Fortune 500 company to occupy city hall space

Base rent set at $21.50 per square-foot per month

Staff writerJune 11, 2014 

Puyallup When the city of Puyallup opened the new city hall building in 2008, it willingly thrust itself into the position of leasing out space to private enterprise — a policy not favored by some council members.

“The city made the building with the idea of renting it out, but that was before I got (on council),” said Mayor John Knutsen. “I would have never supported it. I’ve never voted to rent city buildings to private business. I don’t like us in the landlord business.”

On June 3, the Puyallup City Council had before them the decision to approve or not approve a 10-year lease with Edward Jones, a Fortune 500 company, to occupy a 1,148- square-foot space on the ground floor of city hall.

The large space — sandwiched between Elements Frozen Yogurt and Subway — has been vacant since the opening of the city hall in 2008.

Deke Jones, the city’s parks, property and facilities manager, said when he was hired last June the city charged him with the task of filling the unoccupied space.

On June 3, the city council approved the 10-year lease on a vote of 6-1. Knutsen was the lone dissenter.

Jones said the lease is a sound business decision.

“It doesn’t do any good for the downtown business core to have a vacant space,” Jones said.

When Edward Jones moves into the space later this summer, the last vacancy will be a 700-square-foot spot between the now taken Edward Jones space and the Subway.

“The city is actively looking to fill that space,” Jones said.

Jones said the city started negotiating with Edward Jones in March. What has stalled any final agreement between the retirement investment firm and the city has been the cost of tenant improvements required.

In a 10-year lease agreement approved by city council, Jones said the city will give up to $67,000 to Edward Jones for tenant improvements.

“We negotiated with Edward Jones to increase the monthly rental amount to $21.50 per square-foot,” Jones said.

Operating costs amounting to $5 per month is added to the base rent of $21.50. The gross monthly rent of $26.50 escalates 3 percent annually over the 10 years. The $5 operating cost will go up if operating costs go up for the building, Jones explained. Jones said there would be an annual reconciliation based on the forecast and budget.

The increased monthly rent shortens the city’s payback period to recoup the $67,000 in tenant improvement costs.

“You want to recapture those costs as quickly as possible,” Jones explained.

The city is hopeful that Edward Jones will move in by the beginning of August.

Meanwhile, Knutsen thinks the city should only accommodate other government agencies, charities and nonprofits in the tenant spaces at city hall, but not private businesses.drew Fickes: 253-552-7001 Twitter: @herald_andrew

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