Authorize Professional Services Contract with Premier Commercial Realty to List a Portion of the Ramsey Municipal Center for Lease  (Portions may be closed to the public.)

Purpose:
Authorize a professional broker services contract between the City of Ramsey and Premier Commercial Realty to list 3,029 square feet of the Ramsey Municipal Center for lease.

Background:
The City of Ramsey owns and operates the Ramsey Municipal Center (RMC), a 68,354 square foot building, located at 7550 Sunwood Drive in The COR.  This building is the current, and long-term, home for the City's Administration, Community Development, Engineering and Police Departments.  City offices were moved to this location in 2006.

The RMC was designed and constructed for the long-term needs of the City.  Currently, the 68,354 square foot capacity of the RMC is underutilized by the City of Ramsey.  As a result, the City has leased available vacant office space within the RMC to third-party users.  For example, the City has leased 2,666 square feet of space to the Anoka County License Center since 2010.  Overall, said lease agreement with Anoka County has a net positive effect on the City (i.e. increased traffic to the RMC and The COR, rent proceeds to help pay RMC debt payments, CAM proceeds to help pay for maintenance costs).

Currently, the City has 3,029 square feet of office space available for lease on the second floor of the RMC.  The purpose of this case is consider a relationship with a real estate broker to assist the City in attracting a tenant to lease this space.


 

NA

ALTERNATIVES:
Three alternatives have been identified by Staff (below).  This includes proposals from two brokers in which the City has existing formal relationships. 


(1) Premier Commercial Properties
Premier Commercial Properties provides property management services for City owned properties located on U.S. Highway 10.  Additionally, Premier provides broker services (via a listing agreement) to lease City owned property/buildings along U.S. Highway 10.  The existing relationship with Premier has been positive and effective.  This firm has a strong regional presence, network and history with the City of Ramsey.  Staff is confident Premier is capable of effectively marketing/leasing the RMC.
 

(2) CBRE
In early 2014, CBRE entered into a broker agreement with the City of Ramsey to market/sell City-owned property.  Currently, CBRE is listing 18 City-owned properties available for development.  Additionally, CBRE has struck listing agreements with other key land owners within the City; and is pursuing development that will provide momentum to the success of the City's future business park and The COR.  The existing relationship with CBRE has been positive and effective.  This firm has a strong national and metro-wide presence.   Staff is confident CBRE is capable of effectively marketing/leasing the RMC.
 

(3) Amended Process
The City Council does have the ability to chose a different alternative.  Listed below are general options:

• Don't lease the RMC altogether; don't move forward with the proposed contract.
• Open this process to a larger pool/formal request for proposals (RFP).
• Pursue a non-market rate user for the RMC; don't attempt to lease at market rate.
• Significantly amend the proposed contract; and table this case.

IMPORTANT NOTES:

• Lease will require tenant improvement package; a new wall and other minor amenities will be needed.  The City will likely need to be creative to get a quality user (i.e. first XX months of "net lease dollars" discounted).  This will also be discussed in closed session/at the time a prospect make a proposal.
• Council approved deal range/pricing strategy will be discussed in closed session.
• If property is leased by private sector, taxes will be charged by County (estimated at XXXX annually).
• An estimated $4.00-$6.00 psf of lease revenues will be redirected for common area maintenance (CAM) charges; this could range from $12,116 to $18,174 annually. This number will be deducted from gross rent.  Additionally, if user would like access to lunch room and regular use of meeting rooms an increased CAM charge will be negotiated.
• Based on Staff estimations, this space will not be needed by the City for the next seven years.  Staff and the City's broker are targeting a seven year lease with a professional services organization (engineering, legal, insurance, title, government, architecture, etc.).
• Specific lease agreement details will be negotiated at a later date with an end user; separate council case.
• Attached are comments from Briggs & Morgan (the City's real estate Attorney) regarding lease restrictions due to the tax-exempt bonds utilized to construct the RMC.  In summary, due to the size of the proposed lease, no restrictions will apply.

Lease revenue proceeds.  Normal staff duties (Administration and Finance Departments).

Staff recommends selection of Premier Commercial Properties to provide broker services to lease the Ramsey Municipal Center.

WHY?

• The existing relationship with Premier has been positive and effective.
• Premier has competitive compensation rates (when compared to CBRE).
• Premier has direct/in-depth experience with leasing office space in The COR, in the City of Ramsey, and the Ramsey region.
• The proposed extended relationship with Premier is consistent with existing broker relationships: CBRE (selling City owned property) and Premier (leasing/lease management).  See background section of case for details.  This consistent status of relationships creates efficiencies for Staff work processes.
• Staff is confident Premier is capable of effectively marketing/leasing the RMC.

Approve the attached contract for professional broker services with Premier Commercial Properties; contingent upon review and amendments from the City Attorney.