SUBJECT:
Title
Request Approval of the Lease Renewal Agreement Between 2275 Biscayne Holdings, LLC, and Marion County for the Tax Collector Office Space Located at 17860 SE 109th Avenue, Units 601B/602, Summerfield, Florida 34491 (Villages Branch) (Budget Impact - Neutral; projected increase of $11,385)
Body
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INITIATOR: |
DEPARTMENT: |
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Matthew G. Minter, County Attorney |
County Attorney |
DESCRIPTION/BACKGROUND:
The Marion County Tax Collector, George Albright, requests that Marion County enter into a Lease Renewal agreement with 2275 Biscayne Holdings, LLC, for a term of five (5) years commencing October 1, 2025, through September 30, 2030.
The Marion County Tax Collector has negotiated terms for the renewal of the 2010 lease with the new owners of the shopping center, 2275 Biscayne Holdings, LLC, who acquired the property in March 2022 at a mortgage foreclosure sale. At the time of purchase the shopping center had suffered years of deferred maintenance. The County has enjoyed a flat base rental rate ($15.00 sf) for the past 5 years with annual Common Area Maintenance (CAM) increases. The rental rate began below market rate in year one and by the end of the 5-year lease (September 2025) is significantly below the area's market rental rate. Shortly after purchasing the shopping center the new owners began correcting the deferred maintenance, brought it up to a much better standard of operation, replaced the roof, and gave the entire center a major facelift. The center now has little vacancy. According to management, the last major item to improve is the parking lot which they anticipate to begin in 2026.
The base rental rate is currently $15.00/sf. The annual base rental rate is currently $32,175.00 which equates to $2,681.25 per month. The monthly CAM is currently at $8.37/sf which equates to $1,496.14. Accordingly, the current monthly rental expenditure is $4,177.14. For FY 2024-25 the total rental expenditure for this branch office will be $50,125.68.
The Lease Renewal increases the base rental rate to $20.00/sf. The annual base rental rate from October 1, 2025, through September 30, 2026, would be $42,900.00, which equates to $3,575.00 per month. The monthly CAM for September through December 2025 will remain at $1,496.14. Accordingly, the new monthly rental expenditure on October 1, 2025, will be $5,071.14.
The base rental rate for the 5-year term is set to adjust annually on October 1st based upon the Consumer Price Index at that time using the formula set forth in Section 7 of the lease. CAM changes annually in the month of January. Shopping center management does not anticipate large increases in CAM going forward as the majority of the deferred maintenance has been rectified. Should the annual CAM increase in line with the average of the last 3 years, the estimated annual increase in CAM is $880.00 for 2026.
The market rental rates for this area and this shopping center are $23.50 to $30.00 per square foot. Based upon available market data, the owner of this shopping center has been renewing existing tenants slightly below the area's market rate. New tenant leases are being placed at higher rates.
The budget impact for FY 2025-26 for the base rent increase is $10,725.00. The budget impact for the FY 2025-26 fiscal year for the projected/estimated CAM increase is $659.97. Accordingly, the projected budget impact for FY 2025-26 is an increase of $11,384.97 over FY 2024-25.
BUDGET/IMPACT:
Neutral; projected increase of $11,384.97 over FY 2024-25.
RECOMMENDED ACTION:
Recommended action
Motion to approve and authorize the Chairman and Clerk to execute the Lease Renewal between 2275 Biscayne Holdings, LLC, and Marion County for the Tax Collector office space located at 17860 SE 109th Avenue, Units 601B/602, Summerfield, Florida 34491 (Villages branch).
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