Authority staff recommend 20-year lease at 1455 Market Street; board hears financial details

The Transportation Authority’s staff presented an action item on June 10 to authorize the executive director to execute a 20-year lease for office space at 1455 Market Street with two 5-year options to extend. Cynthia Fong, deputy director for finance and administration, said the proposed lease amount would not exceed $1,126,597 for the year, plus operating and lease-related expenses, and that the lease would include annual 3% rent increases.

Fong told the board the authority’s office is currently on the 22nd floor of 1455 Market Street and that the current lease term was ending June 30, 2025. She said the authority had solicited comparative offers in recent years and had one landlord offer at $66 per square foot. The city’s negotiated option would be a $41.20 per-square-foot rate — about 3% higher than the authority’s current $40 per-square-foot rate — and would avoid one-time moving and tenant-improvement costs, Fong said. She said the cost of the lease will be paid from Proposition L funds and had been included in the FY25–26 budget.

Commissioner comments were brief and supportive; Chair Mirna Melgar specifically thanked the city’s director of real estate, Adrico Penick, for work on the negotiations. A motion to approve the lease authorization was moved by Commissioner Joel Mandelmann and seconded by Commissioner Aaron Walton. The transcript records the motion and the staff presentation but does not include a roll-call tally or recorded final vote for this item in the June 10 meeting transcript.

Why it matters: the lease locks in long-term office space and sets a predictable rent escalation schedule; staff said it is the most cost-effective option compared with market offers and avoids relocation costs.

What’s next: staff expected to negotiate nonmaterial terms and return with final lease execution per the authority’s administrative process.