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3. Revenue Lease
– 2670 Queensview Drive BAIL – 2670, PROMENADE
QUEENSVIEW
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COMMITTEE RECOMMENDATIONS
That Council:
RECOMMENDATIONS
DU COMITÉ
Que le Conseil
municipal :
2. Approuve une lettre
d’intention entre la société Upper Room Alliance Ltd. (Broyhill) et la Ville
d'Ottawa autorisant le directeur de la Gestion des biens
immobiliers à négocier et à finaliser au nom de la Ville un bail fondé sur cette lettre d’intention pour des locaux
pour commerces de détail d’une superficie de 20 000 pieds carrés situés au
2670, promenade Queensview, pour une période de cinq ans débutant le 1er juin
2007 et prenant fin le 31 mai 2012, le loyer net total prévu pour la durée du
bail étant de 1 254 456,00 $ (TPS non comprise).
DOCUMENTATION
1. Chief Corporate Services
Officer’s report dated 19 September 2006
(ACS2006-CRS-RPM-0059).
Report
to/Rapport au :
Corporate Services and Economic Development Committee
Comité des services organisationnels
et du développement économique
and Council / et au Conseil
19 September 2006 / le 19 septembre 2006
Submitted by/Soumis par : Greg Geddes, Chief Corporate Services Officer/
Contact
Person/Personne ressource : Gordon MacNair, A/Manager Real Estate Services
Real Property Asset Management/Gestionnaire par
intérim, Services immobiliers,
Gestion des biens
immobiliers
(613) 580-2424 ,ext. 21217,
Gordon.MacNair@ottawa.ca
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SUBJECT: |
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OBJET : |
REPORT RECOMMENDATION
RECOMMANDATION DU
RAPPORT
2. D’approuver une lettre
d’intention entre la société Upper Room Alliance Ltd. (Broyhill) et la Ville
d'Ottawa autorisant le directeur de la Gestion des biens
immobiliers à négocier et à finaliser au nom de la Ville un bail fondé sur cette lettre d’intention pour des locaux
pour commerces de détail d’une superficie de 20 000 pieds carrés situés au
2670, promenade Queensview, pour une
période de cinq ans débutant le 1er juin 2007 et prenant fin le 31 mai 2012, le
loyer net total prévu pour la durée du bail étant de 1 254 456,00 $ (TPS non
comprise).
BACKGROUND
In 1995, the Regional Municipality of Ottawa-Carleton entered into an agreement of Purchase and Sale with Hewlett-Packard (Canada) Ltd., to purchase the land and building located at 2670 Queensview Drive, for the future construction of part of the West Transitway Extension Project.
As part of the agreement of Purchase and Sale, the Regional Municipality of Ottawa-Carleton and Hewlett Packard also entered into an agreement to lease back the property to Hewlett Packard, for a term of sixty-six months, plus an option to extend the original agreement an additional six years, which Hewlett Packard exercised until 31 May 2007.
DISCUSSION
Hewlett Packard has acted as head tenant and Landlord for the 50,000 square foot building since the original date of purchase and has been responsible for the operation, leasing, and maintenance of the building since 1995.
Hewlett Packard will no longer have any leasehold interest in the property, as the Lease agreement and extension between the City of Ottawa and Hewlett Packard will not be extended beyond 31 May 2007. Hewlett Packard will have satisfied all of its obligations as of that date. The City will now act as landlord and as such, control all facets of the buildings’ requirements.
Hewlett Packard had occupied approximately 20,000 square feet of the building since the original date of Purchase in 1995 and had sublet the remaining 30,000 square feet to IBM Canada.
A year ago, Hewlett Packard consolidated its staff to a location in Kanata and sublet their 20,000 square foot portion to Upper Room Alliance. They now occupy the building, retailing furniture under the Broyhill corporate name.
Both tenants expressed interest in continuing with their tenancy in the building after 31 May 2007. A third party rental analysis was commissioned by Real Estate Services for the purpose of providing guidelines to determine a fair market rent. Real Estate Services drafted two Letters of intent that will provide a general level of understanding for all parties to move forward and begin negotiations on formal Lease agreements. The current uses of the building comply with the zoning of Business Park Industrial IP3 F (1.0) H13.8.
Current annual net rent revenue from Hewlett Packard is $594,684.00. This proposed new market rent revenue from the combined tenancies in years one and two $622,544.00, year three $647,844.00, year four $657,800.00 and year five $667,756.00 plus GST.
Real Estate Services communicated with Comprehensive Asset Management Division to evaluate the best use of the building. It was determined to maintain the same use for a further five years due to the uncertainty of the Transit Corridor implementation date.
CONSULTATION
Real Estate Services requested a time line from Transportation and Infrastructure Planning Division and received a requirement date for the lands past 2012. Comprehensive Asset Management Division was also consulted and comments have been incorporated into the Discussion section of the report.
The local ward Councillor supports the staff recommendation.
FINANCIAL IMPLICATIONS
The revenue from these leases has been
incorporated within the existing 2006 operating budget for the Real Property
Asset Management Branch of the Corporate Services Department.
DISPOSITION
Following Council’s approval, Real Property Asset Management and Legal Services Branch to negotiate and finalize Lease agreements.