Subject: APPROVAL OF A LEASE AMENDMENT 800 NORTH FIRST STREET
COUNCIL
DISTRICT: Citywide
Approval of an amendment to the lease
agreement with Luxport Properties for 6600 square feet of office space located
at 800 North First Street, replacing the name of Luxport Properties to the name
of the current Lessor, 800 N. First Street, LLC and extending the term of the
agreement by an additional three (3) years from 60 months to 96 months with a
rental rate of $22,770 per month during the first year of the three (3) year
extended term increasing to $23,628 per month and $24,618 per month during the
second and third year of the extend term respectively.
In June of 1997, the City of San José
entered into a lease agreement with Luxport Properties for 6,600 square feet of
office space located 800 North First
Street to house the Office of the City Auditor. This space was selected because of its close proximity to City
Hall. The lease on this space is due to
expire on June 30, 2002.
Public Works Real Estate staff was
approached by the Lessor’s representative requesting that the City enter into
negotiations to renew the existing lease.
The reason given for this request is that due to recent changes in the
local real estate office market, it may take some time for the owners to secure
a new tenant. In order to ensure that
the building will not be vacant, the owners requested that the City commit to
extending the lease now or the owner would be forced to start marketing the property.
Real Estate staff proceeded to negotiate
a lease extension to June 2005 to guarantee the Auditor’s continued occupancy
until the new downtown City Hall is ready for occupancy. The new lease will not go into effect until
July 1, 2002.
The lease extension is an increase of
approximately 40% over the rate that was negotiated back in 1997. Currently, space at 675 and 77 N. First
Street, where the City rents space goes for $3.25 to $3.50 per square foot. The new rental rate at 800 N. First Street
for the City Auditor is $3.45 per square foot effective July 1, 2000, which is
reflective of current market rates for office space in this area.
The amended term of the lease is 96
months with a commencement date of July 1, 1997 and an expiration date of June
30, 2005. This increases the terms of
the current lease by 36 months. Rent
for the second and third year of the extended lease term is $23,628 per month
and $24,618 per month respectively.
There is no other office space
available in the Civic Center area that offers enough space to house the City
Auditor’s staff.
The new lease contains wording that
allows the City to terminate the agreement upon 90-days written notice. All other terms of the current lease remain
unchanged.
Not applicable.
This item has
been coordinated with the Department of General Services and the Office of the
City Manager. The Office of the City
Attorney has reviewed the agreement and approved it as to form.
Rent for the first year of the extended
term of the agreement commencing July 1, 2002 is $273,240 increasing at a rate
of approximately 3.6% per annum over the lease term to a total rent of $852,192 over the three-year extended term
of the lease from July 1, 2002 to June 30, 2005.
Fund: 001
Appn: 0592
RC: 001-59-000320-4038
Amount: $17,132,854
Budget
Document: 2000‑01
Operating Budget
RAJEEV BATRA
Acting Director,
Public Works Department