Sunday, September 14, 2008

State of California Enters 20 Year Lease for Highway Patrol HQ in Sacramento - September 12, 2008

The state has inked a 20-year lease for a 285,000-sf, three-building low-rise campus here on behalf of the California Highway Patrol. Known as Continental Plaza, the buildings will be used to consolidate CHP’s administrative functions, which are now spread among several buildings in the Sacramento area. The law enforcement agency is slated to fill its new headquarters with 1,000 employees next September.

The state’s lease rate starts at $2.44 per sf per month, fully serviced with the exception of utilities, an information office with the state Department of General Services tells The lease agreement includes a $41-million ($144 per-sf) tenant improvement allowance, annual rental rate bumps (approximately 1.5%) and a purchase option that may be exercised at the end of either year 10 or year 20. If exercised at year 10, the purchase price would be based on a 7% cap rate on the property’s NOI for year 11, according to DGS. If exercised at the end of the lease term, the purchase price would be based on a 7% cap rate on the NOI rent from year 19. If the state pays rent for 20 years, it would pay the property owner $193 million, according to DGS.

“The fact that Continental Plaza was an existing facility offered many benefits, including cost savings to the agency, an accelerated occupancy schedule and the reuse of an existing structure, [which is] part of the state’s ‘green’ strategy,” Newland says. Per state requirements, all three buildings will be renovated with the goal of receiving a LEED-NC-Silver certification from the US Green Building Council.

The property owner is Grove Investment Co. of Newport Beach, CA. Grubb & Ellis brokers Bill Newland, Clyde Rawlings and Toss Vallentine represented the building owner in the transaction. Cornish & Carey represented the state. Sphere: Related Content

No comments:

Wikinvest Wire