GENERAL COMMITTEE - FINANCE AND ADMINISTRATIVE COMMITTEE

 

 

 

 

 

TO:

Mayor and Members of Council

 

 

 

 

FROM:

Catherine M. Conrad, Town Solicitor

 

 

 

 

PREPARED BY:

Brian Varner, Manager of Real Property

 

 

 

 

DATE OF MEETING:

May 16, 2005

 

 

 

 

SUBJECT:

Lease Renewal and Amendment

Innovation Synergy Centre In Markham

1380 Rodick Road, Markham

 

 

 

 

RECOMMENDATION:

That Council enact a by-law authorizing the Mayor and Clerk to execute an Amendment to a Sublease Agreement between Lucent Technologies Canada Corp. and the Town of Markham in a form that is satisfactory to the Town Solicitor, for up to 6,187 square feet of office space located at 1380 Rodick Road (Lucent Technologies Building), Markham, for the period May 1, 2005 to April 30, 2007, at a net rental rate of $10.25 per square foot plus approximately $13.23 per square foot for taxes and operating costs in Year 1 and $10.50 per square foot plus approximately $13.50 per square foot for taxes and operating costs in Year 2, yielding an estimated total of $293,759 and including one option to renew for a period of two (2) years, with funding for Year 1 to be taken from Capital Project Account No. 042-6900-6774-005 and funding for Year 2 to be considered in the 2006 Capital Budget.

 

PURPOSE:

The purpose of this report is to request Council’s permission to execute an Amendment to a Sublease Agreement between Lucent Technologies Canada Corp. and the Town of Markham to extend the term and expand the leased area to 6,187 square feet of office space, located at 1380 Rodick Road (Lucent Technologies Building), Markham, for the period May 1, 2005 to April 30, 2007, at a net rental rate of $10.25 per square foot in Year 1 and $10.50 per square foot in Year 2, including one option to renew for a period of two (2) years.

 

EXECUTIVE SUMMARY:

The current lease for the Innovation Synergy Centre in Markham (“ISCM”) expired on April 30, 2005. The ISCM occupies 4,742 square feet of office space. The existing net rental rate is $10.00 per square foot and it includes the use of fixtures, furnishings and equipment within the space. The Landlord has agreed to extend the Lease for a further period of two (2) years under the same terms and conditions save rent, which will be at a net rental rate of $10.25 per square foot for the first year and $10.50 per square foot for the second year.

The ISCM also requires additional office space and the Landlord has made available 1,445 square feet of adjoining space at the same rate. The additional space also includes fixtures, furnishings and equipment.

 

BACKGROUND:

In March 2003, Markham Council approved the staff recommendation that the Town proceed with the establishment of the Innovation Synergy Centre in Markham and approve the execution of a Lease for 4,800 square feet of office space in the Lucent Technologies Building located at 1380 Rodick Road, Markham. The Lease incorporated a two year term (May 1, 2003-April 30, 2005) with a base net rental rate of $10.00 per square foot throughout the term. The Tenant’s proportionate share of additional rent for operating costs and taxes was initially at a rate of  $12.60 per square foot. Included, but at no additional cost, is the use of all furniture, fixtures and equipment in the leased office space.

 

DISCUSSION:

On April 19th, 2005 Mr. Bob Glandfield, President and CEO of Innovation Synergy Centre in Markham presented a status report to Development Services Committee including the accomplishments of ISCM during the past two years. He outlined the financial position and funding partners of ISCM. The presentation also outlined the existing Lease terms and proposed terms of an Amendment that included the following:

 

Two Year Term (May 1, 2005 – April 30, 2007)

 

Up to 6,187 square feet of office space (4,742 sf existing, 1,295 sf additional, option for a further 150 sf)

 

Year 1: 

$10.25/sf net rent + $13.23/sf estimated proportionate share of additional expenses = $23.48/sf

 

Year 2 :

$10.50/sf net rent + $13.50/sf estimated proportionate share of additional expenses = $24.00/sf

 

Net rental rate includes furniture, fixtures and equipment within the office space.

 

 

FINANCIAL CONSIDERATIONS:

The estimated total rent for Year 1: 6,187 sf x $23.48/sf = $145,271

The estimated total rent for Year 2: 6,187 sf x $24.00/sf = $148,488

 

Total Estimated Rent Over Two Years                       $293,759

 

Funding for the leased premises is to be paid for from within the approval Capital Budget Account #042-6900-6774-005 in Year 1 and funding for Year 2 is to be considered in the 2006 Capital Budget.

 

BUSINESS UNITS CONSULTED AND AFFECTED:

The Economic Development Director and the President/CFO of the ISCM have been consulted in preparing this report.

 

ATTACHMENTS:

None.

 

 

 

______________________________________        ___________________________________

Catherine M. Conrad                                                    Brian G. Varner                                   

Town Solicitor                                                              Manager of Real Property

 

Q:\Exec Office\Legal\VARNER\VARNER 2005\REPORTS 2005\Innovation Synergy Centre In Markham.doc