Port Staff Relocation May Be ‘Game Changer’ For Downtown Office Market
July 20, 2011 Leave a comment
Harbor Department Negotiates New Headquarters, Buys World Trade Center Parking Lot
by Sean Belk, Staff Writer
Negotiations are ongoing for the Port of Long Beach to relocate its near 400-member staff from its current location at the port to a new headquarters possibly somewhere in Downtown Long Beach. The move could be a “game changer” for the downtown office market, said real estate agents.
After a plan to build a new $295 million energy efficient, “green,” nine-story complex on a 17-acre site near the current headquarters was scrapped by Mayor Bob Foster last year, vetoing the line item from the budget, port executive staff floated several different proposals.
In closed session during the July 11 harbor commission meeting, Port Executive Director Dick Steinke discussed with commissioners and other negotiating parties the potential lease or purchase of space at One World Trade Center or Golden Shore property, or the possibility of space at the Union Bank Building or the City National Bank Building.
According to a staff report, the port has already approved the purchase of the 5.6-acre One World Trade Center parking lot, which has 659 parking spaces behind the building at the southeast corner of Golden Avenue and West Broadway. The $8 million sale and $200,000 deposit was negotiated by Cassidy Turley BRE Commercial.
It’s unknown at this time if the parking lot purchase is connected to moving into the 27-story One World Trade Center, said Art Wong, port spokesperson. But, he said the current real estate market for office space has provided for reasonable rates for the relocation. The port is looking for upwards of 200,000 square feet of space, in addition to conference rooms.
Meanwhile, the current 127,000 square-foot-building at 925 Harbor Plaza Dr. is in need of repairs, including elevators and seismic retrofits and port staff is “anxious” to move as soon as possible. “The air conditioner barely works on some days and our elevators are a gamble, Wong said. “Either we make some major repairs, which they indicated they don’t want to do, or else we move out of there.”
Toliver Morris, leasing director for the Landmark Square on Ocean Boulevard for Brookfield Properties, said the port move into One World Trade Center, which is 30 percent vacant, in addition to Molina Healthcare possibly purchasing the 15-story ARCO Center towers, which he said is currently “ongoing,” could alter the downtown office market entirely.
He added it could have a positive absorption ripple effect not only in Class A space, but other subsectors as well. “I think this could be a game changer for downtown,” he said. “If those two things happen, then Class A goes to 95 percent over night, because right now, occupancy is at only 85 percent. So you go to a quasi-healthy Class A market to a virtually full Class A market . . . and ultimately that would matriculate into the Class B and Class C.”