“In response to your questions about CIRM’s new office space, we’ve provided detailed information below about CIRM’s search for new offices, our decision to move to Oakland, and the estimated costs of the move, including our decision to purchase new furniture. We’re excited about the opportunity to move into space that is designed both for quiet work and collaborative efforts.“In 2005, CIRM selected San Francisco as its headquarters. San Francisco’s offer included ten years of free rent (including operating costs), free tenant improvements and furniture, and numerous other amenities, including discounted hotel rooms and free meeting sites with a value estimated at $18 million. CIRM has saved more than $12 million on rent alone, but like all good things, CIRM’s free rent will come to an end when our lease expires on November 1, 2015. Given the cost of remaining at our current location, we had no choice but to move.
“As a result, we began searching for new office space at the beginning of the year in the midst of a construction and commercial real estate boom. CIRM’s goals were to minimize disruption and expenses. CIRM’s team, led by Senator Art Torres, investigated available office space in San Francisco, South San Francisco, Oakland and Emeryville. Although Senator Torres worked diligently with the City and County of San Francisco to identify suitable office space at a reasonable price, the demand for commercial real estate outstripped the supply and the available spaces were either prohibitively expensive, did not meet CIRM’s needs, or both. As a result, CIRM shifted its focus to South San Francisco and the East Bay, while continuing to seek new opportunities in San Francisco.
“South San Francisco and the East Bay each offered substantially cheaper options, although rents are escalating quickly in these areas as well as result of the technology boom in the Bay Area. After exploring the disruption that would be caused by moving to either location, including commute times and cost and access to public transportation, the CIRM team determined that the East Bay offered the best alternative. Ultimately, CIRM selected Oakland as its new headquarters. CIRM’s new offices are a short walk from BART and the City of Oakland has agreed to offer discounted parking to those employees who choose to drive.
“CIRM executed a lease with Divco West to rent office space at 1999 Harrison Street, across from Lake Merritt, where CIRM will be leasing space on the 16th floor (14,411 sq. ft.) and the 15th floor (2,686 sq. ft.). The term for the 16th floor is five years, four months; the term on the 15th floor is three years, four months, with an option to extend by two years to coincide with the term on the 16th floor. This will provide CIRM with the flexibility to reduce its space and rent burden, depending upon the circumstances.
“CIRM will pay $3.40 per square foot the first year, which will cost CIRM $58,129.80 per month. CIRM will pay no rent on the 16th floor for the first four months of its lease, saving CIRM $195,989.60. As a result, CIRM will pay a total of $501,569 for the first year of the lease. The rent will escalate three percent per year.
“The 16th floor is shell space and requires substantial tenant improvements. Although the 15th floor is already built out, it also requires improvements in order to accommodate CIRM’s needs. In order to get the best pricing in light of the booming commercial real estate market and the demand for commercial construction contractors and subcontractors, CIRM ensured that the landlord competitively bid the project, which will cost approximately $1,719,820 in total. The landlord has agreed to pay $891,520 towards these improvements; CIRM will be responsible for approximately $828,300. CIRM plans to use donated funds to pay its share of the tenant improvement costs.
“CIRM will also incur several one-time costs relating to the move, including costs for architectural and engineering services, cabling, AV, project management, security, moving, signage and furniture. These items, and the estimated cost, are set forth below.
“You asked specifically about furniture. As discussed above, CIRM’s existing furniture was included in the City of San Francisco’s bid. Thus, CIRM incurred no costs for the furniture. In evaluating whether to move the furniture to CIRM’s new office space, CIRM took into account the following factors before deciding to purchase new furniture:
- “Architect $92,085
- “Engineers/Plumbing $36,800
- “IT Cabling $60,200
- “AV $160,000
- “Project Management $134,740
- “Furniture $371,043
- “Security $23,671
- “Signage $9,300
- “Relocation $45,660
- “CIRM is downsizing from almost 20,000 square feet to approximately 17,000 square feet.
- “CIRM currently has 39 private offices; the new space has 12 private offices, along with work stations and collaborative spaces. The existing private office furniture cannot be re-configured to fit in work stations and is not suitable for the new space.
- “The cost of disassembling, moving and rebuilding the furniture would be significant; based on prior experience, CIRM’s Finance Director, Chila Silva-Martin, estimates that this cost would be approximately two-thirds of the cost of obtaining new furniture.
- “The furniture is ten years old and is not ergonomically designed.
- “CIRM utilized the State’s pre-negotiated contract (California Multiple Awards Schedule) for its furniture vendor, All-Steel, realizing savings of between 70-100% for the various items of furniture it has purchased.
“Although CIRM will incur some one-time costs as a result of its relocation, we believe that the space is better designed to facilitate the CIRM team’s execution of CIRM 2.0 and beyond, and CIRM will realize more than $2 million in savings over the course of the lease compared to the costs of remaining in its current space.
“Based on the latest information provided to CIRM by the Department of General Services, rents for comparable office space of 10,000 square feet or more near CIRM’s current location ranged from $79 to $86 per square foot. Indeed, even at $75 per square foot for our current space, in the first year alone, CIRM will save approximately $1 million in rent ($501,569 in Oakland compared to approximately $1.5 million (19,500 sq. ft. x $75).
“Over the next five years and four months, CIRM would pay approximately $8 million to remain in its current office space. The costs for rent in Oakland will be approximately $3.975 million (assuming CIRM occupies the entire premises, including the 15th floor, for the full term). Thus, even with CIRM bearing some of the costs of tenant improvements and other one-time relocation expenses, CIRM will realize substantial savings from the move and it will occupy space that is better designed to achieve the agency’s mission.
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