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Lister costs much higher than other city leases
June 8, 2006
Lister Block. Council decided a year ago to enter into a lease arrangement for the Lister property on the understanding that the Lister building would be restored, or at least major historic elements would be preserved and incorporated into a re-built structure. LIUNA has now indicated that is too expensive and has applied for a permit to demolish the building.
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A review of the city's major office space leases over the last two years reveals rates consistently much lower than those demanded by LIUNA for a reconstructed Lister Block. And it appears that a lower cost solution to the city's needs for office space slipped through council's fingers earlier this spring.
CATCH has learned that the CIBC office tower at 1 King West was sold in March for $21 million. That's $9 million less than the city expects to pay for a 15-year lease of half the building that LIUNA proposes to build to replace the Lister Block.
The city currently plans to lease 60,000 square feet of the LIUNA building for $30 million. The 17-floor CIBC building has more than twice that amount of floor space. The price tag of this prime office space facing Gore Park may impact the June 12 decision of city councillors on a demolition permit application for the Lister building.
Council decided a year ago to enter into a lease arrangement for the Lister property on the understanding that the Lister building would be restored, or at least major historic elements would be preserved and incorporated into a re-built structure. LIUNA has now indicated that is too expensive and has applied for a permit to demolish the building.
Councillors are scheduled to debate the application in a special committee of the whole meeting starting at 3 pm on Monday. The city's heritage committee voted 12-1 to oppose the demolition but city staff and the mayor favour approval of LIUNA's application.
The city's long term strategy to accommodate all downtown City employees is to construct a 250,000 square foot office tower connected to the existing City Hall by 2020.
A major issue in the Lister arrangements is the cost to the taxpayers. The modified gross leasing rate is $31.50 a square foot at the beginning of the lease, rising to $33.50 during its 15 year term. The space would be used to accommodate city staff until the construction of a new office tower beside city hall that is scheduled for 2020.
The leasing rate, however, is substantially higher than those for city office space negotiated over the past two years. Last October, council approved a 15-year lease with Fercan for 50,000 square feet on the first and second floors of the former Eaton's Centre. The lease rate starts at $17.50 a square foot and rises to $19.50 over the term of the lease.
Late in 2004, the city signed two other large office leasing arrangements. A deal with Effort Trust was concluded in November 2004 for the entire building at 250 Main Street East - the former location of the Canada Centre for Occupational Health and Safety at the corner of Victoria Avenue. The lease rate starts at $17.75 per square foot, rising to $18.75 over the course of the 12-year lease.
The following month, council approved a 15 year lease of 20,000 square feet owned by Paletta International for a rate of $19.69 a square foot. The location is a commercial mall located at 2255 Barton Street East.
The earlier leasing agreements can be found on the city's website at
The 2005 lease agreement for the Lister Block property can be viewed at http://www.myhamilton.ca/nr/rdonlyres/18df9868-2d1f-403b-ad8c-
d7798ad46b2e/0/feb07pd05095fcs05052cm05018leaselisterblock2850james.pdf .
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