Hootsuite building had been through open tender, final deal was at market rates and supported tech jobs

5 East 8th with its For Sale signs standing proudly.

5 East 8th with its For Sale signs standing proudly.

The Hootsuite lease at 5 East 8th Ave. that is at the centre of a court action launched by Glen Chernen, a man who would be mayor, has been standing in pretty plain view since Mayor Gregor Robertson announced it on Nov. 12, 2012.

Termed “small potatoes” by one public policy expert, the suit claims Hootsuite received preferential treatment in obtaining the lease. But city records, released last month,  show that:

  •    the building was offered for public tender in February and March 2012 in a 60-day open process that produced four written offers to purchase, the highest at $7.5 million. Since the building was assessed at $9.6 million, all four offers were rejected as below market price.

In May, the city received an offer from CBRE, acting on behalf of Hootsuite. The key terms:

  •  Five year lease: Year 1 – $565,794 ($17 per sq ft), with 3 month net rent free period (so they pay taxes and utilities during this period);  Year 2 – $632,358 ($19 per sq ft); Year 3 – $665,640 ($20 per sq ft); Year 4 – $698,922 ($21 per sq ft); and Year 5 – $732,204 ($22 per sq ft) per annum.  (There are two five-year renewal options to lease at market rate in event that option to purchase not exercised.)
  • Tenant to also pay amount in lieu of property taxes as if levied and operating costs, and pay for 71 parking stalls at $65 per month per stall.
  •  Tenant improvement allowance was $20 per sq ft but in the event option exercised, unamortized amount of TI allowance payable back to city 20 days after the sale completes.
  • Tenant responsible for all major capital repairs other than structural and full roof replacement (if necessary); tenant responsible for roof repairs.
  • Option to purchase price was $9.3 million ($279 per sq ft); option expires November, 2015.

The lease rates are in the range of market rates, as is the purchase price. The building was empty. A Vancouver company could move in, pay market rates, perhaps purchase, expand and generate jobs. Council approved the deal.