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Port staff proposes FY2014–15 rent schedule: office rents up about 6%, mixed changes for land and warehouses
Summary
Real Estate staff proposed a parameter rent schedule that would increase office rents roughly 6%, adjust warehouse and land rates variably and preserve parameter rents as a tool for executing small leases without full commission review.
Port real-estate staff presented the proposed fiscal-year 2014–15 parameter rent schedule to the commission on May 28, and staff described the approach used to balance market data, facility condition and affordability for small tenants.
Nate Cruz, Financial Analyst in Real Estate, said the port proposes a general 6% increase in office rents with selected higher adjustments (one office increase cited as high as 30% for a specific property), an overall warehouse-rate increase of about 3%, and small reductions in some unpaved and paved land rates. Cruz noted that parameter leases are intended for non-retail uses under five-year terms and typically generate a large portion of lease count but a much smaller share of total revenue.
To illustrate market comparisons, Cruz showed private-sector office transactions such as ING Waterfront Plaza and compared them with port-managed properties like the Roundhouse; he said the proposed $3.25-per-square-foot minimum for certain office product reflected condition and service differences versus comparable private buildings. Jeff Bauer, leasing manager, confirmed that storing construction equipment in containers is an acceptable use for paved land leased for equipment storage and said tenant improvements vary by tenant needs (he cited an example of $400,000 in tenant improvements for one user).
Commissioners pressed staff for a portfolio breakdown — how much of the port—s space is parking, paved/unpaved land, office and improved buildings — and asked for an "upgrade report" showing how much office space has been improved and a vision for future capital upgrades. Staff agreed to provide supplemental reporting and acknowledged constraints such as building-condition issues and capital limits that shape upgrade feasibility.
Why it matters: Parameter rents set the floor for many small leases across the port and are used to balance revenue goals against the port—s role as an incubator for small businesses. Changes in rates can affect tenants, vacancy timelines and the port—s overall revenue mix.
Next steps: Staff will return on June 10 with the approval item and will provide requested portfolio breakdowns and an upgrade report to the commission in a future meeting.
