City details terms of S&P Global’s lease for downtown building
Charlottesville’s Office of Community Solutions continues to review leases the city has with third parties who rent space. Council held a work session on the topic in May and learned that until now there was no central place in city government entrusted with keeping track of leases for about 145,275 square feet of floor space and about 50 acres under ground lease. (view the presentation)
One of those buildings is a five-story structure currently occupied by a branch of S&P Global, an international company that does research into economic and business issues. According to the May presentation, the city’s Economic Development Authority takes in $240,000 annually in rent but the property’s market value could be as high as $1.58 million.
“The S&P Global building started its life as the National Ground Intelligence Center,” said Chris Engel, the city’s economic development director. “Essentially it was built in the 60’s by the federal government and occupied by the Army.”
In the 1990’s, NGIC moved to a larger and more secure location at the Rivanna Station in northern Albemarle County.
“At that time the city was concerned about the loss of activity that building created and went and petitioned the federal government and the General Services Administration to have them gift the building to the city,” Engel said.
The city entered into a lease with the Economic Development Authority and the EDA offered a 30-year lease to a company that used to be called SNL Financial, which then took the space to consolidate its offices into one place rather than be scattered across multiple locations. A company that would later be renamed S&P Global purchased the company in July 2015 for $2.2 billion.
Engel said the EDA’s lease with S&P Global is about two thirds of the way through.
“The way the lease is structured is that all the burden is on them to manage the facility and maintain the facility, everything,” Engel said. “We essentially do nothing from a physical standpoint.”
Engel said S&P Global has earned upfit credits for about $9 million worth of investments put into the building at the beginning of the lease.
“Those credits are nearly running out,” Engel said. “Those credits are nearly running out. They’re not quite all the way run out. They have actually just qualified for about $3.5 million in additional rent credits. They replaced the boilers. They replaced the roof, the chiling system, the elevator system. They added fire protection.”
When the credits do run out, Engel said S&P Global will pay closer to market rate. Council will have a further discussion on city-managed leases.
Before you go: The time to write and research of this article is covered by paid subscribers to Charlottesville Community Engagement. In fact, this particular installment comes from the June 15, 2022 edition of the program. To ensure this research can be sustained, please consider becoming a paid subscriber or contributing monthly through Patreon.