ST. LOUIS — The U.S. Department of Agriculture will pay significantly lower than market rate to occupy parts of six floors of One Metropolitan Square downtown, according to public documents.
The federal agency in June announced it would move 1,000 employees from an outdated, hazardous north St. Louis city office to the 42-story high Met Square at 211 N. Broadway, in downtown's central business district.
The agency signed a 20-year lease for 163,604 square feet worth about $72 million. The terms of the lease, obtained through a Freedom of Information Act request, show that the building's owner, The 601W Cos., offered rents in the lease's early years that are more than three times lower than the average lease rate for downtown office space.
Office space in the downtown submarket was leasing for an average of $18.06 per square foot in the second quarter of 2020, according to CBRE data. The rental rates offered to the USDA won't reach that level until the final five years of the lease. Here's a breakdown of the lease terms, which also includes access to common areas such as elevators and hallways:
- Years one to three: $5.70 per rentable square foot
- Years four to five: $13.32 per rentable square foot
- Years six to 10: $14.21 per rentable square foot
- Years 11 to 15: $15.32 per rentable square foot
- Years 15 to 20: $19.37 per rentable square foot
Neither representatives for the building owner nor the General Services Administration, the federal agency that oversees government leases, responded to requests for comment. But the GSA typically follows the “lowest price technically acceptable” criteria when comes to procurements like this.
David Wright, attorney and commercial real estate broker with St. Louis-based Lawyers Realty Co., who was not involved in the deal, said the lease terms are indicative of a building owner embracing an aggressive strategy to land what he called a "a high credit tenant."
"The landlord made an aggressive deal to get a very desirable tenant in a market where there's not a lot of new leasing," Wright said.
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