1 week Ago
The city of San Diego will move a portion of its development services department out of the crumbing operations building downtown and into two floors a few blocks away at Five50West. Monday, San Diego city council members unanimously approved a lease agreement for 43,460 square feet of space at the 550 West C St. property with landlord 550 Corporate Center Investment Group.
The lease includes an initial term of five years, seven months. The city also has the option to renew the deal for two, five-year terms. The contract is expected to start in December and cost the city $10.
6 million in total — or $10.4 million in base rent and $167,321 million in operating expenses. The agreement comes with $1.
7 million worth of improvements to the floors, as paid for by the landlord. The contract sum does not include, however, market-rate parking fees for the 87 unreserved spaces allocated for the city’s use. “Our employees absolutely deserve a better space,” said Councilmember Kent Lee.
“I’m confident that this location will continue to help development services to not only continue to provide the quality customer service that they do, but I think it’s only fair to state that we would expect continued improvements that would ultimately translate to meaningful support for housing, small and large businesses alike, and ultimately our region’s overall economic success.” The council action represents the second piece of a two-part plan to move workers in San Diego’s Development Services Department, or DSD, out of the City Operations Building at 1222 First Ave. Built in 1970, the operations building is said to require $45.
2 million in deferred maintenance and is plagued by broken elevators, plumbing problems and HVAC issues. In June, San Diego agreed to sublet the office building at 7650 Mission Valley Road to serve as its primary headquarters for DSD staff who need to interface with the public. The downtown space, which will also offer public-facing services, is meant for employees who need to be near City Hall.
DSD is responsible for reviewing project plans, processing permits for public and private developments, performing building inspections, maintaining records, and enforcing building and land-use regulations. The department, currently spread across three facilities, employs more than 700 people and is growing. DSD will consolidate into the two newly leased properties, with 500 people expected to work at the Mission Valley location and 225 people expected to relocate to the downtown skyscraper.
The 20-story building at 550 West C St., branded as Five50West, is a 362,822 square-foot office tower just five blocks west of the operations building. It is owned by the Alaska Permanent Fund Corporation.
The pension fund last year spent $13.4 million on a Gensler-designed remodel, which introduced an outdoor cafe, a lobby bar and an upscale gym with spa-style locker rooms. The city will pay $3.
65 per square foot on a monthly basis for base rent, with the base rate increasing 3.5 percent annually. The contract is a full-service lease, meaning janitorial and utility costs are included in the rent.
The city has also negotiated seven months of free rent and the aforementioned $1.7 million in tenant improvements. “The lease that’s before you, as was represented by staff, is consistent with market rates, and it has some decent concessions for the city,” Charles Modica, the city’s independent budget analyst, told council members.
Modica said his office’s real estate consultant, Kosmont Companies, reviewed the terms. The base rent and operating expenses will be paid with DSD’s enterprise fund, with funds appropriated during each fiscal year’s budget cycle, according to the staff report prepared for the meeting. The department fund collects fees charged for city services.
“When you look at downtown as a whole, Five50West is considered a class A building and is located on the west side of downtown, which is the preferred location of most office tenants,” said Richard Gonor, an executive with Jones Lange LaSalle who negotiated the lease on behalf of the landlord. “It’s in the Columbia District, so you’re next to the train station, it’s a three-block walk to Little Italy, and you’re two blocks away from the courts. So it’s highly desirable to a number of different types of tenants.
” With the just-approved lease agreement, San Diego intends to move DSD staff into Five50West in February, Christina Bibler, who oversees the city’s real estate division, told the Union-Tribune. The city’s two floors, suites 1200 and 1300, require minor updating and will need only new paint and carpet, security enchancements and some electrical work for workstations, city staff told council members. DSD’s relocation plan comes as the city continues to work on a longer-term plan for a new City Hall complex.
The longer-term plan has yet to take shape..
