St. Paul council approves eight-year lease for Osborne 370 to house city offices

The St. Paul City Council on a 7-0 vote approved an eight-year lease for the entire ninth floor of the Osborne 370 building at 9 Fifth Street East, city staff said. The space is a little over 10,000 square feet, the lease is gross, and the first 12 months are rent-free.

City real estate manager Bruce Engelbrecht, who presented the item, said the lease would allow the city to meet space needs for employees now in City Hall, the City Hall annex and other downtown sites while a space-use study is completed. "The space is little over 10,000 square feet. The entire Ninth Floor of the Osborne 370 Building. It's in great condition. It has a lot of furniture already. It's ready to use," Engelbrecht said.

The lease starts at $25.50 per square foot — significantly below the roughly $40-per-square-foot market for comparable Class A space cited by staff — and is structured as a gross lease that bundles utilities, common-area maintenance, taxes and insurance into the rate. Annual rent escalations are set at $0.50 per square foot per year, Engelbrecht said. The property owner offered the first year rent-free, and occupancy could begin as soon as the lease is signed.

Why it matters: Engelbrecht said the city expects to identify specific occupants after a separate citywide space-use study now under way with "nail partners." Potential users include departments with space shortages, collaboration space for downtown revitalization partners and staff who work downtown most days. Council members framed the lease as both a practical step to meet immediate office needs and part of a broader strategy to help stabilize downtown commercial property markets.

Council discussion focused on who the study will examine and how the lease relates to longer-term reuse of city property. Chair Johnson asked whether the space study would include all departments; Engelbrecht said the study would look at departments with footprints downtown, including staff in this building, the City Hall annex and, potentially, staff at the central library. He said the office of neighborhood safety — which has recently moved to a new lease — may be noted for its footprint but likely would not be a primary study target.

Councilmember Provotsky said he was "very supportive," noting the city’s leasing power can be used strategically to help revive downtown and potentially free up other city-owned properties for conversion to housing. "Every individual action like this is part of that strategy," he said.

The council approved the resolution authorizing the lease 7 in favor, none opposed. Staff said next steps include completing the space-use study, identifying occupants, and executing the lease to permit near-term occupancy if the city chooses.

The council did not specify funding sources for fit-out or long-term occupancy in the meeting; Engelbrecht said some initial occupancy could require minimal upfront investment (for example, internet connectivity) because the space already has furniture.

Ending: The council adopted the lease authorization with unanimous support and directed staff to continue the space-use study and follow up with departments and council offices as the study progresses.