City of Alexandria, Virginia
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MEMORANDUM
DATE: NOVEMBER 20, 2024
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
THROUGH: JAMES F. PARAJON, CITY MANAGER /s/
FROM: JEREMY MCPIKE, DIRECTOR, GENERAL SERVICES
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Consideration of an Addendum to the Lease Agreement Between the City and Bankers Square Associates, LLC for office space at the Bankers Square Office Building located at 100 North Pitt Street
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ISSUE: Consideration of an Addendum to the Lease Agreement between the City and Bankers Square Associates, LLC for office space at the Bankers Square Office Building located at 100 North Pitt Street to accommodate existing City offices and City offices to be relocated from City Hall during the planned City Hall Renovation Project.
RECOMMENDATION: That City Council authorize the City Manager to execute the proposed Fifth Addendum to the lease with Bankers Square Associates, LLC.
BACKGROUND: After many years of service, City Hall requires major updates to repair aging components, improve operating systems, optimize space utilization, improve building circulation and wayfinding, and enhance security. Therefore, the City has initiated an extensive project to design and renovate City Hall which will provide a revitalized safe, and sustainable environment to better service City staff, Alexandria residents, and visitors well into the future.
During the City Hall renovation project, the entire building, its offices, staff and operations will be required to vacate the building. As a result, the City will need to secure alternative temporary office space, or swing space in nearby office buildings, including the Bankers Square Office Building, located at 100 North Pitt Street to accommodate the relocation of staff and offices from City Hall.
In 1997, the City entered into a three-year agreement with Bankers Square Associates to lease 5,959 square feet of office space in the Bankers Square Office Building to accommodate the offices of two City divisions. The lease agreement was renewed a number of times over the last several years. Most recently in 2016, the City and Bankers Square Associates agreed to Addendum Number Four which extended the lease agreement for an additional 10 years with a new expiration date of October 2026.
With leased space required for both the existing City divisions that currently occupy 5,959 square feet of office space at Bankers Square and additional space that will be required for a period of at least three years to accommodate the relocation of staff and offices from City Hall, the existing lease agreement for the 5,959 square feet of office space will need to be renewed. A Fifth Amendment for a period of five years with a new expiration date of 2031 at the current rate of $31.68 per square foot, or $188,781 per year, with an escalation of two and a half percent (2.5%) annually is attached for consideration.
DISCUSSION: To accommodate office relocations during the City Hall renovation project, staff has identified an additional 16,117 square feet across the second and fourth floors of the Bankers Square Office Building located at 100 North Pitt Street.
The lease agreement for the 16,117 square feet of office space shall commence March 2025, for a term of three years with an expiration of February 2028, to align with the estimated completion of the City Hall renovation project and the relocation of offices back to the renovated City Hall. In the event the leased space is required longer than the three-year term, the lease shall include three, one year renewal options.
The lease rate will be $20.00 per square foot, which for 16,117 square feet will result in a cost of $322,340 per year with an escalation of two and a half percent (2.5%) per year.
The lease shall include the right for up to fifty (50) additional garage parking spaces at a rate of $50.00 per space per month and a tenant allowance of $150,000 for improvements to the additional leased space.
The additional 16,117 square feet of leased space at Bankers Square shall be included as part of the Fifth Amendment to the existing office space lease.
FISCAL IMPACT: The lease rate for the additional 16,117 square feet of leased office space in the Bankers Square Office Building located at 100 North Pitt Street shall be $20.00 per square foot, or $26,862 per month. In addition, the rate for operating expenses and real estate taxes per the terms of the lease will be $9.36 per square foot, or $12,571 month. Based on the commencement date for the lease space, the fiscal impact for FY 2025 will be $157,731; and $475,881 for FY 2026 including the two and a half percent (2.5%) annual increase.
The fiscal impact for the current lease of 5,959 square feet at the existing rate of $31.68 per square foot, plus $9.36 per square foot for operating expenses and real estate taxes shall be $81,519 for FY 2025 which is included in the FY 2025 operating budget; and $246,126 for FY 2026 including an increase of two and a half percent (2.5%) annually.
ATTACHMENT:
1. Addendum Number Five to Lease Agreement By and Between Bankers Square Associates, LLC and the City of Alexandria
STAFF:
Julian Gonsalves, Assistant City Manager
Alfred Coleman, Deputy Director, General Services
Dominque de ’la Bay, Building Manager, General Services
Daniela Licata, Real Estate Specialist, General Services
Bryan MacAvoy, Assistant City Attorney