnished.  

The landlord will complete some minor tenant improvements prior to the commencement of the lease, including the installation of new security access doors, and construction of additional offices and storage areas. The projected completion date of these renovations and commencement date of the lease is projected to be December 1, 2017. However, there will be no rent charged for the month of December 2017. Rent payments would commence in January 2018.  

The lease rate will be $782,644 per year on a full-service basis; equating to $21.42 per square foot. The lease rate is fixed over a four-year term. The City has the option to extend the lease one additional year (fifth year) at an annual cost of $842,931.60; equating to $23.07 per square foot.

A full-service lease basis means the landlord pays all utilities, taxes, insurance, janitorial, and common area maintenance expenses. The City will incur some information technology related charges to extend a secure fiber connection to the building and distribute that connectivity to outlets. The IT-related expenses are estimated at $122,000.00. The facility is already fully funished and furniture will not be relocated from other City facilities to the space. Therefore, moving expenses will be minor.  

This new office space is intended to facilitate the relocation of most of the staff from Gamble and BMB.  Selling these older facilities for commercial re-use will add value to the tax roll, increase operational efficiencies, and enhance customer service by providing on-site parking and more modern facilities. The City expects to save an estimated $600,000.00 annually through reduced operation, maintenance and repair costs once BMB and Gamble are sold.     

The lease has been negotiated by the Real Property Services Department and the City Attorney's Office. The landlord has signed the lease and it is ready for execution by the City.



David Keating, Director of Real Property Services
Financial Impact
 $782,644 annually, less an estimated $600,000 annually in existing maintenance/operational costs
Review Comments
Chatham Pkwy Lease.pdf
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