City Council - 12/04/2012 - Workshop APPROVED MINUTES
CITY COUNCIL WORKSHOP & OPEN PODIUM
TUESDAY, DECEMBER 4, 2012 CITY CENTER
5:00—6:25 PM, HERITAGE ROOMS
6:30—7:00 PM, COUNCIL CHAMBER
CITY COUNCIL: Mayor Nancy Tyra-Lukens, Council Members Brad Aho, Sherry Butcher
Wickstrom, Kathy Nelson, and Ron Case
CITY STAFF: City Manager Rick Getschow, Police Chief Rob Reynolds, Fire Chief George
Esbensen, Public Works Director Robert Ellis, Community Development Director Janet Jeremiah,
Parks and Recreation Director Jay Lotthammer, Communications Manager Joyce Lorenz, City
Attorney Ric Rosow„ and Recorder Lorene McWaters
Workshop - Heritage Room H
Council Member Butcher Wickstrom was absent.
I. CITY CENTER
City Manager Rick Getschow introduced John McCarthy of Cushman &Wakefield.
McCarthy was appointed by the City Council to act as its broker for the City Center space
that will be vacated by C.H. Robinson next year. McCarthy introduced Larissa
Champeau, a member of his project team, and presented a PowerPoint on their plans for
marketing the space.
McCarthy said Cushman and Wakefield have a dominant presence in the south suburban
market, and a solid track record marketing corporate headquarters. He listed a number of
similar listings in Eden Prairie his firm has handled. He said in the current market,
landlords are still dealing with"concession-aggressive" tenants, and that large tenants are
driving the market. He noted that market-wide vacancy rate has dropped slightly, from
17.9 percent to 17.4 percent.
McCarthy said the City Center space that will be vacated by C.H. Robinson has some
notable selling points, including:
• A desirable location
• Strong local ownership
• Good regional accessibility
• Fiber optic connectivity
• Above average parking ratio
• Amenities, including an on-site cafeteria and an exercise area
Challenges associated with the space include:
• Condition of current finishes
• Improvement costs
• A challenging floor plan
• Limitations associated with multi-tenant space
City Council Workshop Minutes
December 4, 2012
Page 2
• Lack of executive parking
• Number of competing properties
McCarthy said he believes the City can reasonably expect to achieve a lease rate of$19-
$20 per sf. Tenant-paid tax/operating expenses are estimated at$9.75 per sf, for an
achievable net rental rate of$9.25 to $10.25 per sf. McCarthy also said that sale of the
City Center building could bring in around $12 million. City Manager Getschow noted
that it would likely cost between $15 and $17 million to build a new city hall.
McCarthy said they plan to use a number of marketing strategies, including
• Promoting the property locally and nationally
• Leveraging the fact that Eden Prairie is a premier community in which to live and do
business
• Promoting within the brokerage and business communities
McCarthy said they have purchased the domain name EPCityCenter.com to use as a one-
stop site for everything related to marketing the City Center space. He said they will also
make extensive use of electronic mailings, create a project video that can be distributed
via e-mail, and conduct broker lunches/tours.
Nelson asked if the cafeteria would remain. McCarthy said the cafeteria is an amenity
that will appeal to many potential renters. Economic Development Manager David
Lindahl asked about the likelihood of leasing the entire available space. McCarthy said he
will encourage potential tenants to take the entire space, and may recommend the use of
incentives to achieve that. McCarthy said he is aware that there has been some
discussion of locating a business incubator in the building. He recommended the City not
to give away prime space for such a use, since it is not required for that type of operation.
Council Member Case said the Council needs to give McCarthy direction on what path
to pursue— sale or lease. Council Member Aho said it sounds as if leasing makes more
sense than selling,but he does not want to close the door completely on the sale option.
Case said he and Aho attended a seminar on business incubators at the National League
of Cities Conference in Boston and both are interested in exploring whether or not the
concept could work for Eden Prairie. Case suggested directing staff to carve out 7,000 sf
for a small business incubator. He said it could be basement space,but he feels the City
really should try out this concept.
Nelson asked if the School District intends to stay in their space. Getschow said they
have indicated they want to stay, so a new lease agreement will have to be negotiated
early in 2013. Nelson said she would like to the C.H. Robinson training room located
near Parks & Recreation to be converted into an accessible meeting room for City use.
Mayor Tyra-Lukens said she does not have the strong impression that the City is in need
of additional meeting space. Tyra-Lukens asked McCarthy to provide quarterly updates
to the Council.
Open Podium - Council Chamber
City Council Workshop Minutes
December 4, 2012
Page 3
II. OPEN PODIUM
III. ADJOURNMENT