City of San Francisco to Complete 100K-square-foot Lease Agreement with Laurus
- Nov 07, 2012
The Laurus Coporation is cashing in on one of its earlier San Francisco Bay Area investments. The company has recently announced it is negotiating a leasing agreement for a large chunk of space at its 1155 Market St. property.
The L.A.-based investment company is currently holding talks with the City and County of San Francisco for approximately 75 percent of the available office space at the building. The city’s Board of Supervisors must first sign off on the move before local authorities are able to move in to 103,000 square feet of space, leaving only three floors open out of the available 11.
Bought for $27 million, the Mid-Market office property will now bear a solid occupancy rate, with the agreement signing imminent. City authorities would benefit from a preferential, below-market rent rate of $31.67 per square foot for the first year of contract. The second year’s rate will record a bump that will bring it to $39.14 per square foot, followed by a further increase of 3 percent during the third year of contract. The negotiated agreement would secure the space for the next 10 years, although the city would have the option of leaving the premises after five years.
According to the San Francisco Business Times, city agencies that would be moving into the new Mid-Market facility would include: treasury, tax collecting, assessor-recorder and public works. Those entities are currently located in a Shorenstein-owned office property at 875 Stevenson. However, the owner’s intention is to get extensive renovations underway at the property and has offered the city $3.25 million for early termination on that agreement. Once the facility is vacated and renovated, Shorenstein Properties intends to re-brand it as One 10th Street, SFBT noted.
As previously mentioned, the City of San Francisco will benefit from a hefty rent rate cut, as 2012 has seen rates surge by as much as 9 percent. Data provided by Marcus & Millichap Real Estate Investment Services shows that the end of the year should see median rates reach as much as $43.05 per square foot, meaning that even after the increases mentioned in the contract, local authorities would still lease the facility at a substantial discount.
Chart provided by Marcus & Millichap Real Estate Investment Services at www.marcusmillichap.com
For more news from San Francisco, click here.