State seeks up to 600,000 square feet of Ada County office space

If you have 110,000 to 600,000 square feet of vacant office space in Ada County to lease or sell, or even a desire to build, the state of Idaho is looking for you.

The state Department of Administration issued a request for proposals Oct. 21 for at least 110,000 square feet of office space as a new home for the Idaho State Tax Commission, whose lease at Washington Group Plaza expires in June 2017. The RFP elaborates that as many as 600,000 square feet of new or existing office space are desired.

The deadline for proposals is Dec. 15.

“I’ve been talking to brokers who say I’ll get 40 responses, which I find amazing,” said Linda Miller, the statewide leasing manager at the Idaho Department of Administration.  “We are trying to negotiate a short-term extension.”

Miller wants to relocate the tax commission before August 2018.

Bill Beck wonders how successful the state will be in lining up so much office space.

“There are 24 million square feet of office space (across the Treasure Valley) with about 10 percent vacancy,” said Beck, founding principal of Tenant Realty Advisors, a Boise commercial real estate firm that exclusively represents tenants. “That’s about 2.2 to 2.3 million square feet. If they take 600,000 square feet, that would take 25 percent of the vacancies away.

“Right now,” Beck continued, “if you are looking for 50,000 to 80,000 square feet of space, there might be between four and six. There’s not that many options. If you want 150,000 square feet, there’s one option. If you want 200,000 to 300,000 square feet, to the best of my knowledge, there are none.”

St. Luke’s Health System is evaluating whether to buy 556,000-square-foot Washington Group Plaza with four large structures at the eastern edge of downtown Boise.

Whether the sale goes through or not, the state must relocate the tax commission, Idaho Department of Fish and Game and Idaho Department of Finance as their leases expire at the Washington Group Plaza, the former corporate headquarters for Morrison Knudsen Corp., Miller said.

The tax commission will be the first to go. The Department of Finance lease on 21,132 square feet expires in July 2021, and the Fish and Game lease on 28,022 square feet expires in June 2019. Miller said those leases would remain valid even if Washington Group Plaza changes ownership.

Moving the three agencies inspired Miller to find ways to consolidate 38 different state-leased locations in Boise to fewer than 10 leased locations with the requested range of 110,000 to 600,000 square feet. The state leases 704,000 square feet in Boise for $11 million a year, a dollar figure that has doubled since 1996, Miller said.

“(The consolidation) could be anywhere in Ada County, including Meridian or Eagle,” she said. “This is the biggest RFP I have ever done and I’ve been here for 17 years. It’s forward thinking. It’s looking at containing our costs.”

She is focusing on moving agencies that don’t need to be in downtown Boise and with leases that expire in the next five years. These are agencies not located in the 15 buildings that comprise the 1 million-plus square feet of the Capitol Mall.

Miller is considering leasing or purchasing office space. She’s also considering using existing buildings or building new buildings, even a new campus, if an interested developer steps forward.

“I would prefer buying,” she said. “We will be looking at leasing with an option to buy or a phased purchase program. We’re looking for some creative concepts.”

Miller estimates new construction would cost between $100 and $200 per square foot for a projected total cost of $60 million to $120 million that would require legislative approval. She said build-out could be in phases over a number of years.

Because it has an “annual appropriations cancellation clause,” Beck said, the Legislature can cancel leases if, for instance, the state doesn’t have enough money. Whatever their length, the leases are therefore regarded as year-to-year.