THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Wednesday, February 12, 1997 TAG: 9702120459
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY BATTINTO BATTS JR., STAFF WRITER
DATELINE: PORTSMOUTH LENGTH: 87 lines
Convinced that you have to take chances to make things happen, the City Council Tuesday night approved a proposal to build a 100,000-square-foot office building in the PortCentre Commerce Park.
Although no businesses are committed to using the building, city officials expect it to be home to telemarketing firms, reservation centers, law firms and insurance companies.
Armada/Hoffler, a Chesapeake-based construction firm and developer of a number of high-profile projects in the region, will construct and own the $8 million building on city land.
The Portsmouth Industrial Development Authority will enter into a 30-year lease agreement on the building from A/H PortCentre Associates, L.L.C., a subsidiary of Armada/Hoffler created for the project.
Annual rent for the building, which could be finished by the end of the year, is not expected to exceed $850,000.
The IDA intends to pay the rent from money it receives from businesses who lease space in the building.
By approving the plan, the City Council obligated the city to cover any difference between the revenue and the rent.
That money would come from annual operating budgets and would not be included in the city's long-term debt, the city said.
The building will solve a shortage of office space that has hampered Economic Development Director Matthew James' efforts to bring businesses to Portsmouth.
James said the shortage left Portsmouth unable to attract companies such as Avis, TransWorld Airlines, UPS and The New York Times, all of which opened offices elsewhere in Hampton Roads, he said.
Although the building is being constructed without any tenants lined up, James said that three companies already have expressed interest in coming to Portsmouth once the facility is in place.
City Manager Ronald Massie acknowledged that the city is taking a risk building without any rental contracts.
But Portsmouth must spend money if it hopes to make money, the City Council determined at its retreat last weekend in Williamsburg.
And considering the potential economic benefit of this project - an estimated 300 new jobs and $110,000 in additional real estate tax revenue to the city - the office building works toward the city's goals, Massie said.
``The most important thing for this city to do is to build inventory to give us the ability to compete,'' Massie said. ``The $850,000 is what it will cost us if no one comes. But that's almost impossible. It's inconceivable that that would happen. But if it does, we would find a way from our growth to cover it.''
There is currently about 300,000 square feet of vacant office space available in Portsmouth. But the space is scattered throughout the city in parcels of no more than 15,000 square feet, James said.
James, who traveled as far as Japan trying to sell businessmen on the city, said most firms interested in Portsmouth want at least 30,000 contiguous square feet and they want it available within four to six months.
Armada/Hoffler officials said they too have tried to interest businesses in coming to Portsmouth, only to be hampered by the lack of office space.
The company submitted an unsolicited proposal to construct the office building, Massie said.
Dan Hoffler, chairman of the board of Armada/Hoffler, is a native of Portsmouth.
``Having been born and raised in Portsmouth,'' Hoffler said, ``I personally am very enthusiastic about this opportunity to contribute to the growth and resurgence the city of Portsmouth is experiencing.
``We believe this project is a clear signal that Portsmouth is open for business and represents great vision on the part of the city's current leadership.''
James has been able to convince several firms, such as Lindab Inc., a manufacturer of spiral ductwork, to come to Portsmouth by encouraging them to refurbish existing office and warehouse space.
But the office building would allow Portsmouth to attract more businesses by offering new, customized office space. Once a firm commits to coming to Portsmouth, the city would construct space in the building to meet its needs, said Steven L. Lynch, president of the IDA.
In addition, city officials expect the office building to encourage more development in the city-owned commerce park, which is more than half empty.
``This building puts us in the game,'' Lynch said. ``Matthew was out there before without a bat. It's kind of hard to hit the ball without a bat. Now he has a bat in his hand.'' ILLUSTRATION: Map
Planned office building
KEYWORDS: PORTSMOUTH CITY COUNCIL OFFICE BUILDING