Multi-Year Lease of Office Space for the Relocation of the Register of Deeds and Wake County Revenue Department
October 16, 2006
Specific Action Requested:
That the Board of Commissioners:
1) 1) Approves a lease agreement with TSO Fayetteville, LLC for approximately 44,000 square feet in the One Bank of America Plaza Building located at 421 Fayetteville Street in Raleigh for a term commencing September 1, 2007, and ending June 30, 2013, containing the terms and conditions listed below.
2) 2) Authorizes the County Manager to execute the lease on behalf of Wake County subject to terms and conditions acceptable to the County Attorney .
Item Summary:
In 2004, the County completed an update of a 30-year Justice Facility Master Plan (Master Plan). The entire plan was presented to the Board of Commissioners (Board) in December 2004. A detailed review of the justice-related capital improvements planned for FY07 thru FY13 was conducted at a work session with the Board in Fall 2005. Capital funding for implementing the Master Plan is included in the County's 7-Year Community Improvement Plan.
The major element of the Master Plan that must be completed by 2013 is a new Criminal Courthouse/Public Records Building ( Justice Center ). This facility is planned for the northern half of the city block between the Wake County Public Safety Center and Martin Street in Downtown Raleigh. The existing courthouse will become a family/civil court facility. Modifying an existing tunnel connector under Salisbury Street will connect these two buildings and the Public Safety Center .
On the site of the proposed new Justice Center , structures currently exist that were built 40 to 80 years ago. These structures include a 654 space parking deck and offices of Register of Deeds, Revenue Department, probation and parole staff. The structures are nearing the end of their useful life and are scheduled for demolition in FY 2009 to allow construction of the new Justice Center .
Prior to demolition of the existing buildings, it will be necessary to relocate the Register of Deeds Office and the Wake County Revenue Department to leased office space in the downtown area. County staff, working with commercial realtors, have conducted a search in the downtown area to identify potential suitable space available for lease. It is currently planned that approximately 40,000 square feet of space will be needed in January 2008. Based upon the occupancy of the leased space in January 2008 and allowing approximately 12 months for up-fitting the space and moving, the relocation could be completed by January 2009. There is currently suitable space available in the downtown area meeting the County's needs. However, the County will not need the space until January 2008 and it is likely that the space may be leased prior to that time.
Staff evaluated 8 alternatives based upon 3 proposals received from commercial realtors for potential suitable properties located in the downtown area. Based upon the results of this evaluation process, staff pursued further discussions with the leasing broker for the One Bank of America Plaza Building (formally referred to as One Hanover) located at 421 Fayetteville Street. This building is owned by TSO Fayetteville, LLC, A Georgia Limited Liability Company and managed by The Simpson Organization based in Atlanta , Georgia . CB Richard Ellis provides space leasing and building management services. Based upon these discussions, the owners have proposed a lease agreement containing the following terms that address the County's needs with regards to the schedule for the space required:
- The lease will include two entire floors consisting of approximately 44,000 square feet
- The lease commencement shall be September 1, 2007
- The lease term shall be 5 years and 10 months and terminate on June 30, 2013
- The County shall be provided with a three-time right to terminate the lease early at the end of the 48th, 54th and 60th month
- The Landlord shall provide a concession of free rent for the first 6 months of the lease term ($407,000)
- The County will commence paying rent on March 1, 2008
- The Landlord shall provide an allowance of $528,000 for space planning, design and construction of improvements
- The rent rate commencing September 1, 2007 will $18.50 per square foot. (First 6 months free rent)
- The rent shall increase 3% annually on each lease anniversary date
- The County shall be responsible for a proportionate share of the Building and Land Operating Expenses that exceed the established 2007 base year operating expenses (estimated to be less than $8,500 annually)
Based upon these terms and conditions, it is recommended that the staff be directed to finalize a lease agreement with TSO Fayetteville, LLC for approximately 44,000 square feet in the One Bank of America Plaza Building subject to terms and conditions acceptable to the County Attorney .
Funding for this multi-year lease is included in the Criminal Justice element of the County's 7-year Capital Improvement Program.
More condos for uptown, but not the usual suspect
Charlotte Business Journal - September 22, 2006 by Ashley M. London
It appears the 112 Tryon Plaza building uptown may be going office condo.
The 20-story landmark building was recently purchased for $12 million by Atlanta-based The Simpson Organization. The company is still debating particulars, but it believes the building's character lends itself to for-sale space.
In June, company President Boyd Simpson dispelled the notion that the building would follow the uptown residential trend.
But Simpson says he had envisioned converting the building to for-sale office space when he bought it. The tower's individual floors are relatively small, and the options for buying office space uptown are few, he notes.
Mike Kemmet and David Dorsch of Colliers Pinkard are handling the marketing of the 112 Tryon Plaza building. A date has not been set for announcing the condo conversion.
COLLIERS INVESTMENT SERVICES GROUP BROKERS SALE OF BUSINESS CENTER
News From July 31, 2006
MEMPHIS , TENN. — John Huguenard of Colliers Turley Martin Tucker/Indianapolis and Daniel Wilkinson of Colliers Wilkinson Snowden/Memphis have represented the seller, Boston-based Great Point Investors, in the $9.2 million sale of East Point Business Center in Memphis . The Simpson Organization of Atlanta purchased the seven-building, 287,482-square-foot office portfolio.
Johnston Building to go condo
Charlotte Business Journal - July 14, 2006 by J. Lee Howard
In a move that has been widely anticipated, the 17-story Johnston Building in uptown Charlotte will be the first center city commercial office tower to go condo.
The 200,000-square-foot building is at 212 S. Tryon St .
Owner Howard Duvall of Duvall Investment Group Inc. has decided to convert the building to office condominiums after identifying what he considers a strong, untapped market for for-sale office space uptown.
While the building will be subdivided into for-sale units, it will still be possible to lease space in the building.
Units are available for purchase for $183 to $256 per square foot, and lease rates range from $17.50 to $18.50 per square foot.
John Stipp of Office Properties will handle sales, with Jessica Brown and Kathleen Fenn of CB Richard Ellis managing leasing. Anne Vulcano of CB Richard Ellis will oversee marketing of both the for-sale and rental space.
Uptown sources say Duvall is converting the building into office condos, at least in part, to pre-empt a similar move by the new owner of the 112 Tryon Plaza building.
The Simpson Organization, an Atlanta real estate company, bought that 140,000-square-foot tower last month for $12 million from Dallas-based Sarofim Realty Advisors.
At the time, Simpson President Boyd Simpson promised "significant changes" at the property.
Several years ago, local developer Jim Gross considered going condo with the commercial sections of his Ivey's Townhomes project on North Tryon Street but decided against it.
Times have changed, however, and Vulcano says the Johnston Building offers uptown businesses a rare opportunity to own their office space.
The Johnson Building 's tenants include the Nelson engineering and design firm and a McCormick & Schmick's seafood restaurant.
112 Tryon purchased by Atlanta firm
Charlotte Business Journal - June 2, 2006 by J. Lee Howard
The 112 Tryon Plaza has been sold for $12 million to an Atlanta real estate company, which plans to maintain the 20-story tower as an office building. The Simpson Organization bought the 140,000-square-foot tower from Dallas-based Sarofim Realty Advisors. Simpson Organization President Boyd Simpson plans some significant changes but won't convert it to residential condominiums.
In April, Crown Realty & Development Corp. of Irvine , Calif. expressed strong interest in the building as a condo site, real estate sources say. But Crown didn't make a formal offer, and the deal never materialized. "We think it's a good office building and will continue to be one," Simpson says, adding he was drawn to the building's history and relevance to the uptown landscape. "But as much as anything, we were attracted to the Charlotte community's commitment to its downtown."
The landmark tower, constructed in 1928, is one of uptown's few remaining pre-war buildings. Its nostalgic exterior and art-deco interior have long made it a magnet for design firms and architects.
The building is about 50% occupied and leases for $18.50 to $20 per square foot. The new ownership is not likely to result in a dramatic change in appearance.
However, Simpson plans to install a large fitness center and conference space, as well as making improvements to the interior common areas, the security system and the life-safety systems. "Otherwise, we're going to remain true to the art-nouveau style of the building," he says.
The Simpson Organization owns one other asset in North Carolina -- the One Bank of America Plaza building in downtown Raleigh . The company has been an active player for years in the Atlanta area, where it owns a range of properties, including flex developments, offices, warehouses and business parks. Its assets include the 1401 Peachtree Street building in Atlanta , Pharr Plaza in Buckhead and The Shoppes at Dunwoody retail center.
The 112 Tryon Plaza building is the latest uptown building to be sold to a national investment group. In April, Hartford, Conn.-based Cornerstone Real Estate Advisors paid $52.3 million for the 32-story Interstate Tower building. In March, Chicago-based Trizek Properties Inc. announced the $77.3 million sale of the 477,000-square-foot First Citizens Bank Plaza to Brighton, Mich.-based Osprey Ltd. Uptown office vacancy has declined to 6.5%, less than half the 14.1% citywide rate, according to Karnes Research Co. Low vacancy rates tend to make office properties investment targets, says Andrew Jenkins, Karnes managing partner. But, counter to the trend, the appeal of the 112 building may be that about half of it is vacant, Jenkins says. "There's not much class-B space left, and not everyone can be in class-A," he says. Simpson looks forward to the challenge of filling the building. "We see this as an opportunity. It's why we're there."
Rob Cochran, senior vice president of office investments at Colliers Pinkard in Charlotte , represented Sarofim in the sale negotiations. The Simpson Organization represented itself. Colliers Pinkard will handle leasing and management at 112 Tryon Plaza.
Sandy Springs Police on the Prowl
DEALS AROUND ATLANTA , Written by Bailey Webb - April 6, 2006
As the City of Sandy Springs has doubled its office space at Morgan Falls to 60,000 square feet, the new city ’s police department is looking for 25,000 square feet for its headquarters.
David Rubenstein, a principal at Miller Richmond Co., who, along with counterpart Bogue Miller, is leading the site search effort, said that the Sandy Springs police HQ would work well with a number of area properties slated for redevelopment, allowing the developer/owner to bank the land and take advantage of the city’s strong credit while fully formulating redevelopment plans. Given the police department’s somewhat unusual requirements -- most office requirements don’t involve crime labs and ammunition storage -- a free-standing, single-tenant building is the most likely option. The Sandy Springs PD intends to be up and running by July.
The city, which is administered by construction and engineering firm CH2M Hill, originally leased about 32,000 square feet at Morgan Falls Building 500 in January and has since doubled its space. The Simpson Organization owns the property.
NEW CITY , NEW HOME: SANDY SPRINGS LEASE SPACE FOR CITY HALL
March 23, 2006
Deal at Morgan Falls Office Park Brings Once Struggling Property to Over 80% Leased
Just hours prior to the inauguration of the first mayor and city council in the newly formed city of Sandy Springs, details were being wrapped up on the lease that would give metro Atlanta’s second-largest city a place to call home.
"We’ve been working on it awhile and got it signed the morning of the inauguration," said David Rubenstein, principal with The Miller Richmond Co. "I’ve never done a deal like this -- it was unique."
Rubenstein and partner Bogue Miller represented the new Sandy Springs government (and consultant CH2M Hill, which is handling most of the city’s back office work while it becomes operational) in a 32,000-square-foot lease at Morgan Falls Office Park, a five-building, 258,000-square-foot park off Roswell Road, not far from the Fulton County Government’s North Annex.
The lease includes rights of first refusal on the rest of the space in the 61,000-square-foot facility (building 500) that now houses City Hall. Rubenstein said the space includes the Mayor’s Office, City Council and Municipal Courts but is not home to the city’s police and fire operations. The extra space could eventually house those groups though, Rubenstein said.
"There’s some discussion about adding services to the space," he said.
The project is owned by The Simpson Organization, which has turned around the once-struggling park, going from 25% to more than 80% leased in the 12 months since Simpson purchased it.
"We’ve got a very attractive, well located product. The property had just been off the brokerage radar because it had been primarily occupied by GE for years," said Chris Hardy, senior vice president for Simpson.
Besides the Sandy Springs deal, Hardy points to a 43,000-square-foot deal with Irwin Industrial Tools, a division of Atlanta-based Newell Rubbermaid Inc., as another high point in the ongoing revitalization.
Hardy said the brisk leasing activity has allowed Simpson to move to phase two of its plan for the park: going condo.
"We’re in the process of setting up a condominium structure. We’ll be offering sales from 1,700 square feet up to an entire building," Hardy said. "We’re intending to sell it all eventually."
