The UA is seeking regents’ approval to lease prime office space about three blocks from the White House as part of the school’s first “full-service” facility in the nation’s capital.
The Arizona Board of Regents finance, capital and resources committee on Thursday gave approval to send the proposal to the full regents board for its approval.
The proposal will have the UA paying nearly $1.2 million a year in rent, operating expenses and real-estate taxes for about 15,000 square feet of space in the new One Freedom Plaza building at 1301 Pennsylvania Ave. NW. The lease agreement still needs to be finalized.
Lisa Rulney, senior vice president of business affairs, told the committee the location is ideal for the university.
“We vetted over 60 options to find one that best meets our needs,” she said. “We feel like we were able to negotiate a favorable deal in this ideal location. We believe that having a significant presence in Washington, D.C., will help us move forward our strategic initiatives as well as have it be the UA’s front door in Washington.”
As proposed, the school will lease about half of the building’s fifth floor. The new 13-story building, developed by Quadrangle Development Corp., will be the site for the UA’s Center for Outreach and Collaboration.
The center will house a variety of UA programs, including the school’s federal relations office, the National Institute for Civil Discourse, the Research, Discovery and Innovation Office and the new Semester in Washington Presidential Fellowship Program as well as other programs and offices.
The UA is proposing to lease the space for 11 years with an option for a 10-year renewal. The initial base rental rate is $50-per-square foot, for a total base rent of $743,750 per year. Operating expenses and real estate taxes will cost about $424,000 annually. The lease is scheduled to start in February 2020 and the property owner will provide rent abatement — typically done while space is being renovated or under construction — for the first 16 months of the lease.
Rulney said the rate compares favorably to the average office rental rates in the area of about $54 per square foot. She said the UA’s rate is in line with what is being paid by other tenants in the building, including the law firm Kirkland & Ellis at $56 per square foot, and Duke Energy at $62.50 per square foot.
The building features a full glass-and-metal facade with a ground floor retail area, a three-floor underground parking garage and nearly 300,000 square feet of rentable space, according to promotional material from the developer. The UA, as other tenants in the building, will have access to a rooftop deck, a smaller indoor event space and a fitness facility. The building is walking distance to the Capitol, White House and many federal agencies.
The new center will give two of Arizona’s public universities significant footprints in Washington, D.C. The UA office will be about 1½ miles from Arizona State University’s facility, the ASU Barbara Barrett and Sandra Day O’Connor Washington Center.
In other action
The regents committee delayed voting on a UA request to purchase the property at 1501 E. Mable Street, near North Cherry Avenue. The UA and seller negotiated a sale price of $950,000 — above the appraised value — for the 7,125-square-foot site, which includes a 2,751-square-foot building that serves as a privately owned seven-bedroom mini dorm. The deal also includes the UA paying nearly $41,000 to relocate tenants who have leases through the summer 2020.
The UA said the property is strategically located in an area for future campus uses, and is located on a block that is nearly entirely owned by the university. Rulney said the sales price reflects the “rapidly increasing market around our campus boundary.”
Several regents questioned the high price for the property, with Regent Jay Heiler, saying the school was getting “hosed in that deal.” The matter will be taken up again at the regents full board meeting in mid-June.