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<br />Al Tinklenberg, The Tinklenberg Group, indicated the $53,000 annual lease rate would be a <br />blended rate for the office, warehouse, outdoor storage, cold storage, and the taxes of $16,000 <br />per year. The rate was based on local comparables. <br /> <br />Mr. Fischer provided an overview of rates and terms used in the market. He explained the term <br />office can be an office tied within a warehouse building; within the industrial market place there <br />is warehouse space and an office that can be part of that warehouse; a stand-alone office building <br />would be technical office space that would be at a higher rate. Retail can run a range depending <br />on the users and the newness of the space. He and Jodi Ruehle have discussed that in the <br />industrial market the office rate in an office attached to a warehouse is $8.50 per square foot; this <br />is on a net/net basis, which means the tenant is paying for the common area maintenance of the <br />building and all the property taxes. An industrial building with 10% office and 90% warehouse <br />would pay a rate of $8.50 per square foot for the office space and $4.50 per square foot for the <br />warehouse space. Above and beyond that the tenant would pay for all the property taxes and all <br />the maintenance on that facility. <br /> <br />City Attorney Goodrich inquired about the sample lease calculation for the Todd Bialon property <br />with a rate per square foot at 75% of the market rate. <br /> <br />Mr. Fischer explained that a tenant will want the ability to execute options on a property and <br />remain at the leased site for a certain period of time. The City is not able to provide this on <br />Highway #10, and a discount should be applied because the tenant will not be able to maintain <br />their business and have the security of renewing the options on the lease as long as they would <br />like. <br /> <br />City Attorney Goodrich questioned if Mr. Fischer is comfortable that the typical net negotiated <br />lease amounts listed on the sample lease calculation are at market rate. <br /> <br />Mr. Fischer responded in the affirmative. He explained the numbers provided for retail are <br />general, as each retail building needs to be evaluated on an individual basis. <br /> <br />Councilmembers indicated comfort that the lease rates on Highway 10 are equitable to other <br />properties leasing in the area based on the information that has been provided. <br /> <br />City Attorney Goodrich suggested the option language in the lease agreement for the property <br />located at 7751 Highway #10 be tweaked. <br /> <br />Councilmember Jeffrey questioned if there is a concern of liability regarding the subleasing on <br />this property. <br /> <br />City Attorney Goodrich replied with regards to subleases, the City will pay relocation to existing <br />subtenants and to Mr. Bialon; however, from the day the City signs the lease with Mr. Bialon any <br />future subleases will not be entitled to relocation. <br /> <br />Councilmember Olson asked if the tenants will be required to be relocated individually or as a <br />package. <br /> <br />City Council Work Session / July 18,2006 <br />Page 4 of 6 <br />